In the wake of the housing bubble and the recession that followed it, home purchase assistance programs became an important point on the authorities’ agendas, from federal to state and local level. HUD loans can work very well as first time home buyer grants, even though they were not specifically designed to this end. Yet, nowadays a lot seems to be riding on the return of the prodigal, millennial first time home buyer to the market, in hopes that she’s the one who finally manages to revive it, beyond any shadow of a doubt. Now, if the prospect of applying for a costly, conventional first time home buyer loan seems daunting (for the obvious financial reasons, such as high rates and/or down payments), you might want to consider applying for HUD’s HOME program.
What is HUD HOME?
Mapped out as a grant service for communities, towns, and cities, HOME finances local groups, often via non-profits in that area, to help them build, purchase, or renovate housing, with affordability in mind. Aside from this, HUD HOME also directly targets low income earners, by helping them find rentals they can actually afford. If you want to apply for a mortgage or a refinancing, HOME is a great choice, insofar as first time home buyer programs go. Check out some frequently asked questions answered from first time home buyers and remember that laws are often updated. Check back with the HUD HOME website often, to make absolutely sure you are eligible for buying a home.
Am I eligible to buy an HUD home?
It’s very likely that you are, even if you have bad credit and/or little to no money saved up for first time home buyer loans down payments. To figure everything out, it’s advisable to get in touch with a representative from your local housing counseling agency financed by the HUD. Additionally, the housing and community developing office in your area might provide some information. The most important criterion you need to meet, in order to become eligible as a buyer, is to fit into the income earning tier targeted by the HUD. According to current norms, that’s up to 80 per cent of the median income per household in your area.
Do I need to work with a broker?
Yes, you do: the HUD will require you to bid for a home through a local real estate agent. You won’t have to pay for his or her services, because that’s a cost covered by the seller, not the buyer, in the case of HUD homes.
How much money do I need, in order to buy a home?
There’s no single answer to this question, since it obviously all depends on how much the house actually costs, as well as on the type of mortgage you’ve received. However, the general rule of thumb is that you’re going to need to cover the cost of the deposit (also referred to as ‘earnest money’), the down payment, and the closing costs. Generally, the deposit, which your broker will place into an escrow account for you, and which goes to show that you’re serious about your bid, will be around $500 to $2,000. Down payments are usually an issue for buyers, since some types of loans will require you to pay 10 to 20 percent of the home’s total value upfront. The HUD recommends FHA loans, as a type of first time home buyer grant that comes with very low down payments. And, as far as closing costs are concerned, HUD allows for them to be rolled into the mortgage for eligible buyers through seller concession.