Tag Archive for first time home buyer education

Home Advantage Down Payment Assistance

How much Down Payment Assistance can I get with Home Advantage?  This depends on the price of the home and lending guidelines.  Home Advantage provides down payment assistance up to 4% of your loan amount.  So if your loan amount was $200,000, you would potentially be eligible for $8,000 in down payment assistance!

Do I have to pay the Down Payment Assistance back?  The money would have to be paid back eventually, but there is NO monthly payment and ZERO interest!  You would repay the down payment assistance when you either sell the home, rent it out, or pay off your 30 year mortgage.A or B?

What loan programs can be used with Home Advantage?  Almost any loan program can be paired with this down payment assistance program, including Conventional, FHA, USDA, and even VA loans.

Is Home Advantage any different than other Down Payment Assistance programs?  Yes.  The rates are much better than other programs that have been offered by Washington State in the past.  Also, for this down payment assistance program you DO NOT have to be a first time home buyer AND it can be paired with the MCC program!  This is unprecedented as in the past most programs have only been available to first time home buyers and could not be paired with the MCC.

Is Home Advantage right for everyone?  Everybody’s personal situation is different.  To find out more about Home Advantage guidelines, as well as other down payment assistance programs offered in Washington State, go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.  Don’t make the biggest decision of your life without getting educated!

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What’s Earnest Money for?

What is earnest money for?  Earnest money does a couple things for first time home buyers.  One, it’s a show of good faith to the seller that you have the financial capacity to purchase the property.  Two, and more importantly it’s a remedy for default in case you decide to illegally breach the sales contract.

So it’s like a deposit?  Yup, that’s another way to think about it.  If a first time home buyer breaches the contract, the seller is going to be very inconvenienced by having to go back on the market and find another buyer.  They may also be out a fair amount of money, so they just want to confirm that the buyer is serious about purchasing their home.

How much does earnest money have to be?
  It really depends, but a general rule of thumb is somewhere between 1-3% of the purchase price.  For instance, somewhere between $2,000-6,000 for a $200,000 dollar home.  Again, this is just an example as the amount can vary in each specific money in the windsituation.

That’s a lot of money!  We realize that this can be a large amount, especially for first time home buyers just starting out.  Please keep in mind that like a deposit this money is credited towards the final purchase.  So as long as you DO NOT breach contract and move forward to closing (which most buyers do) the earnest money will be credited towards your down payment amount.

But what if I decide I don’t want the house?  There are also several protections in the contract that give you outs in certain instances, but we’ll save this for another blog.  Before writing an offer and making a decision about earnest money, be sure to consult with your licensed real estate broker.

Don’t make the biggest decision of your life without getting educated!
  If you’d like to learn more about earnest money or the home buyer process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

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What if I Don’t Close on Time?

What if I don’t close on time?  Closing your home purchase on time is crucial!  Many lenders think if a first time home buyer misses their close date it’s not really a big deal.  “Just get an extension”, they might say.  But it’s not this easy, so make sure you ask your lender up front how long it will take them to process your file, and hold them to it.

How does it affect me?  Much of first time home buyers lives will revolve around their closing date.  You’ll give your landlord notice that your vacating, you’ll schedule movers, you’ll potentially have new furniture delivered.  If you miss your close date it will probably throw a monkey wrench into your entire life, not to mention you not having a place to live for a while!

Does the seller care?  The seller’s life will also revolve around the close date.  They’ll be scheduling similar situations, so they want to stay on schedule as much as you do.  They also may be buying a new place, and they usually Senior man showing a for sale signcan’t close on their purchase until you close on purchasing their existing home.  So the seller is very concerned with you closing on time.

Sounds like just a bit of inconvenience.  The biggest thing for first time home buyers to be aware of, is if you miss your close date the seller DOES NOT have to give you extra time to secure your loan.  In today’s current housing market, many buyers are placing back up offers on homes that are already under contract with other buyers.  If you miss your close date it gives the seller a way to EXIT the contract and potentially sell to another buyer!

Don’t make the biggest financial decision of your life without getting educated!
  If you’d like to learn more about the closing timeline or the home buying process in general, please go to our Calendar/Reservations page and register for one of our First Time Home Buyer/Down Payment Assistance workshops.

 

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Should First Time Home Buyers Borrow From Their 401K?

Should first time home buyers borrow their down payment from their 401K?  Many first time home buyers struggle to come up with a down payment to buy their first home.  Others have the minimum down payment, but would prefer to have a LARGER down payment to avoid mortgage insurance.  Borrowing against a 401K or other retirement plan may be a good option.

Doesn’t it make more sense to get down payment assistance?  Most down payment assistance programs are determined by your annual income.  Many of our first time home buyers find that they make too much money to be eligible to receive down payment assistance from the state.

But don’t you have to pay high fees for liquidating money from your retirement account?
  Generally speaking yes, so you want to BORROW AGAINST the account, not liquidate funds.  This will help you avoid penalties from the IRS for early withdraw.  Usually the money is paid back with interest, but the interest goes back into your account.  So essentially you’re acting like your own bank in this instance.

Would it be better to just wait and save for a down payment?  This depends on many different variables.  Some things to consider are: Will housing values and interest rates rise in the near future?  How long will it take me to save a down payment?  If it won’t take you any time at all to save, then you Piggy bank 401K and dollarprobably won’t be as concerned with rises in the market.  But if it may take you a year OR MORE to save, then borrowing from your 401K may be a really good alternative.

Are their any downsides to borrowing against my 401K?
  Not usually.  The Federal Government has allowed this type of transaction for first time home buyers to support home ownership across the country.  However, this doesn’t mean that your specific company doesn’t have other criteria you may need to meet to borrow against your retirement account.  So it is important to get all the details from your Human Resources department before making a final decision.

Don’t make the biggest decision of your life without getting educated!
  If you would like to find out more about the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

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New Down Payment Assistance for First Time Home Buyers!

Down payment assistance for first time home buyers!  There is a brand new down payment assistance program offered in Washington State.  It allows for up to 5% of the purchase price in assistance.  So if you were purchasing your first home for $300,000, you could potentially receive up to $15,000!

What if I also need money for closing costs? 
The great part about this new program is the assistance money can be used for BOTH down payment and closing costs.  Depending on your situation and purchase price, you may still need to come up with one or two thousand dollars, but this is about as close as you’ll get to a zero down first time home buyer loan.

So do I need to REPAY the down payment assistance?
  NO!  In the past, most of our down payment assistance programs have esentially been second loans with subsequent repayment terms.  HOWEVER, this new down payment assistance program is a GRANT, which means it does not have to be repaid!

How long does the program last?  It is a pilot program, so we don’t have a definitive answer as to how long it will be around.  But in the past, whenever we have seen a first time home buyer program with these types of terms, the program typically doesn’t last very long.  So if you want to take advantage, you should act fast!

How do I gain access to this program?  In order to take advantage of this program, you need to attend one of our workshops where you will recieve a state issued certificate veryfying that you have went through the education process.  Our state funded non-profit wants to make sure you are make educated decisions as a first time home buyer.

Don’t make the biggest financial decision of your life without getting educated!  If you’d like to gather more information about this new down payment assistance program, or the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.

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