Coming up with a down payment can be a very intimidating task and a seemingly unattainable feat for some. Down payment assistance is one of the most popular web searches for home buyers. And why shouldn’t it be if there is a way to help get into a home without needing to save $10,000 or more?
The common misconception I keep getting on the inquiries about the down payment assistance grants (DPA) is that they are being perceived as “stand alone” grants. And that this is “free” money from the government. Both assumptions are incorrect, they are neither. They are referred to as grants because you are not required to pay them back. But here is the truth, you are paying them back. These grants work with your loan, they are not a separate form of funds that you receive outside of your home loan. It is in your home loan. Make sense?
The DPA programs have a slightly higher rate than your standard FHA or Conventional mortgage. This is how your DPA is funded, there is really no such thing as “free” money. There is a cost to everything, and these rates are not flexible, every lender that is an approved lender for these programs get the same rate, it is not something you can “rate” shop. The main competition between lenders would be the programs they are approved with and having the availability to offer diversity with ability to offer multiple loan programs. This means that if you don’t fit into one DPA program you could be eligible for another.
Now, that said, this does not mean that these programs are not good, they are great and very much needed. Even with a slightly higher rate/cost, if this is the only way you can achieve your home ownership dreams, then why wouldn’t you use it? If you were stranded on an island and a boat came by to take you home, would you take it? Exactly.
If you would like to learn more about the down payment assistance programs and would like to see if you qualify, please contact us.