Closing Assistance Can Be the Difference Between Buying and Renting
A young client was considering renting.
For the neighborhood that he was considering, I knew that the price to purchase a home would yield a mortgage payment that was about the same as renting and probably lower.
He was interested in buying, but was thinking that he did not have enough money for the down payment and closing costs.
He did not know what these numbers were; he just had horrible visions of dollar signs floating around in his head.
His concerns could have been true, if it were not for the many sources of money to help a buyer with the closing costs and down payment.
For a house that he would like to purchase, the closing costs and down payment were nearly $23,000, which is much more than he had available.
We looked at several sources of money and were able to come up with a plan that would bring that $23,000 that he would have needed to just over $3,200.
The sources that he would use were:
- The Seller, who can contribute up to 6.0% on a FHA deal. We only asked for 3.0%.
- The Federal Home Loan Bank of Atlanta will do a $4 match to every $1 that the Buyer puts into the deal up to $5,000.
- The Maryland Mortgage Program has several elements to it, but we only needed to use one which allowed for the Buyer to get $5,000.
Suddenly, the amount needed was less than the amount that he would have needed upfront if he were to rent.
Of course, there is more to these programs than walking up to an ATM and withdrawing cash, however they are available and usually are worth the effort.