First Time Homebuyer Programs (how they work)
May 04, 2024Read time - 3 minutes / Disclaimer
Today I’m going to explain first time homebuyer programs.
Learning how they work can:
• Give you options.
• Help you with costs.
• Help you buy sooner.
Unfortunately, these programs aren't well known.
They Aren't Advertised
Many people are unaware of these programs including:
• CPAs
• Bankers
• Financial Advisors
Learning how they work may help qualify you for a loan sooner.
Fortunately, I worked in lending for 10 years and came across many of these.
Here are 3 steps to figure out your options:
Step 1: Find A Program
Locate a program you can take advantage of.
There are a few ways to go about this.
You can call your local housing authority.
You can also Google:
• "first time homebuyer"
OR
• "down payment assistance"
Some loan officers know about these programs.
But many don't.
Spend time researching them on your own.
Step 2: Learn Program Options
After locating a few programs.
Figure out how they work.
Most are called "grants" or "community seconds".
Grants:
Grants help cover your costs when buying a home.
In most cases, you don't have to pay the money back.
Grants usually come from:
• Nonprofit organizations.
• Local housing agencies.
• The government.
• An Indian tribe.
• Plus others.
For Example
• You find a special program.
• The government offers it.
• You apply and get approved.
• You receive a $10,000 grant.
Community Seconds:
Community seconds also cover your homebuying costs.
The organizations that give "grants" often give "community seconds" too.
What's the difference?
Community seconds are viewed as a "loan".
They often come with rules.
The rules might say:
• You agree to pay back the loan if you sell the property.
OR
• The loan will be forgiven in 5 years if you don't sell.
OR
• You agree to begin paying off the loan in 3 years.
Each program is different.
For Example
• You find a special program.
• A housing agency offers it.
• You apply and get approved.
• You're eligible for $10,000.
• The loan is forgiven in 5yrs.
Not all community seconds need to be paid back.
Step 3: Connect With The Pros
If you receive approval for a special homebuyer program.
Finding a real estate agent is the next step.
You may already have one.
If so, the agent must understand the program you qualify for.
If not, the program you're working with often has a list of agents familiar with it.
You can ask for a referral.
Conclusion
A few things to remember.
Most of these programs say you must move into the home you are buying.
Some say you need to be a first time homebuyer.
Read through the details.
Here's some things to consider when comparing the options:
• Is it a grant/community 2nd?
• Must you pay it back?
• What are the rules?
Here's a resource to find programs in your local area:
That's all for today.
See you next week.
