There are a few companies whose sole purpose is to facilitate transactions by helping provide downpayment grants to otherwise qualified buyers.
The exact a small fee for their service. The downpayment funds actually come from the Seller.
The Seller makes what they believe to be a tax deductible contribution to a non profit organization. The NP in turn, makes a grant to the Buyer.
This technique is usually used in slow markets to help sell homes to marginally qualified Buyers without downpayment or closing costs.
It isn't so much the Buyer qualifying for the grant, but rather the Seller willing to participate in such a transaction.
Having a background in NP management, I don't think that the Seller's contribution qualifies as a 'charitable contribution' and would not survive an audit. But that';s the Seller's problem. A grant/gift would have no impact on the Buyer.
One such program is called the:
"Futures Home Assistance Program"
Not real sure how it works but that's what my buyer had. The MB (Mortgage Broker) suggested this program because she was a first time homebuyer with no $ down and needed 100% financing.
She only had to come up with the Closing Costs...3% from her or the seller...depending on the situation.
In Southern California a procedure is followed which to me is pure fraud. Other then the fraud itself is an ongoing economic intrusion. ie: property prices, not values continue to rise to the point that the requirement to own a house will take about one half the homeowners income. In some cases more. It goes like this. Property goes up for sale and is over listed about 20%. The Broker dealing in a minority customer base offers the property at a nothing down price. This also may include the closing costs. The Broker a participant in a non profit organization arranges the downpayment payment from that fund. The closing costs are a contribution from the Seller. All this money is covered by the overpricing of the home. which overage sum is given to the broker, the friendly appraiser if necessary. Or a JOHN DOE insert. The Seller gets top market the property appears to have sold for 20% more and that statistic becomes a comparable for future sales. Up goes the market and it is all peanut butter the top 20%. The Buyer cannot make the payments, after running thru all the cards he can at high interest rate and the street loans etc. goes into foreclosure and son of a gun Hud finaly lays it off thru Golden Feathers on the market for its last sale price. Brokers then repeat this scam over and over and the low priced market continues to advance. Several convictions occured during the last few weeks. But I do not think it stops the trend.
As an investor, speculator, champion of the working ??? Classes. I now must revalue all offers to purchase or correct, cause the top 20% of value is fuzzy. I can handle it but I do not think FHA, HUD and the rest are that fast on their feet. Reminds me somewhat of the peacetime trained generals at the beginning of the United States Entry into WWII. The planning of the early 8th AF missions looked a like total lack of knowledge of three dimensional warfare. Well this is a little bit similar.
My answer to the above is a fudge. I bargain in at true cost. I include in the money coming out in payments enough funds to convert the garage into a unit, single with bath. no kitchen (on Permits).This little addition produces enough income so that my buyer can get down to the 33% housing costs versus income which makes possible a ownership that is affordable. I would love to spread it to two units but most zoning will not allow. So here I go, a broker, a contractor and a financial planner for our newly arrived minoritys from whom we once upon a time stole this lovely state. Time does march on. Lucius soon to be called Lucio and I like it.
There are a few companies whose sole purpose is to facilitate transactions by helping provide downpayment grants to otherwise qualified buyers.
The exact a small fee for their service. The downpayment funds actually come from the Seller.
The Seller makes what they believe to be a tax deductible contribution to a non profit organization. The NP in turn, makes a grant to the Buyer.
This technique is usually used in slow markets to help sell homes to marginally qualified Buyers without downpayment or closing costs.
It isn't so much the Buyer qualifying for the grant, but rather the Seller willing to participate in such a transaction.
Having a background in NP management, I don't think that the Seller's contribution qualifies as a 'charitable contribution' and would not survive an audit. But that';s the Seller's problem. A grant/gift would have no impact on the Buyer.
Justmjc,
One such program is called the:
"Futures Home Assistance Program"
Not real sure how it works but that's what my buyer had. The MB (Mortgage Broker) suggested this program because she was a first time homebuyer with no $ down and needed 100% financing.
She only had to come up with the Closing Costs...3% from her or the seller...depending on the situation.
Clif
In Southern California a procedure is followed which to me is pure fraud. Other then the fraud itself is an ongoing economic intrusion. ie: property prices, not values continue to rise to the point that the requirement to own a house will take about one half the homeowners income. In some cases more. It goes like this. Property goes up for sale and is over listed about 20%. The Broker dealing in a minority customer base offers the property at a nothing down price. This also may include the closing costs. The Broker a participant in a non profit organization arranges the downpayment payment from that fund. The closing costs are a contribution from the Seller. All this money is covered by the overpricing of the home. which overage sum is given to the broker, the friendly appraiser if necessary. Or a JOHN DOE insert. The Seller gets top market the property appears to have sold for 20% more and that statistic becomes a comparable for future sales. Up goes the market and it is all peanut butter the top 20%. The Buyer cannot make the payments, after running thru all the cards he can at high interest rate and the street loans etc. goes into foreclosure and son of a gun Hud finaly lays it off thru Golden Feathers on the market for its last sale price. Brokers then repeat this scam over and over and the low priced market continues to advance. Several convictions occured during the last few weeks. But I do not think it stops the trend.
As an investor, speculator, champion of the working ??? Classes. I now must revalue all offers to purchase or correct, cause the top 20% of value is fuzzy. I can handle it but I do not think FHA, HUD and the rest are that fast on their feet. Reminds me somewhat of the peacetime trained generals at the beginning of the United States Entry into WWII. The planning of the early 8th AF missions looked a like total lack of knowledge of three dimensional warfare. Well this is a little bit similar.
My answer to the above is a fudge. I bargain in at true cost. I include in the money coming out in payments enough funds to convert the garage into a unit, single with bath. no kitchen (on Permits).This little addition produces enough income so that my buyer can get down to the 33% housing costs versus income which makes possible a ownership that is affordable. I would love to spread it to two units but most zoning will not allow. So here I go, a broker, a contractor and a financial planner for our newly arrived minoritys from whom we once upon a time stole this lovely state. Time does march on. Lucius soon to be called Lucio and I like it.
Nehmia is another one. I don't think I spelled it right, but they do down payment assitance.
Go to google or yahoo and type in (with quotation marks)
"down payment assistance"
Any stipulations with these programs? Have anyone ever used them effectively?
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