September 28, 2022

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The home veterans

First-time homebuyers can take advantage of local, national grants

8 min read

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The traditional method of saving for a house — from moving in with family members to forego rent or establishing a stash for a future down payment — is a timeless tactic to achieve homeownership. But in today’s housing market, and with today’s prices, many first-time buyers are looking for a seat at the closing table sooner than their savings might allow, and they’re making it happen.

Though the local seller’s market remains competitive with limited inventory available in the Capital Region, first-time homebuyers – with a team of professionals in their corners —  can make winning offers, close on time and make smart investments without breaking the bank.

“One of the most overlooked things when it comes to buying a home is having a smart financial strategy,” said Michael Rankin, mortgage consultant and president of ClearPath Mortgage Solutions in Latham. “There are more options nowadays than the old-school route of a conventional loan and 20 percent down, and homebuyers need our guidance and expertise in order to complete a successful purchase.”

First-time buyers, through varying financing options, are able to take advantage of creative solutions to cover a down payment, secure a mortgage and pay closing costs. Local municipalities as well as state and national governments can provide assistance or resources to aid in the purchase of a first home.

“It’s possible to pay nothing or very little at the closing table, but you have to be willing to do the work,” said Ryan Yamin, a licensed real estate agentwith Property Pro Realty Group in Waterford. Yamin began investing at the age of 23 when he purchased his first multifamily property in Troy. He now uses his experience and passion to help clients get into their own first homes – many of which are also multifamily residences.

“I had a recent client who took advantage of a first-time buyer program with a local credit union and covered her entire closing costs,”  Yamin said. “While it wasn’t the easiest thing to go through for the buyer, it saved her a ton of money.”

Purchasing a multifamily property


Rankin and Yamin strongly believe first-time homebuyers should consider purchasing a multifamily property where they can occupy one unit while renting out the others. Mutifamily homes provide opportunities to save at the point of purchase, and to add supplemental income to cover the cost of the monthly mortgage payment.

One piece that makes securing the financing to purchase a multifamily home easier is the ability to use up to 75 percent of the prospective rental income as qualifying income, Rankin said. When a buyer is in the market for a single-family home, the pre-approval amount could be significantly lower when using only current income to qualify.

Jared Eide received a higher pre-approval for his two-family property in Cohoes by going this route, and saved money at the closing table with an FHA loan, a government-backed mortgage that allows buyers to purchase up to a four-family unit with a 3.5 percent down payment. He also took advantage of seller concessions and financed a portion of closing costs, taxes and mortgage insurance into his loan.

“It was a nice surprise to learn I didn’t need as much cash to close as I originally thought,” said Eide, who worked with Premium Mortgage Corp.’s Capital Region office, along with Yamin as his agent, to walk him through the process. 

Details on some of the loans, grants and programs mentioned in this story, and beyond:

Some of the grants mentioned in this story, and beyond, include:

FHA Loan details for first-time buyers:

•    75 percent of prospective rental income can be used to pre-qualify
•    3.5 percent down payment for up to a four-unit property
•    Buyers must occupy the home as a primary residence
•    Easier credit score requirements; 580 is considered in good standing with most FHA-backed lenders
•    Seller concessions: up to six percent of the sale price of the home can be used to pay some of the buyer’s closing costs
•    Income from rental unit(s) can cover a portion or the entire monthly mortgage payment

Restorative Housing Justice Fund (Touhey Homeownership Foundation)

This grant provides up to $10,000 in down payment and closing cost assistance to African American or Black first time homebuyers in the Capital Region, with a mission to help Black homebuyers overcome discriminatory housing policies and barriers to homeownership.

Eligibility:

•    First time home buyer
•    Identify as African American or Black
•    Property purchased must be located in the following cities: Albany, Amsterdam, Schenectady, Rensselaer, Troy, Watervliet

Use of funds: Down-payment or closing cost assistance

Award amount: Up to $10,000 in the city of Albany; up to $5,000 in other Capital Region cities

More information: https://www.buildingblockstogether.com/resources

Homebuyer Dream Program (HDP)

This grant provides up to $10,000 towards down payment and closing cost assistance to eligible first-time homebuyers purchasing a home through community-based, member lenders part of the Federal Home Loan Bank of New York. 

Local lenders include: Capital Communications Federal Credit Union, First National Bank of Scotia, Glens Falls National Bank, SEFCU, Sunmark Credit Union and more.

