Thanks to the low housing prices combined with the great interest rates that are currently being offered on home mortgage loans, now is definitely a great time to purchase a home. Unfortunately, many people who are poised and ready to take advantage of these great deals do not have the money saved up for a down payment. For those who find themselves in this situation, however, there are options available that can still help them with purchasing the home of their dreams.
While it was once a common practice for banks to provide loans to buyers without a down payment, the recent economic crash has pretty much put an end to that practice. With the help of special down payment assistance programs, however, interested buyers can still purchase a home even if they do not have the money to put down on it.
Currently, Freddie Mac requires mortgage loan buyers to come up with approximately 5 percent of the cost of the down payment and closing costs. First-time homebuyers, however, can obtain assistance with the help of tax credits, grants and other government programs. Those who are interested in learning more about these programs should visit the U.S. Department of Housing and Urban Development’s Website. Here, they can search through a directory that provides information about down payment assistance programs that are specific to each state, county and locality. Some programs that may provide assistance to homebuyers include:
- HOME Investment Partnerships Program
- Community Development Block Grant Program
- American Dream Downpayment Initiative
- Neighborhood Stabilization Program
The amount of assistance provided by each of these programs is dependent upon a number of factors, including the geographic location and the financial needs of the buyer. Depending upon the program and the individual qualifications, it is possible to receive anywhere from a few hundred dollars to several thousand dollars through one of these programs.
When obtaining assistance through one of these programs, it is important to understand certain differences. With grant programs, for example, the homebuyer does not have to repay the funds that are provided. Certain restrictions will apply with these types of programs, however, as grants generally require meeting certain income guidelines and the buyer usually must remain in the home for a certain period of time after making the purchase. Loan programs are different from grants in that they must be repaid, but the loan may be deferred for a period of time and may have a very low interest rate. In some cases, these loans do not accrue any interest at all over a certain period of time.
Contact your Colorado mortgage professional for more information. If you don’t already have one, contact us.
