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Kristina and Robert Smith desperately wanted to buy their first home,
but with only several hundred dollars in savings, they could not qualify
for a loan.
Then the couple heard about The Buyer's Fund -- one of a number of
programs nationwide that provide low- to moderate-income families with
cash down payments to buy homes. Instead of thousands of dollars, the
Smiths had to come up with only about $600 to complete the purchase of a
new three-bedroom, one-bathroom home.
"We've been here since August and still can't afford to put in our
yard or window coverings, but that's OK -- we own our own home,"
Kristina Smith said.
Programs such as Orem-based The Buyer's Fund (marketed under the
name Neighborhood Gold) and another run by the Nehemiah Corp. of
Sacramento, Calif., are assisting Utahns who otherwise may not be able
to buy homes because they lack up-front cash.
No one knows exactly how many homes in Utah or other states sell
through such programs, but they are involved in a growing number of
sales.
The Buyer's Fund, for example, has facilitated more than 12,700
sales nationwide since April 2000, including 3,000 in Utah. Home
buyers like the option.
Each program operates a little differently, but all are designed to
help buyers find a way around a federal law that prohibits sellers from
providing down payments to buyers. In order to qualify for a home loan,
buyers need cash down payments of about 3 percent or more.
Through programs such as Nehemiah and The Buyer's Fund, sellers
provide money for buyers' down payments directly to the organizations,
which in turn grant the money to buyers in the form of down payment
assistance.
So, a seller who lists a home for $100,000 pays $3,000 in down
payment assistance to one of the programs, plus a fee ranging from $500
to $1000, accepting the fact that they will only get $96,000 in the
sale. The buyer receives the down payment assistance from the program
and agrees to pay a fee for the service.
To avoid adding more costs to the loan it is wise to look into a
loan that includes closing costs. Rather than adding another $2000 to
$5000 to the loan. You can usually streamline Re-finance an FHA Loan to
a lower rate (if available).
Other
programs such a Utah Housing Home Loan program Provide 100% percent
financing and are subject to income and other limitations.
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