Many residents in the United States struggle to save enough money to afford a home. Some strive to put aside fund every paycheck to support the costs. Offering a bigger down payment for a home may help you qualify for financing programs and obtain better mortgage rates. However, some cannot seem to save enough to meet minimum requirements. At this point, if you are serious about buying a home, you can research programs to help support your down payment costs. Professional Mortgage Solutions in Rego Park, NY is here this week to help you learn more how these assistance programs work.
What is a Down Payment Assistance Program?
Down Payment Assistance Programs are a type of financial aid for people that cannot afford to put down a lot of money when purchasing a home. There are a wide variety of Down Payment Assistance Programs (DPAPs). Many of these programs are offered through nonprofit or government agencies in partnership with various financial institutions. When you start to research DPAPs, it is important to understand the various ways that they operate.
Grants for Down Payment Assistance
Some DPAPs come in the form of a grant, which may be a great deal, since they usually do not require a repayment as a loan would. These grants may be restricted to certain types of homes or geographies. They may come with requirements to live in the home for a certain number of years and restrict the terms under which you can resell, or profit from the home. You can look up various down payment grants and see which terms they carry through local agencies or governmental organizations.
Tax Credits for Down Payment Assistance
Another type of DPAP comes in the form of a tax credit, so, technically speaking, it not direct funding for a down payment. However, the program will reduce the taxes paid by the buyer so that they can save more money to support down payment or closing costs for their home. There may be restrictions with this program as well. In some cases, it is limited only to first time homeowners.
Mortgages for Down Payment Assistance
The most obvious type of DPAP comes in the form of a loan. Typically, the loan is made as a second mortgage. The first mortgage covers the cost to purchase the entire home, while the second mortgage will cover the down payment investment. Many governmental and nonprofit agencies offer this type of assistance with zero or low-cost interest rates. You can also get a fixed-rate for this mortgage, so that you have a predictable form of funding.
Professional Mortgage Solutions in Rego Park, NY is happy to answer any questions you may have about Down Payment Assistance Programs (DPAPs).