Once You Qualify…!
On the surface, the DAP may sound like winning the lottery. In some ways, because they are outright gifts that will help you realize the dream of home-ownership, they are. However, unlike the lottery, you have to do more than stop at the convenience store and plunk down a couple of dollars for a ticket. But the odds of winning are much better.
Buyer Beware: Take the Time to Look a Gift Horse in the Mouth
Keep in mind that not all DAPs are created equal. In fact, some organizations have been cited for fraud or other criminal activities. Before you decide on a program, check with the Homeownership Alliance of Nonprofit Downpayment Providers (HAND). HAND is the national association for DAPs, and has the most updated information on all the organizations.
Strings Attached: The Forgivable Loan In addition to checking out the DAP organization with HAND, always ask for all of the details about DAPs before you apply. For example, some DAPs come in the form of a "forgivable loan." This requires you to live in the home for a specific time period - from five to fifteen years is most common. If you move within this time frame, the “gift” must be paid back. Some programs will pro-rate the amount to be paid back based on the length of time the home buyer lived in the home. Some programs will also charge a much higher interest rate on the forgivable loan.
Step by Step (Up the Walk to Your New Home!)Once you determine whether or not you qualify, a typical down payment gift-assisted sale includes these steps:
1. Contact a real estate professional, a homebuilder, a lender or a DAP and learn about the availability of down payment assistance programs in your area.
2. Identify a home you want to purchase.
3. Work with a bank or other mortgage lender to determine whether or not you qualify for a loan.
4. Make sure the seller of the home is willing to work with a DAP organization.
5. Submit an application to the DAP organization.
6. The seller must also enroll the home in the DAP charitable gift program.
7. The DAP organization provides the gift at the time of the settlement. The funds are applied to closing costs and/or down payment obligations of the buyer.
8. The seller pays a fee to the DAP organization from the sale proceeds. This fee is applied to the DAP charity's gift pool. Fees collected by the charities are used to cover operating costs and develop new charitable programs and services. Sellers participating in these programs are encouraged to consult a tax professional to determine whether any portion of a contribution is tax deductible.
Have a Good Day!The process of approval with most DAPS is quick. Once you fill out the required forms - most are available online - you will hear back from them within one day. Imagine knowing that you are qualified to receive a gift to cover your full down payment and closing costs 24 hours after you ask for it. If only unpacking in your new home could happen as fast
Uncle Sam Wants You…To Own a Home!The new American Dream program described above is just one of many programs the government provides to help Americans become home owners. And, in addition to programs that are nation-wide, many states and counties offer down payment assistance
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