Eligibility:

•    First time home buyer
•    Must earn at or below 80 percent of the Area Median Income (AMI)
•    Available for a home purchased in New York, New Jersey, Puerto Rico or the U.S. Virgin Islands

Use of funds: Down-payment or closing cost assistance

Award amount: Up to $10,000

More information: https://www.fhlbny.com/community/housing-programs/hdp/

Town of Colonie Down Payment Program

This program in the town of Colonie provides up to $14,000 for down payment and closing costs for the purchase of a single family home in the Town of Colonie, or villages of Colonie or Menands. This is a deferred loan that becomes a grant if buyers occupy the home for 10 years.

Eligibility:

  • First time home buyer
    •    Must qualify for a conventional loan
    •    Property purchased must be located in: Town of Colonie, Village of Colonie, Village of Menands
    •    Property meets Federal Housing Quality Standards at the time of closing
    •    Must be a primary residence single family home, condo or townhouse

Use of funds: Down-payment or closing cost assistance

Award amount: Up to $14,000

More information: https://www.colonie.org/departments/communitydev/first-time-homebuyer-program


Today, after taking some time to upgrade the units and approve the appearance and functionality of the property DIY-style, Eide is leasing his second apartment to a tenant and using the rental income to pay for the mortgage and cover costs he incurred during renovations.

“I can’t wait to use what I’ve learned to continue investing in at least one other multifamily property before I can get into a single family ‘forever home’ in my ideal five-year plan,” Eide said.

Homebuyer grant programs

Grants are a creative option for first-time homebuyers to find the resources needed to purchase a home. While there are national grants from the U.S. Department of Housing and Urban Development, there are a number of state-funded and Capital Region-based grant programs available that often go undiscovered during the buying process.

“There is no centralized resource for people to get information about grants that can be used to purchase a home,” said Virginia Rawlins, founder of Building Blocks Together, which aims to educate potential homebuyers on the purchase process as well as available local funding opportunities. “It’s always been more of a referral thing, so if you don’t know about grants, you probably aren’t using them.”

Rawlins primarily works with first-time buyers, and provides services as a housing consultant to offer homeowner education courses and walk buyers through the path to home ownership. Her long-term goal is for Building Blocks Together to serve as a real estate investment vehicle for minorities in the Capital Region.

BBT is administering the Touhey Homeownership Foundation’s Restorative Housing Justice Fund, a program providing down payment and closing cost assistance to qualifying Black first-time buyers purchasing in select Capital Region cities. Other qualifications to file an application include satisfying income guidelines, or buying with the intent to rehabilitate the home to meet code requirements.

Additionally, Rawlins says buyers have to complete a homebuyer education course as part of the process, and if a grant is awarded, are subject to pay back a portion or the entirety of a grant if they do not occupy the residence for the entire specified term, which can range from five to 10 years.

Create a smart strategy

Even when the money is in order, there are still existing factors that can impact whether or not a deal gets done. All parties involved in the sale of a home – from the buyers and sellers to the mortgage professionals and realtors – all express concern in today’s market that a sale can fall through in its final stages. And so, there are also creative ways to prevent a critical error from happening on the back end of a transaction.

“If you want to win as a buyer, you need to think like a seller,” Rankin said. “There are things you can do to reduce the risk of the seller and help build your case as the right purchaser for the home.”

At ClearPath Mortgage Solutions, professionals representing the buyer send a video recording to the seller’s realtor, listing out the buyer’s credibility while also doing what they can to humanize the transaction.

“You can’t really write a love letter to the sellers anymore about why you deserve the house,” Rankin said. “But people do want to work with someone who brings accountability, an understanding of the local market and an overall confidence – and we can help communicate that.”

Considerations from a seller’s perspective

•    The seller wants to make a profit, and is likely using the money to purchase another home
•    The seller cares about the terms of the deal, specifically the timing and flexibility of the closing
•    The seller wants to minimize their risk throughout the transaction

Strategies for the buyer

•    Develop an appraisal gap strategy with your mortgage coach if the home does not appraise for the purchase price
•    Reduce the risk of the seller by increasing the inspection threshold from $1,500 or waiving elements of the inspection that are less important to the buyer
•    Complete homeowner education course and grant applications during the pre-approval phase of the buying process
•    Consider being flexible on the closing date and timeline, or offer a lease-back option to a seller that needs to remain in the house beyond the closing
•    Work with a local mortgage lender vs. a national company to establish a local understanding of the market and confidence in the deal

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