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The Basics of Down Payment Assistance
Down payment assistance is part of your down payment is usually funded at the state or local level by a nonprofit charitable organization or even a public entity, such your labor union or employer. There are also programs provided by lenders!
A grant-type of down payment assistance, such as those from a nonprofit, must meet two requirements for it to be considered assistance and not a gift. First, it must be available through an application process and second, the grant must be available to the general public. In other words, the grant cannot be created just for you.
Down Payment Assistance from Sellers
Before the laws changed in 2008, sellers could contribute to the buyer’s down payment through a “middleman” service that kept an account for the buyer. Although this option is no longer available, there are ways that the seller can still help you with the down payment.
The trick is to negotiate for other items as part of the home buying transaction. For example, you can ask the seller to assist with the title insurance. You can also ask the seller to help pay for points to lower your interest rate or to contribute to your property taxes.Keep in mind that there is a limit as to how much the seller can contribute. The limits are based on the type of home loan you’re using.
5 Home buying myths
There are a lot of myths about buying a home that are easy to bust.
Here are a few of the big ones:
I need a 20% down payment.
FALSE! This goes back to the days when lenders had far fewer options. Now, you can get a mortgage for as little as 1% down and still have a low monthly payment. The better your credit; the more options you have. Get your score as high as you can BEFORE you apply.
I have to dig up a lot of paperwork.
FALSE! A lot goes into qualifying you for a mortgage, but these days much of the verification process — like collecting pay stubs, bank statements and tax information — can be done automatically by your mortgage lender. Realistically, once you are ready to buy your lender can take it from there.
It will take a lot of time.
FALSE! A good mortgage lender can take your application and give you a pre-approval letter in moments. Many even let you do it yourself online. This way the time is in your hands. Time is on your side.
My bank is the best place to get a mortgage.
FALSE! Banks don’t offer many mortgage choices. An independent mortgage broker in your local community can help you find the best options and the lowest rates.
I need to be “settled down” first.
FALSE! When you buy a home, you’re paying yourself, not your landlord. Don’t keep waiting based on temporary situations, make the sacrifice to prepare for the purchase. Save your income tax, overtime, and extra income. Even with down payment assistance there are some fees you will still need to pay out of pocket such as your earnest money, option fee, appraisal, survey, and even home inspection.
Determining Your FICO Score-Credit scores are calculated using the credit bureaus TransUnion, Experian, and Equifax along with these Five categories, including:
Payment History—Payment history is often used to gauge the likelihood a borrower defaulting on their loan.
Length of Credit History—A long and significant credit history also helps to improve your FICO score.
New Credit—The amount of newly opened credit and the type of account opened is another factor your FICO score.
Type of Credit in Use—Consider the different types of accounts you have.
Ideas to Raise Your FICO Score
The good news is that no matter where your FICO score is right now, it can change! Here are our top insider tips to get a raise your credit score:
Keep Credit Balances Low-Using too much of your open credit can lower your FICO score. Attempt to keep your balances below 20-30%& pay your credit card bills on time!
Keep Credit Revolving-Though it seems like the right thing to do, you don’t want to close your unused account. A simple way to keep it active is to make purchases, like gas or coffee.
Review Credit Score Thoroughly-Review the factors of your FICO report completely. Make sure all the information is correct and notify the credit bureau if you found any errors.