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Down Payment Assistance

By
Mortgage and Lending with Right Trac Financial Group, Inc., NMLS# 2709 NMLS #1012303

A recent survey prepared for NeighborWorks America indicated that 70% of American adults are not aware of down payment assistance programs that arehome buyers available, according to a recent press release.  NeighborWorks America is a national nonprofit community development corporation based in Washington, D.C.  The corporation has local organizations around the country and provided more than $100 million in down payment assistance last year.

While there are programs available that do not require a down payment, like VA mortgage loans and USDA guaranteed or direct loans, there are programs that will provide grants that can be used by first-time home buyers in particular, to help complete a home purchase. In some areas these programs are provided through state or local governmental agencies.  Down payment assistance can also be obtained by a gift from a relative or through any available employer sponsored program.  Gifts from relatives must not be subject to repayment, whereas employer sponsored programs may be in the form of loans or grants.

HUD previously implement rules to limit the source of down payments on transactions involving FHA insured loans.  HUD will not allow any third party that has a financial interest in the transaction to provide down payment assistance.  For example, a seller cannot provide down payment assistance, but can provide seller concessions to help defray closing costs.

NeighborWorks America organizations around the country can be found at neighborworks.org  Look for the "network directory on the right hand site of the web page.  They do have offices in the major cities in CT.  I have not explored their locations in all states, but the website is user friendly.  It is certainly an option worth pursuing in an effort to secure affordable housing for a potential buyer who may not otherwise be aware, or who may not have sufficient available assets.

Posted by

Your Dedicated Mortgage Consultant!

Randy Kirsch, NMLS #1012303

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 X120

Fax: 860 647-8940

Cell: 202-827-6434

Email: randy@righttracfg.com

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The blogs written and published by Randy Kirsch are not in any manner whatsoever to be considered as legal advice or as a legal opinions.  If you have legal questions or concerns regarding any area of real estate law or mortgage law you are advised to consult a licensed, competent real estate attorney in your local area to address your concerns and questions.

 

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Comments (4)

George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Randy I am not familiar with NeighborWorks Amarica.  But hopefully NeighborWorks America is not receiving the funds they are contributing towards down payment assistance from Sellers.  I beleive Ameri Dream or something like that was one of the non-profit organizations doing that.


This was a big issue a few years ago, and FHA closed off the loope hole that some of the non-profits were using to circumvent the rule that Sellers cannot contribute towards the down payment.  So Seller were contributing the down payment to a non-profit.  The non-profit then, for a charge to the Seller, gifted the money to the Buyer.  Hopefully that is not what NeighborWorks America is doing and is providing the down payment assistance through legitimate sources.

Dec 10, 2014 08:53 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Randy. Nice job finding this organization that assists families with down payments in order to by homes. I haven't needed to to look for an agency to assist any of my clients, but glad to know that it's out there. Well done!

Dec 10, 2014 06:01 PM
Randy Kirsch
Right Trac Financial Group, Inc., NMLS# 2709 - Manchester, CT
(NMLS# 1012303) Your Dedicated Mortgage Consultant

NeighborWorks America seems to be a legitimate venture George Souto - they have been around for about 35 years and appear at least to run a clean program that is not a screen to circumvent the HUD rules.  They do have about 6-7 offices in CT, in Hartford, New Haven, Waterbury, Stamford.  I have not done any business with them and I do not have any connection with them.

Thanks for sharing.  Make it a great day.

Dec 10, 2014 09:25 PM
Randy Kirsch
Right Trac Financial Group, Inc., NMLS# 2709 - Manchester, CT
(NMLS# 1012303) Your Dedicated Mortgage Consultant

You never know when someone might approach you for a referral to an agency like this Joe Petrowsky - It can be another arrow in the quiver to get a deal done where the potential borrower has little or no resources but strong income.

Thanks for sharing.  Make it a great day.

Dec 10, 2014 09:27 PM