Life brings different changes and challenges for each of us individually that can affect us financially, but we have to play with the cards that are dealt to us and then ask the dealer to hit us with another card. By doing so, we can manifest and then change our path. Continuing to gather information to get us closer to a win would be one of the cards the dealer hit us with. I’m here to hit you with another card.
There are many ads that offer 100% home loans, no down payment, etc. but does that mean that there is no need for money? Probably not. However, there are down payment and/or closing cost assistance programs that one may qualify for, which minimizes the amount of money a buyer will need to purchase. Most of these programs are income based and one should speak to their lender to see what programs they offer and which they may qualify for. Keep in mind that not all lenders provide down payment assistance, so you may need to steer clear of your preferred lender if you need help. When you speak with the lender of your choice, make sure they tell you if it is a bond or a grant.
Bond money usually comes in the form of cash provided to the settlement table and the lender providing the assistance then places a short-term lien on the property. These programs are subordinate to the existing first lien, whether it is a VA, USDA or FHA loan. There are no payments to be made while the borrowers occupy the property. For most bond programs, as long as borrowers occupy the home for at least three years, the repayment is waived. However, if the buyer sells the house before the deadline, the refund will have to be made. There are other bond programs that fund the entire transaction and are designed for low to moderate income borrowers. These programs also require borrowers to be first-time home buyers or not to have owned a home in the previous three years.
Grants are another source of down payment assistance. Again, the conditions for housing subsidies vary depending on the agency issuing the funds, but the important thing to remember is that with a housing subsidy, there is no refund. Although grants are usually given to first-time buyers and used to help them with a down payment and closing costs, some lenders may have their own in-house programs. For example, consider a couple who want to buy their first home, but must first provide the 3.5% down payment and closing costs required for an FHA loan. For a $100,000 purchase, that’s $3,500 for the down payment and maybe an additional $3,000 for closing costs for a total of $6,500. Depending on the lender and its programs, either the $3,500 or the $6,500 may be paid by the lender.
If a buyer receives assistance, does that mean they no longer need the money? Probably not. But I always tell a buyer to budget for any unforeseen costs that may arise. There is inspection, re-inspection, wood destruction organization (WDO) inspection, assessment, and so on. I only mention these entities because everyone should budget for not only unforeseen costs, but also household necessities such as repairs. If you have a 401K, Thrift, or Employee Stock Purchase Program (ESPP), they are typically used for buying a home. It’s your money, now would be a good time to use it. Always remember that you can call a trusted realtor to ask questions when you are ready to buy.
Dana Lewis, Florida real estate agent
eXp Realty, LLC
A question, a need or a real estate concern? …”You can count on Dana”