I have a large network on Facebook, twitter and LinkedIn and as an active buyer’s agent for first time home buyers, I have to know whether or not first time home buyer programs still exist, outside of the first time home buyer tax credits of 2009, 2010.
The news and the media can give conflicting stories as to the state of the real estate market and if you did a web search online for first time home buyer programs, you might not find enough “good” information to decide for yourself if entertaining one of these programs in the first place is even worth your time and energy.
Last week, I tweeted, posted and basically asked my network a few questions:
- Does 100% financing still exist?
- Are there other legitimate first time home buyer programs other than FHA and VA loans?
As an aside: VA or FHA Loans aren’t really first time home buyer programs, but have been classified as such in recent years.
What I found is that there are a few ways that one can purchase a home with little to no out of pocket expenses. There are in fact 8 different options. In this blog post, I will cover 4 out of the 8 options.
Option 1: NJ Smart Start Program allows eligible borrowers with sufficient personal assets to close a home loan above an 80% LTV (Loan to Value). Home buyers who meet the criteria of this program have the opportunity to receive a grant from the state of NJ for up to 4% of the loan amount towards the down payment and/or closing costs of the home. The grant represents a second lien on the home with 0% interests. If you remain in the home for up to 5 years, the second lien will be removed and you would have been granted the money by the state of NJ.
If the Borrower conveys, refinances or ceases to occupy the premises as his/her principal residence, full repayment of principal will be due as follows:
- Months 0 through 24, the entire principal is due.
- After the 24 month, 25% of the principal on the note will be deed satisfied and the remaining balance will be re-amortized. 25% of the note is forgiven.
- After the 36 month, an additional 25% of the principal on the note will be deed satisfied and the remaining balance will be re-amortized. 50% of the note is forgiven.
- After the 48 month, an additional 25% of the principal on the note will be deed satisfied and the remaining balance will be re-amortized. 75% of the note is forgiven.
- After the 60 month, the entire note will be deemed satisfied and discharged. 100% of the note is forgiven.
Requirements for NJ Smart Start are as follows:
• Income limits are determined by the area of the purchase, family size, which varies based on county.
• The property must used as a primary residence and the buyer must move in within 60 days of closing.
• The property must be in a smart growth area –go to http://SGL.STATE.NJ.US/ Look for property locator and type in address. It will approve or deny the home based on location.
FIRST MORTGAGE PRICING for Smart Start: The 30 year first mortgage interest note rate will vary depending on the Smart Start loan amount elected and will be fixed for the life of the loan in accordance with the following schedule:
- 2% Smart Start loan results in first mortgage Home Buyer Program rate + .375%
- 3% Smart Start loan results in first mortgage Home Buyer Program rate + .50%
- 4% Smart Start loan results in first mortgage Home Buyer Program rate + .75%
Option 2: Live Where You Work
The LWYW program is a home mortgage incentive program that provides low-interest mortgage loans to home-buyers purchasing homes in towns where they are employed. The goal of LWYW is to build stronger communities by promoting home-ownership and encouraging people to live closer to their jobs. This, in turn, will reduce the need for cars and increase the use of alternative transportation such as walking, biking and public transit.
If you would like to buy a house in the town where you currently work, then LWYW might be right for you. Employees benefit from attractive mortgage rates, more flexible loan application review and underwriting criteria, and reduced commuting times to work. Municipalities benefit from having a committed workforce living nearby, and the activity and economic vibrancy that comes with people living near where they work.
- Properties must be located in a participating live Where You Work municipality.
- Eligible properties include one-family units, including condominiums, (new and existing), and existing 2- to 4-family unit properties that are more than 5 years old.
- Some Live Where You Work municipalities include *Urban Target Areas (UTA).
- In Urban Target Areas eligible properties can also include new two-unit residential dwellings. Properties must be located in State designated Smart Growth locations.
(*) Urban Target Areas (UTA) are based upon census data. Therefore, in order to find out if an address is located in a UTA, you will need to identify the census tract within which the address is located.
Option 3: 100% financing on Development Projects.
Provides no down-payment, no mortgage insurance, mortgage loans at pre-approved new or rehabilitated single-family housing developments and for certain newly constructed units. Down-payment and closing cost assistance may be available under this program. First-time and urban area buyers are eligible for 30-year fixed rate financing at the HMFA’s prevailing interest rate. The program is subject to funding and housing availability. Please refer to the One Hundred Percent Project List for available projects in your area.
One Hundred Percent financing is available only when purchasing homes pre-approved by the Agency and listed on the One Hundred Percent Project List.
Option 4: First-Time Home-buyer Interest Rate – 3.75% with 0 points – 30 years!
A below-market, fixed interest rate is offered to first-time home-buyers and urban area buyers. Down-payments of as little as 3.5% are required and must come from the borrower’s own assets. Loans are 30-year fixed rate. Certain closing costs can be gifted by family members, non-profit organizations or government agencies. Debt-to-income ratios are as high as 33 percent (housing debt, i.e., mortgage, taxes, insurance) and up to 38 percent (total monthly debt load).
Purchase Price and Income Limits Information
Purchase Price & Income Limits Statewide Area
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