Down Payment Assistance for First Time Home Buyers! How can this help you?What is Down Payment Assistance for First Time Home Buyers? Is this a grant? Learn the difference between grants and down payment assistance programs. How do these down payment assistance Programs work for first time home buyers mortgage? These are good questions and worthy of our exploring. If you have read over our page on First Time Home Buyer Grants, then you realize that a grant is a gift that may or may not have to be paid back.
Assistance for first time home buyers works very differently. If you're a First Time Home Buyer, it's very important you understand the difference because it can cost you money by not knowing. Now first, you need to realize that this type of assistance or DPA programs are legal. In fact, many people could never become home owners without them. So let's see if we can help you see the bigger picture.Down Payment AssistanceDown Payment Assistance Programs are actually a third party to your transaction. They operate as a non-profit charity organization. That's what makes them legal. When you go to buy a house, you'll need to have the seller to agree that you use down payment assistance to make the down payment. The reason for this is simple. You're going to be asking the seller to make a charitable donation equal to your down payment plus an administrator's fee. Now you can see why the sellers permission is needed. By now I'm sure you're thinking, why would the seller agree to this and where would he get the money to make this donation? Good question!! We all know that there's no FREE LUNCH in this world, right?? So the way your purchase transaction is structured is like this. You're going to borrow the down payment money from the lender and then give it to the seller and he/she makes a donation to the charity. Do you have all kinds of crazy thoughts racing through your head? Don't worry, it's sort of like a legal way to launder money. What you need to concern yourself with is that as long as the lender allows assistance for first time home buyers, then you're OK. Not all lenders or loan programs allow this type of assistance for first time home buyers. The good news is, FHA which is a loan program many First Time Home Buyers use allows this kind of assistance for first time home buyers to take place. Down Payment GiftsDown payment gifts can also be used for the down payment. Learn how these work by reading Mortgage Down Payment Assistance in the Way of Down Payment Gifts. Other Sources of Down Payment MoneyYou may be surprised at the number of ways you can come up with down payment money. Take a look at these several suggestions of money for down payment. Mortgage Assistance ExampleLet me tell you a little story. I had a single mother come to me for a home loan. She was looking to buy her first house. Now she had 1 child and was expecting another. She had been working on the same job for about 4 years and was making pretty good income. She had two problems. One, she did not have any down payment money. Two, she had about $2,000 in medical collections on her credit report. Her credit score was low because of this. The Mortgage Doctor did his work. To make a long story short, she bought that house with only $500 out of her pocket and we paid off the collections at the closing. So she became a new home owner and was able to improve her credit picture at the same time. Do you think we could have done this without assistance for first time home buyers? No, but because this kind of assistance is available, people can buy their first home. If you want to know more how these programs that give assistance for first time home buyers work, fill out the form below and read over our FREE Guide for First Time Home Buyers.
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