The Many Options for Home Mortgage Assistance
Since the end of World War II a big part of the American dream has been to raise a family and own your own home. Unfortunately, neither of these tasks is necessarily easy. When it comes to purchasing your first home, there are several hurdles one must overcome such as saving for a down payment, procuring a mortgage, and finding a property that meets the needs and desires of your family. Due to the economic circumstances of the last several years, many people find they need mortgage assistance in order to purchase a home or stay in the one they currently own.
Mortgage assistance is available through several different means. For first time home buyers there is down payment assistance, government grants, and low or no-interest loans. For current homeowners struggling with their monthly payments the possibility of government-backed refinancing loans is a possibility. We'll discuss all of these options throughout the course of this article, but for specific details that apply to your situation, consult an experienced mortgage broker.
Down Payment Assistance
Down payment assistance is a great tool to help first-time buyers purchase their home. This is especially true for those prevented from saving large amounts of money due to limited income. It's much more difficult today that it was just a few years ago to procure down payment assistance, but that doesn't mean it's impossible. Down payment assistance is available through dozens of nonprofit organizations throughout the country who specialize in this type of thing. A quick internet search will yield the names of several different programs available to you. Keep in mind that all of these programs will have restrictions. But as long as you meet the requirements, you are free to apply.
All 50 states offer at least some sort of down payment assistance, especially for low income purchasers. Programs will vary from state to state and some are limited in nature. Check with your state housing authority or local mortgage broker for details about the down payment assistance programs in your state.
Finally, down payment help may exist in the form of friends and relatives who might be willing to help you out. Be aware that FHA-backed mortgages do have some restrictions about buyers receiving gifts to be used for a down payment. Your real estate agent will be familiar with the various loans you're eligible for and the guidelines concerning gifted down payments from friends and relatives.
Government Grants
The federal government does not provide any type of grant or financial assistance directly to home buyers. Any grants they do provide go in lump sums to the various states that then disperse them through their own programs. If you're planning to look for a federal grant to help you with your mortgage, don't waste your time. Despite the claims of pushy flashy salesmen, the simple fact is that the federal government does not get involved in housing grants.
As for the states, they are all willing to provide mortgage grants under various programs targeted at specific groups of people. Some of these grants never need be repaid, others do under certain circumstances. You can find grants to assist with down payment, pay for property rehab, and even pay insurance and utilities in some cases. Keep in mind the government grants will always come with strings attached and they are almost never made available to real estate investors.
Low or No-Interest Loans
The most popular form of mortgage assistance available today comes in the form of low or no-interest mortgages. A no-interest mortgage is pretty self-explanatory; it is a loan, usually backed by the federal government, which provides a mortgage to a low income home buyer at 0% interest. Of the two types of loans discussed in this section, the no-interest mortgage is by far the less utilized of the two. Where states do offer no-interest mortgages, they are severely restricted based on income and financial need.
Low-interest loans are very common in the mortgage industry especially for low income buyers, veterans, minority groups, the disabled, and others. In most cases these low-interest loans are backed by FHA or HUD, and can be financed by Freddie Mac or Fannie Mae. Low-interest loans typically provide a mortgage at rates significantly lower than a conventional mortgage. However, with standard interest rates as low as they are how much lower these loans can go remains a mystery.
Refinancing for Current Homeowners
A new concern in the mortgage industry within the last few years is a condition called being “underwater.” In an underwater scenario, a homeowner probably purchased his home at a time when real estate values were near their peak. But now, due to the collapse in the housing market, the value of the house has fallen to a point where the owner owes more on the mortgage than the house is worth.
Homeowners who find themselves underwater are often tempted to simply walk away and allow the bank to foreclose. Obviously, banks and the government want to avoid this as much as possible. In order to help, the federal government has developed refinancing packages to allow homeowners to renegotiate their mortgages and bring them in line with current real estate values.
Though these refinancing programs have been heavily pushed by the federal government in the last few years, their success remains a matter of debate. In fact, a high percentage of homeowners allegedly qualified for such refinancing assistance have still not managed to obtain a new loan. Government red tape and other hurdles have hindered these programs from helping the vast majority of people who need them.
Whether you're a first-time home buyer having trouble coming up with a down payment, or a distressed homeowner underwater, there are options available for mortgage assistance. What's available specifically to you depends on your income and other circumstances. But it's worth the time and effort for you to investigate your options if it will help you obtain a mortgage you can afford.
