Q & A: I’ve heard of programs in certain county/cities that have money set aside for people to help with down payment assistance. What are these programs and how can I see if I qualify for this?

There are various first time buyer programs and down payment assistance programs available right now.  Some programs are available state-wide others are for certain counties, cities, or even neighborhoods within a city.  Some of the programs can be layered to utilize more than one program at a time. 

Each program has different requirements to qualify for the assistance.  Most programs have an income limit meaning your household income needs to be under their maximum to qualify.  Most require you be a first time buyer but a few only require that you do not own any other residences.  Some require the buyer to show a financial need of the assistance in order to afford the house payment or cover the down payment.  Most require the buyer to take a first time home buyer class prior to closing. 

In order to determine if a buyer qualifies for one or more of the programs they really need to go through a pre-approval with their trusted Bell Mortgage Loan officer.  Each program has its own unique qualification requirements so it takes some time to go through each program to see if a buyer fits the program guidelines. 

Buyers will be asked which areas or neighborhoods they wish to live in so their Bell Loan Officer can qualify them for programs that offer assistance in their areas of interest. 

The majority of first time buyer programs follow the property guidelines for FHA loans meaning the home has to be safe and occupiable as it is sold.  For homes built before 1978 any peeling or chipping paint on the inside or outside of the home or any buildings on the property including fences need to be scrapped and painted to be considered safe.  The reason for that is prior to 1978 there could have been lead in the paint which is toxic if ingested.  Smoke detectors need to be on each level of the home and operational.  There can be no exposed wires and all fixtures and outlet covers need to be in place.  Appliances (stove and refrigerator) are not considered a requirement for FHA but the buyer will need to show they have the funds to purchase the appliances (stove and refrigerator) after closing.  Any rotting wood, broken windows or steps more than 48 inches off the ground without a railing need to be fixed.  If there is a patio door more than 48 inches off the ground with no deck the door needs to be secured so it cannot be opened more than a few inches.  All faucets have to have adequate water pressure with both hot and cold.  The roof shingles have to appear to be in good repair with no missing or severely curling areas.  These are just some of the most common areas looked at but is by no means an all-inclusive list.  Your Bell Loan Officer can refer you to a qualified Realtor to help you in assessing the homes ability to qualify for FHA financing. 

The interest rates with these programs are fixed 30 year rates at or below current market rates.  There is no prepayment penalty and many times they are assumable which means the buyer of your home in the future if they qualify as a first time buyer as you did, are under the income limits in effect at that time for the program, and are approved with the current credit requirements could take over your loan and you would be released of liability.  This is an extremely attractive feature if your loan has a rate that is lower than the current market rates at the time you sell. 

The down payment and closing cost assistance as a norm accrues no interest and requires no payments.  It is either forgivable after a period of time meaning as long as you live in the house beyond that time period you do not have to pay it back.  Or, you pay back the principal amount received when you sell, refinance, no longer live in the home as your primary residence or the end of the 30 years. 

There has never been a better time to take advantage of the low-interest rates and assistance that is available.  Talk to your trusted Bell Loan officer today.  If you don’t have someone you are working with you can contact Cheryl Stuntebeck at 763-360-5114 or cstuntebeck@bellmortgage.com.

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