Last week in this blog, we looked at the first five myths associated with Down Payment Assistance programs – programs that can make the difference between being able to buy a home and not. Today, we’ll look at the final five myths. The information is in a booklet with the same title as this article, which may be accessed at downpaymentresource.com
Myth # 6: Down payment assistance is only compatible with FHA loans.
Not true. “While FHA loans are commonly used with down payment assistance, it doesn’t mean that other loan products are off the table,” according to the booklet. Many down payment assistance programs are compatible with FHA, VA, USDA (United States Dept. of Agriculture) and conventional mortgage loans.
Myth # 7: Down payment assistance dollars are never forgiven.
The good news is that not all programs have to be repaid. “There are a variety of programs available, including some that defer payments or interest, and others that offer grants or forgivable loans,” the booklet continues.
Myth # 8: Down payment assistance programs guarantee longer closing timelines.
Not necessarily. While some of these programs may take a little longer than a typical loan, researching the loans in the early stages of looking for a home will give you a jump-start on the loan process. In short, “you’re trading a little extra legwork to gain immediate equity and retain some of your savings,” the booklet states.
Myth # 9: Sellers won’t accept offers with layered financing.
Possibly, but “In fact, down payment assistance may cover items like closing costs and other seller-paid costs, allowing the seller to gain even more. When agents and sellers open their minds to buyers taking advantage of homebuyer programs, it can help all parties involved,” the booklet.
Myth # 10: A bigger down payment is always better.
A bigger down payment may be better (in terms of eliminating Private Mortgage Insurance (PMI) and providing a better mortgage interest rate), but the number one reason most buyers wait longer than they’d like to buy a home is because they lack the down payment and closing cost money. “Today’s down payment programs allow you to retain some of your savings for long-term homeownership success. Plus, during the application process and required homebuyer education, new homeowners will learn about the responsibilities and expenses of home ownership…,” the booklet concludes, making them more successful homeowners going forward.
There you are – lots of reasons to explore down payment assistance programs when the time comes to purchase your home, and almost no reasons not to.