Down payment assistance helps buyers qualify.
Let's face it, to buy your dream home you have to have a substantial down payment. The days of exotic and zero down mortgages are gone for good. The banks that used to offer them are long gone and those who survived will remember the losses for years to come. The chaos in the lending industry made the banks cautious, now they want people to actually pay a part of the home purchase price. Depending on buyers credit situation that part can be from 10% all the way up to 50%.
An average home price in Atlanta metro area is just a tad over two hundred thousand dollars. Let's use a nice round number of $200,000. So to buy a home for $200k with 10% down we have to come up with $20,000 in cash at the closing table, not counting the closing costs and all the fees. And those costs and fees add up to about 3% of your home price, on average. to in reality to buy this dream home we realistically need closer to $26,000. How many people you know who have $26,000 just sitting in a bank account? Not many...
So how can we overcome this problem, or more exactly 26,000 problems. Down payment assistance comes to mind. Down payment assistance comes in two forms:
- a gift form seller or 3rd party
- payment plan over time
Some lenders, not all, will allow all or part of the down payment to come in form of a gift or grant. Gift can be something your parents can give you to cover part of the down payment. Local governments offer grants to first time home buyers in certain areas, price ranges, occupations, etc. They also offer "forgivable" loans, which become grants if certain conditions are met, like living in the house for couple years. Check with your local HUD office to find out what is available in your city.
If you need more time to save up for a down payment, the payment plan option may be something you should consider. If used together with rent to own, you can enjoy home ownership while you saving up for a down payment. In such a case, you would use rent to own program where part of your monthly payment goes towards the down payment for the purchase of the home you are leasing.
Do not let the lack of down payment stop you form owning your dream home. Keep an open mind and look for solutions. Be proactive, ask us what can we do for you.
