Don't be like me! I made one major mistake before I quit my corporate job to pursue real estate.
The one thing I regret is quitting my job before I bought my first home!
Let's be real, I was afraid of not having enough for a down payment and spent too much time saving. What I didn't know is that I could get assistance with my down payment which could have gotten me into my first home so much sooner!
Over the next couple weeks we are going to dig into each of these programs a bit more, but let's review some of these programs.
First we need to understand who typically qualifies for down payment assistance:
First-time home buyers only
Buyers must have low- to moderate-income
The home will be a primary residence
The home is in a “targeted” census tract
The down payment assistance is used in conjunction with an approved mortgage program
You work with an approved mortgage lender
*First-time homebuyers are home buyers who have not owned a home in the past 3 years, even if they have owned before.
Types of Down Payment Assistance:
These are the most coveted and desired type of down payment assistance. Why is that? Because these are typically given to first-time homebuyers which the never have to pay back. Did you hear that? You don't have to pay them back.
Forgivable Loans (0% Interest):
These are known as second mortgages that you do not need to pay back as long as you stay in the home for a certain number of years.
These can also be known as "soft" second mortgages. In order to get your down payment forgiven, you will need to meet the requirements of lender. Once you have met these requirements you will not longer need to pay back this to the lender.
Deferred Payment Loans (at 0% Interest):
This is also a second mortgage but you don't need to pay it back immediately.
These loans are usually triggered when you move, sell, or refinance.
Your lender or another organization might offer you the opportunity to take out a second mortgage loan at the same time your first mortgage is finalized.
You will have to pay back this loan each month, which means you will need to make 2 mortgage payments each month.
Matched Savings Programs
Matched savings programs, otherwise known as individual development accounts, are another way for homeowners to help pay for their down payments.
These programs allow you to deposit money into an account with a bank, government agency or organization and the institution agrees to match what was deposited. This allows buyers to use the full amount as a down payment on their home.
*Please talk with your mortgage lender to understand what options are available to you.
Let me know if you have any questions about using any of these assistance programs. My goal, as always, is to be your go to resource for all things real estate. Especially right now in this market, there is a lot of information floating around and I want to arm you with what’s really going on from inside the trenches. Feel free to schedule an initial consultation with me if you would like to discuss how we can get you into a home.