Happy First Time Home Buyer Getting Down Payment Assistance
Down payment assistance programs are in important part of buying a home if you do not have enough of your own money for downpayment or closing costs. Another reason why you might want down payment assistance is because you may want to keep some of your cash that you do have in the bank for until after you move in.
You may also have your own unique reasons for why you need down payment assistance. No matter what the case, knowing what down payment assistance programs are will help you decide how to best go about getting some help. Down payment assistance comes in a variety of forms from government grants to second mortgage forgivable loans and more.
Types of Down Payment Assistance Programs
Down Payment Assistance Programs come in several varieties with numerous program specifics depending on where you seek to get your assistance. Every state has some form of home buying assistance program to help with your down payment and closing costs. Many of these programs have to be used in conjunction with the sponsoring agency’s first time home buyer mortgage program so make you sure pay attention to qualification guidelines as you more forward.
Government Sponsored Down Payment Assistance Grants
Government down payment grants are lump sums of money given to a qualified buyer for the purpose of buying a home. The grant money can typically be used to fulfill the home buyer’s mortgage loan program down payment requirement. Left over money if the down payment is paid can usually be dumped in to pay for some of the costs of closing the loan.
Grant money usually has some sort of string attached like a penalty to pay the grant back if the home buyer does not stay in their home for a preset period of time. Most down payment grant programs require the home buyer to live in the home for 3 to 5 years up to in some cases 10 years. If the home buyer fails to do this, the grant may have to repaid in full or some prorated amount based on length of time in the home.
Some grants are forgivable. This means that the money never has to be paid back. You will have to check with your loan officer and state housing authority for program specifics in your state and locality.
Second Mortgage Down Payment Loans
Some types of down payment are loans made to the home buyer in the form of a second mortgage, or second lien. These programs come in a variety of structures too. One is as an interest free loan that does not have to be paid back until the home is sold or the first mortgage is refinanced. Other types of down payment assistance programs allow for no payments for a specified period of time and range from 5-30 years for the payback period. Also interest rates for these loans are at least at market rates if not better.
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