DOWN PAYMENT ASSISTANCE:
HOW DOES IT REALLY WORK?
Here is an idea that has become more attractive in today's buyers market. Down Payment Assistance is a way to get a client off the fence and into a home. With a large influx of potential homeowners wanting to move closer into Phoenix's core market, advertising 100% purchases will peak a potential buyers interest. With this being the only true 100% financing option for the valley's core market, excluding the rural financing options, this is a great option for clients who do not have 3-5% to put down. Along with attracting buyers, this may be a benefit to include in your listing presentation as a way to sell that clients home in a more reasonable timeframe.
The term "Down Payment Assistance" sometimes conjures up negative thoughts or some have already had a rough experience with it - but when it comes down to it, who wouldn't benefit from an influx of extra money and clients?
The most important thing to know is that basically any qualified home-buyer can utilize down payment assistance - contrary to popular belief, it is not reserved for low-income individuals with less-than-perfect situations. It can help them too, but as a consultant to your client, you should take advantage of every opportunity possible.
So, how does one actually get down payment assistance? In other words, who's giving out all this free money? Know this: it's not one particular person or institution - when talking about down payment assistance, it's usually seller-funded.
All seller-funded means is the seller of the home is making concessions to help your client buy the home. But, because it is illegal for sellers to just give the money to buyers outright, down payment assistance providers like Nehemiah® and AmeriDream® are used.
Here is the breakdown of the process of obtaining down payment assistance:
- Contact Strategic Mortgage and we can help walk you through the process.
- You (The Real Estate Agent) must negotiate seller concessions and down payment assistance.
- When writing a purchase agreement (offer), include the contingency that, upon accepting the offer, the seller will contribute to a down payment assistance provider. You choose the amount - Nehemiah allows up to 6% of the final sales price and AmeriDream allows up to 10%. Each provider requires a fee, too - most are under $500 and if you write it into your purchase agreement, you can get a seller to pay that too.
- When the seller accepts, they donate the agreed upon amount to the down payment assistance provider.
- Prior to closing, the seller sends the money to the down payment assistance provider and your lender arranges to get it from them to fund as a part of your new loan.
- Close!
*Once the seller agrees to your offer, Strategic Mortgage will show you how to use the money - as part of the down payment, to pay points for a lower rate, or for closing costs. The keys factors involved in down payment assistance programs are the lender and real estate agent.
For more information on Down Payment Assistance Programs please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
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