If you’ve ever considered switching from renting to owning, now has never been a better time to buy your first home.
More and more new buyers are entering the housing market in search of their dream home. According to the National Association of Realtors, 33% of all home buyers are first-time buyers1.
But even if mortgage interest rates remain near their historic lows, there are still some hurdles you may face as a potential buyer that could hamper your ability to buy a new home.
One of the biggest hurdles new buyers face is saving enough money for their down payment. Traditionally, the typical down payment recommended for buyers is 20% of the purchase price of the purchased home.
This means that for a house worth $ 250,000, you would need $ 50,000!
But that’s not all. In addition to your down payment, you’ll need funds to cover other costs throughout the buying process, including inspection fees, appraisal fees, or even mortgage closing costs.
While it may seem impossible for a new home buyer to find enough money to cover all the costs associated with buying a home, the good news is that there are programs available in Maryland to help new buyers. buyers to become owners.
Here are some of the best down payment assistance programs available to first-time home buyers looking to buy a home in the state of Maryland.
When it comes to down payment assistance, the State of Maryland takes the cake by offering a variety of solutions to buyers aspiring to become new homeowners.
The state has acknowledged that more and more residents are seeking first-time home ownership. In response to growing demand, Maryland rolled out the First Time Advantage program to help offset the costs of buying a new home in targeted areas.
Advantage 5000 for the first time
The First Time Advantage 5000 option is one of the most flexible solutions under the First Time Advantage umbrella. This offer provides eligible first-time buyers with a $ 5,000 loan at 0% interest that can be used to cover your down payment or closing costs.2.
The $ 5,000 loan will be set up as a second lien on the property, so check with your lender to make sure there will be no problem using the help in combination with your first mortgage application. .
The program does not require any payment on the loan during the term of the first mortgage used to purchase the property2. However, if you repay, refinance, move, or sell the house, the loan balance is immediately payable in full.2.
Advantage First Time Loan 3%
Similar to the First Time Advantage 5000 offer, the First Time Advantage 3% Loan also offers new buyers a second deferred mortgage.2. The funds can also be used for your down payment or closing costs2.
What is different is that the First Time Advantage 3% Loan calculates the loan amount for assistance as a percentage of your first mortgage amount. You can get up to 3% of your first mortgage balance as help, which means the higher the balance on the first mortgage (and the expensive the house), the more help you can get. .2.
Also, keep in mind that if the 3% is more than the total down payment and closing costs, you can use the remaining funds to reduce the principal balance on your first mortgage.2.
Student debt has grown increasingly heavy as the younger generations now seek homeownership. U.S. citizens aged 23 (and under) to 35 have the highest student debt balance totaling more than $ 600 billion in 20193.
In response, Maryland created the SmartBuy program that allows new home buyers with student loan debt to purchase qualifying state-owned housing while paying (or reducing) their student loans. You can get up to 15% of the purchase price of the house to strictly pay off student loans, up to a limit of $ 40,0002.
Remember, to be eligible, you must have a student loan with a balance of $ 1,000 or more, and student debt must be paid off in full when you complete the purchase of your home.2. You are also still subject to all other qualifying buyer criteria.
All first-time home buyers who wish to use MMP’s down payment assistance programs must meet several eligibility criteria to receive assistance.
All applicants must be at least 18 years old and have a valid social security number4. You also cannot have owned a residential property in the past three years, whether in Maryland or any other state.4.
As a first-time home buyer, you may also be required to complete and provide proof of completion of a state-approved training course for new home buyers.
In addition, you must also meet certain income eligibility criteria based on the location of the house and the total size of your household.4. MMP down payment assistance is only available to buyers who wish to purchase a home in targeted areas4. The property in question must also be used as the main dwelling4.
1 Generational Trends of Home Buyers and Sellers Report 2020 (Rep.). (2020, March). Retrieved September 14, 2020 from the National Association of Realtors website: https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf
2 Our programs. (nd). Retrieved on September 14, 2020 from https://mmp.maryland.gov/Pages/Programs.aspx
3 Backman, M. (2020, February 05). Student Loan Debt Statistics for 2019. Accessed September 14, 2020 from https://www.fool.com/student-loans/student-loan-debt-statistics/
4 Eligibility. (nd). Retrieved September 14, 2020 from https://mmp.maryland.gov/Pages/Eligibility.aspx
Author: Billy Rabbitt provides buyer and seller services for the Southern Maryland Real Estate Marlet.