First Time Buyers Look to Tap Alternate Funding Avenues
In an improving residential real estate market, first time buyers may flinch at the greater loan amounts that accompany larger price tags. Lending standards have also put some first time buyers through a tougher gauntlet than faced during many previous eras. Although some easing is now beginning to take place, some Mecosta County first time buyers can still find it difficult to secure the level of funding they seek. For them, there are a number of alternative funding possibilities that first time home buyers in Mecosta County may wish to explore. Here are some of the assistance programs that can serve buyers as they go about buying that first home:
The U.S. Department of Veterans Affairs (VA) Home Loan Guaranty Service is the most well-known of the programs, providing government guarantees for loans to service veterans and those on active or reserveduty. It also provides assistance to widows or widowers of veterans. Some VA loans require no deposit, and although the size of loans are limited and vary by area, the limits aim to make possible purchase of a mid-sized home. The actual loans are made by private lenders; the portion that is guaranteed by the VA protects the lender from losses should the veteran prove unable to repay the loan.
The HUD Basic Home Mortgage Loan 203(b) is a program that provides mortgage insurance to purchase or refinance one-to-four unit principal residences. Applicants who meet standard FHA credit standards and who pay the insurance premiums are eligible for approximately 96.5% financing provided by FHA-approved lenders.
The USDA Rural Development Single Family Housing Guaranteed Loan Program is a rural development grant designed to help low- and moderate-income rural applicants purchase a home. The rural development program works with local lenders to provide 100% financing for eligible home buyers. In order to qualify for the program, an applicant must live within one of the eligible rural areas and have a total household income that does not exceed the established limits for that area.
The Community Development Block Grant is one of the nation’s oldest housing assistance programs. The goal of the CDBG is to make funds available to urban communities to be disbursed to citizens in the low and moderate income range. The money allocated to the CDBG is provided to local government authorities, who have broad latitude in how they allocate the funds to create and upgrade local housing conditions. Examples are shown in the video Role of the CDBG.
Each program has its own specific application format, which may involve completing a grant application package or simply applying for a loan from an approved lender. More detailed information can be found on each relevant agency’s website.
Securing financing is just one step of the home-buying process — though a first time buyer may be excused if they find it an intimidating one. Whether you are a first time buyer in Mecosta County or a seasoned homeowner, give me a call: I’m here to help every step of the way!