Down payment assistance is that a good or a bad thing?

Status: Open
Nov 20, 2017 Views2,961 Answer a Question

Asked by
REALTORS®
Categories:
Realtor Only
About 6 years ago
Just as a principle I like to be informed of all the options available to my buyers or sellers. For this reason, it is a great idea to team up with a mortgage officer that specializes in such programs. There is always sellers contribution however that one is harder to negotiate where lender credit and downpayment assistance become the mortgage officers concern so you can focus on what you do best.
About 6 years ago
I grew my Real Estate business using down payment assistance programs. They are wonderful but not for every client, so there is no black or white answer just 50 shades of gray and the client determines the shade.

Most down payment assistance programs have income caps but there is one that I know of out there that will allow the borrower to make up to $100k a year and fy for heir funds. I always advocate for my client to use the grants over a second loan program. Mist of them will act as a second loan by placing a lien on your home but the lien is removed once all the program guidelines have been met. Having the right lender partners is key and not every lender work every program which is why you need to educate yourself on what available so that you can direct your client to the right set of partners that can help meet their needs.

You will also want to compare the best outcome for your client using their ownoney verses the grant. Usually using the grant is more advantageous because it allows your client to keep their own funds in a reserve account for the unexpected by setting up their 3-6 month emergency fund acvount. If they have a higher interest rate, I then teach my client how they can pay their loan off early to save even more money.

The City if Houston has a $25k grant with a 5 year affordability period and SETH has a 8% grant that they have initiated since Harvey. This is only 2 of the many great programs that are available and they all work well with all loan programs, FHA, VA, USDA, Conventional. Also mist lenders have some type of InHouse grant but you have to ask about it. The loan officer usually will not mention them unless you ask because it us more paperwork for them. It's not a good thing or a bad thing. Just do what's best for your client. Hope this helps.
source:
Over 10 years of personal experience. Excuse the typos. Using my phone to answer and there seem to be a glitch in the system will not allow me to make...
About 6 years ago
Really depends on your client, could work against some of them but for the most part it's a good thing. There are alot of programs, restrictions, and requirements so make sure you partner with a good lender and make some relationships with the processors in different down payment agencies as some can be slow or inefficient.

Food for thought. Although I may advertise down payment assistance for leads I often don't speak alot on it until we find the home they like, that way I match them with the right tool.
source:
First hand experience. Former down payment assistance finance manager.
About 6 years ago
Down payment assistance comes in many different forms. Grants do not have to be repaid if the recipient meets certain requirements. For example, a grant may be given to home buyers earning below a maximum income threshold in a certain geographical location. Further, the grant may amortize after 5 years. In other words, the recipient must remain in the home for 5 years or repay a predetermined portion of the grant. Assuming your client qualifies for the grant, each situation must be evaluated on an individual basis. If you know your client plans to move within 3 years, then you must ask your client will they have the ability and will to repay up to 40% of the down payment assuming they remain in the home for 3 years. In general, if you client plans to remain in the home beyond the grant required years, it may be helpful to accept the grant. However, make sure to suggest the client speak with their tax professional to fully understand the tax implications of down payment assistance.
About 6 years ago
Down payment assistance helps put more people in homes - to me that is a great thing! All programs come with caveats, i.e. higher interest rates etc. You might want to discuss with a local lender to discuss the pros and cons (note: not all lenders participate). I have had many clients utilize down payment assistance, allowing them to move into a home sooner than they anticipated. Below is the link for Texas State Affordable Housing Corporation - they will frequently have webinars that can help you become familiar with programs as well. Some even work with VA loans, thus assisting Veterans even more. The key to any of these programs is a knowledgeable lender and a compliant buyer.
source:
http://www.tsahc.org
About 6 years ago
Seller assistance affords more individuals to become homeowners. It also can free up money for to be used on unforseen expenses. I wouldn't classify it as good or bad. Just be sure to remember that the amount requested in an offer should always run thru your lender in advance to ensure that it is within the guidelines specific to your loan. In addition, also keep in mind the home must appraise for the loan. Hope this helps!
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
Advertisement
Find a Local Expert Real Estate Agent in your Area
Start your real estate search the right way by finding the best agent to work with in your area.

Related Questions