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Government Help
Believe it or not, Uncle Sam wants you to own your own home! As part of an ongoing effort to reduce the gap in home ownership for minorities, all levels of government issue grants to help with down payment and closing costs. They are called community development grants (loans). They are only for owner occupied properties. They usually take the form of a self cancelling lien on the property. That means, for example, that what starts out as a $10,000 lien at closing is forgiven in increments of 1/60th per month so that after 5 years, the balance becomes zero and it is automatically released. Be careful though, if you sell or in some cases even if you still own but no longer reside at that property, you have to pay it back. Other times it can even make refinancing more difficult. They will allow a refiance that reduces your rate or payments but they might not allow a cash out refinance. Just be sure you ask lots of questions so you know what you are getting into.

Community Re-Investment Funds:
If you are the handy type and plan to buy and build in some immediate sweat equity, this type of grant may be just the thing. Neighborhoods targeted for re-investment or revitalization can be a great choice because after the revitalization process in an area reaches a critical mass, property values (also known as: your equity) begin to rise very nicely. Your friends and family may start referring to you as "The New Rockefeller!" It may or may not happen just after you finish your remodeling and fix up projects, but at some point your neighborhood may suddenly be the "in" part of town and your investment will blossom.

Gifts and Indirect Assistance
Gifts from family are acceptable to almost every lender and loan program. Government loan programs, FHA for example will allow family gifts but they don't allow the seller to help you buy their house. Not to worry, however, congress already approved a work around. Instead of giving you the money directly, the seller can agree in writing to make a "donation" at closing, to one of these work around programs. Having that pledge in hand, these programs will "grant" you up to 7.5% down payment assistance (there are dollar limits as well) that you don't have to pay back. You may have heard of programs like: Ameridream or Nehemiah, for example. Unlike the community development grants that can tie you up a little bit. After the closing, you are the home owner and you can make decisions as if you had put your own money down.

Direct Seller Assistance
Many lenders have non-government options that will allow the seller to help you buy their house, so you and they can move on with your lives. Through negotiation - it's nice to have an experienced Realtor or Attorney for this part - the seller can provide direct assistance - AKA, a seller concession.
Here's the basic idea: The seller sets a price based on what they'd like to get which is at the high end of what the market has been allowing for a home like their's to sell for. Let's say $227,499 when they know they will be happy to get $210,000. They set a price that left them some negotiating room.
Every buyer to view their house will have already checked out the local market and will have fixed their starting offer at the low end of what the local market says is reasonable for a house like that. So the buyers plan to offer $200,000 while knowing that they can afford, and will be happy with, as much as $212,000.
You will offer to buy the house at the full asking price with a seller consession of 7%, meaning a contribution towards your down payment and closing costs of $15,924. or an effective sales price of $211,575. Naturally, this won't work if they got 4 other offers today at $230,000 and higher, but if the market overall or in that area is a little sluggish and / or the seller needs to move on because they have been transferred out of town or because they have been paying 2 mortgages for a few months now, this may work out as a winning solution for every one.

The VA
100% financing has actually been around for a long time. Our service men and women, in honor of their service to their country, have been able to buy homes with no down payment for quite some time. If you are a veteran or a qualifying widow or widower, contact the VA Loan Eligibility Center at 1-888-244-6711 or visit the VA website to learn more.

The moral of the story is: You can if you know how and if you don't know how, ask! Make yourself an informed consumer, do the research (probably why you are reading this), get educated. There are community organizations that hold classes on these issues and on the whole home buying process. (We do too, for that matter. Feel free to call us!)

If you have some money that could be used for down payment. Get your mortgage advisor to show the how everythings breaks down with and without down payment.

Find people who can help answer your questions. Two top candidates would be a Realtor and an Attorney that has focused their practice on Real Estate.

Research the area before you buy. No one can predict a company closing down or relocating, leaving the community and its property values without an anchor, but scan the internet for newspaper articles and talk to realtors and residents to get a feel for the local trends. Up trends are great! Down trends... well, its better to know about them before hand. Maybe you're a gambler and you buy anyway. Some people make that work for them too!

Since that Murphy guy thought enough to make a law about it, keep in mind that things happen. Be prepared. Hang on to some cash. Don't put it all down on the house. Don't spend it all on furnishing the house after you buy it either. Be as prepared as you can reasonably be for the unexpected. That will help to make you a happy, healthy, home owner!