Some CDC' S Even Allow Previous Homeowners To Get Into The Program

There are a growing number of home buyers who have found free money to buy a home.

Some CDC's even allow previous homeowners to get into the program. These are grant- loans offered by the Community Development Corps( CDC's) which are local government agencies specifically designed to help low income families purchase their first home. Many local governments have started home loan subsidy programs for emergency workers( EMS, hospital workers, Police, etc. ) so they can purchase affordable housing on their city or county salaries. Their funding is allocated by the city, county or state government and is unpredictable because of funding crises in local and state governments. These same governments have also extended the funding to the public to qualified buyers. If you would like to apply for a loan, you should begin immediately to get qualified because there is usually an educational program associated with the loan. Most carry guidelines that must be strictly adhered to so that the loan becomes a grant and does not have to be repaid after a number of years.

While only loans are mentioned previously, many of the funds disbursed are actually grants and not meant to be paid back. The loans are never transferable to someone buying the home, even if they are qualified in the CDC program. The amount of the funding varies and is determined by the need of the applicant, the expected purchase price of the home, the amount of, and most importantly the funding the CDC gets. There are seldom pre- payment penalties, if the loan, but remember is kept for a certain term, there may be no repayment required. Typically, it is quoted to the perspective homeowner in a flat dollar amount, such as$ 40, 000, which will be about 20% of the purchase price of a home for which the applicant qualifies. His competition is other home buyers that can get conventional financing, so the process of finding a home can be frustrating. Sometimes the applicant can also apply for repair monies, usually about$ 5, 00 The applicant must look for a home to buy while waiting for his funding.

An issue of the loan process is that it usually takes 60 days, once a purchase contract has been signed. Often time's sellers would rather sell at a lower price rather than waiting for the uncertainty of the CDC funding. This unusually long closing time is a hardship on the buyer and seller, but seems to matter little to the CDC. The CDC also requires that the applicant get pre- qualified by a lender for the difference of the grant money and what is owed to purchase the home. Most CDC's have a maximum interest rate the borrower can pay, so this could kill the purchase. It is important that the applicant uses a commercial bank as a lender because a mortgage broker may put part of his commission on the" backend" of the loan, often resulting in a higher interest rate. However, there is an industry secret to overcome this which is to have the seller" buy- down" the interest rate of the loan by giving the lender a set amount at the closing as part of the closing costs.

The CDC loan process may be intentionally complicated so that the number of applicants remaining after the elimination process includes only the strongest. The larger this amount, the lower the interest rate for the buyer. Expect many requirements to change throughout the loan process and before closing. Persistence and perseverance is the key to owning your own home and having the government pay for a big portion of it. This is very annoying, but ask yourself this, "Who else is willing to gift you with$ 40, 000? " Do whatever is asked even if you don' t understand why, or if you have done it before, because there are probably ten people behind you waiting for the same funding.