How to Help Your First-Time Home Buyers with a Down Payment
Being a first-time home buyer can be exciting, intimidating and costly. According to Realtor.com, millennials will be taking out more mortgages in 2020 than any other generation.
Even though the timing has shifted as a result of COVID-19, due to the lifting of some states’ stay-at-home orders, you could start hearing from an influx of renters who now see the value and security that comes with owning their own residence.
Since nearly three-quarters of millennials say that saving for a down payment is still the most difficult obstacle to homeownership, it’s important that you are up-to-date on programs that are available to first-time buyers to help them to secure a down payment.
First-time Buyer Grants and Loans
Every state has a housing finance agency that offers special programs for first-time buyers. Most have down payment assistance programs that may include some of the following:
- Grants that don’t have to be repaid.
- Zero-interest, forgivable loans that don’t have to be repaid if the borrower still owns and lives in the house after a set-period of time.
- Zero-interest, deferred-payment loans that vary by agreement and in general are a loan for the down-payment and closing-costs that are not due until either the home is sold, the mortgage is refinanced or the mortgage reaches the end of the term.
- Low-interest loans that need to be repaid, but are loans specifically for down payment and closing costs that are spread out over several years.
To qualify for a grant or loan like this, you’ll have to help your client to do some digging since they are not widely promoted. The best thing to advise your client is for them to reach out the housing authority in the town or city where they want to purchase a home.
Down Payment Assistance for Special Groups
Depending on the community where your client wants to buy, there may be special assistance programs for teachers, police officers, emergency responders or city employees.
Again, qualifications vary and in addition to being a first-time buyer, often include taking a home-buyer education course, meeting income limits, purchasing in an approved location, staying below a set purchase price and contributing some individual money toward the purchase.
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