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Getting Your Down Payment Assistance

To many first time home owners, it has taken a lot of time, discipline to finally save enough to get their first property. Yet, many got stuck at the down payment/ closing stage. Do you know you can get down payment assistance?

There are literally thousands of down payment assistance programs available to first time home buyers nowadays. Down payment assistance actually comes from home sellers where they give a portion of their proceeds back to the buyer at closing. The sellers do not literally give the buyer the down payment money (they’re not allowed to). So here is where down payment assistance programmes come in to help sellers and buyers to work around these laws.

Here are a few things to look out for in down payment assistance programmes:

·         Comply to the income limits

·         Check out the price limit set on the house

·         Observe the geographic restrictions

·         Know the asset limitation rule

·         Find out the different interest rates from different programmes

·         Note if there’s availability of equity share provisions

·         Some assistance funds can be used with money first mortgage

Every down payment assistance programmes have different guidelines, but most of them have the basic criteria:

·         Assistance funds may not be used to pay off installment debt (credit cards, car loans, etc.), collections, judgments or charged off accounts

·         Cash back to the borrower is strictly prohibited. However, in some cases, the borrower’s initial deposit in the escrow account may be refunded to the borrower

·         Competing city and county specific programs generally may not be combined on any one single purchase transaction (no double-dipping). The home selected for purchase must be situated within the funding agency's geographical jurisdiction, city or county border

·         Borrower must be a first time home buyer who has not owned real estate as a primary residence within the most recent three years. However, there are always exceptions, just check the programme guidelines.

·         Eligible borrowers must provide full income documentation and qualify using tandem first mortgage financing insured through traditional prime insurers or as authorized by the city or county program administrator.

·         Be aware that assistance funds are subject to depletion at any time depending on consumer and lender demand


Why use down payment assistance?

If you are a first time home buyer of low to moderate income interested in purchasing an affordable, moderately priced home, there is a good chance you may qualify for most of the down payment and/or closing cost assistance programmes. Even if you are not a first time home buyer, there are still other programmes where you can get down payment assistance.

Knowing how to use down payment assistance is one of the creative real estate investing methods. You get to save yourself from getting tied up longer in loans, or worse, getting stuck in building up your real estate investing plans when you face difficulties in putting in that down payment. If using down payment assistance can help you from writing that big fat check to pay your home seller, why not? You get to keep that money for other investment.

By using down payment assistance, you can save that money for renovation, furnishing, and other home improvements you can do for that new house that you bought. There is also a possibility where you don’t have to pay back the money you receive for the down payment assistance. There are already a few first time home buyer programmes where you do not need to repay the amount of assistance you received. All you need to pay is a small transaction fee which in included in your mortgage loan.

So look for that down payment assistance programme that will save you a few thousand dollars when you buy a new house!


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