Coming up with enough for a down payment doesn’t have to be a reason to delay the purchase of a home. With over 2,200 down payment assistance programs available across the country—all with the intent of making homeownership more affordable to more buyers—you may be much closer than you think to making a purchase.

The Nature of Assistance

Assistance comes from numerous entities. These include state housing finance authorities, local municipalities and counties, and neighborhood groups and nonprofit organizations. Employers who are having difficulty recruiting talent to their locations, which are as likely to be rural as they are urban, may also offer help.

In fact, high-priced areas like Los Angeles, Miami, Denver, and New York City offer the most assistance. According to a joint study conducted by Realtor.com and Down Payment Resource titled, “10 Priciest Metros Where Buyers Can Score the Most Down Payment Help,” the average assistance can range from just over $12,000 to $40,000 in some areas.

That help can come in a variety of forms and, if you qualify for multiple programs, it can also be layered for greater affordability. These programs may include nonrepayable grants, forgivable loans, mortgage credit certificates of up to $2,000 in annual tax credits, deferred loans (often without interest), and low down payment mortgages.

Who Qualifies

While most of the programs are intended for first time buyers, many are also available to experienced homeowners. Typically, there are income and sales price limits, but these can be generous, depending on the program’s underlying incentive. Often, a needs-based criteria is a factor in order to help lower income families make the move to private ownership. However, this is not always the case. Among the audiences most targeted by these programs are law enforcement and municipal employees, health care workers (including nurses), teachers, firefighters, anyone with a military background, and disabled individuals.

In nearly every case the buyer will be required to be an owner-occupier in order to access these programs, not an absent landlord or occasional resident. Often, there is a minimum buyer investment and an education-counseling requirement that may need to be met. The biggest requirement is being able to qualify for a first mortgage based on your credit, current debt exposure, and income.

Finding Down Payment Gold

As you start to think about homeownership, it is a good idea to look into the programs that serve your area. Check with your state’s financing authority, then research the availability of other programs that may benefit your profession and the neighborhoods you are considering.

Your Real Estate Agent and Loan Officer are also good resources. Different lenders are involved in a variety of community initiatives, and most offer access to loans with low down payment options. These include Federal Housing Administration mortgages (which have 3.5% minimum down payment requirements), Fannie Mae’s new Conventional 97% mortgage, and Freddie Mac’s Home Possible mortgage. If you are a veteran, the U.S. Department of Veterans Affairs offers mortgages with no down payment requirement. Similarly, U.S. Department of Agriculture mortgages also offer a zero down payment option.

While having a down payment enables you to have equity in your home from the start, purchasing it with the help of a down payment assistance program can let you start building equity faster and in a more affordable way. With so much money available, it doesn’t hurt to see if you qualify to claim some for yourself.

If you're looking to begin the process of finding and applying for a home loan, chances are you'll already be feeling overwhelmed before even signing any paperwork. By choosing a knowledgeable, high-quality lender who takes service seriously, it's easy to approach the process one step at a time. One key component of the process that often is overlooked, though, is the home appraisal. Whether you're moving into your first home or looking to secure a better rate on an existing home loan, an appraisal is likely in your future. 

Appraisal Basics

A home appraisal is a routine, standardized event that is intended to determine how much a home is worth, and therefore the cost of the mortgage to finance it¹. Real estate appraisals are conducted by professionals who are licensed and certified to perform this service in your area. Appraisers use their knowledge of the local market, combined with information on the home in question, to come to a determination of value. Although appraisers are typically hired by the lender, the applicant or homeowner is usually responsible for their fee, which can cost around $500.

Appraisers generate an objective assessment of a home's value.

To conduct an appraisal, the appraiser will often need to visit the home in person to take a close look at the interior and exterior². He or she will also tap into public records or multiple listing services to find recent sales of similar homes nearby. These past sales, known as comparable properties or "comps," will serve as a benchmark for final value determination. With all the requisite information gathered, the appraiser will create a report on the home's value for the applicant or owner and lender to view.

Preparing for the Appraisal

An appraisal on the horizon isn't cause for panic, but borrowers should still take steps to prepare and ensure it goes as smoothly as possible. While appraisers are required by law to be fair and objective in their analysis of a home's value, there are several things homebuyers or owners can do to make things easier for everyone involved.

In the days leading up to an appraisal viewing, homeowners should be sure they keep the place in good condition. Lawns should be mowed and gardens tended, and interior rooms should be kept tidy. Appraisers won't judge a home on cleanliness alone, but there's still no harm in taking the time to clean.

If homeowners or potential buyers want to go the extra mile, they can help the appraiser out by finding comparable sales³. Take a look through online listings of recent home sales in the area and select properties similar to yours. Location and square footage are the most common factors used to determine similarity between two homes, but take note of building style, age and other features. Presenting the appraiser with three good comparable sales could help you make the case for a favorable appraisal.

When the time comes for the actual inspection, homeowners or buyers can be present but shouldn't intrude too much⁴. Meeting with the appraiser and explaining the comparable sales you've found is perfectly acceptable. However, most appraisers appreciate space as they do their own inspection, so excessive questions or comments at this time are generally frowned upon. 

With the inspection complete, homebuyers or owners may have to wait up to a week before they can view the report. Once the appraisal decision has been finalized, borrowers are well on their way to securing a good loan with an excellent lender. Keep in touch with the lender for any lingering questions about the appraisal process.

Sources:

¹Forbes

²SF Gate Home Guides

³The Washington Post

⁴The Wall Street Journal

Much has been said about the safety issues real estate agents face when dealing in a professional capacity with people they’ve never met before. Any time an agent is touring an empty property with a total stranger, there are certain risks that are inherent to the situation. 

While practicing common sense and adhering to standard safety practices are a given, perhaps there is more that can be done. For example, there may be some lesser-known safeguards that can be taken.

 Here is a quick list of ideas to consider:

 #1 Familiarize yourself with the latest in security technology.

There are a number of safety-oriented apps—such as those from React Mobile and Agents Armor—that are geared toward the real estate professional. 

#2 Use an ID verification website.

These sites, such as SecureShow.com, provide a process for sharing basic personal information, ID credentials, and photos before setting up a face-to-face meeting.

#3 Always meet in your office first.

It’s a simple idea, but meeting at your office before showing the property goes a long way toward screening for legitimate buyers. This safeguard gives you a chance to conduct a brief personal interview that might reveal a “red flag” or two. Better yet, always urge buyers to get fully qualified by your loan originator. The effort and time will serve to discourage opportunistic actions.

#4 Prepare for "unusual circumstances".

Be suspicious when odd situations arise, such as unexpected “guests” tagging along for a showing or groups who arrive just after the closing time of an open house. In some cases, individuals might drive up to a property and request a tour just as the prior showing is ending. Insist on an in-office meeting first.

#5 Be ready to act.

Don’t take your safety for granted. Have an escape route in mind and consider taking other preventive actions, like wearing “fast” shoes, taking self-defense classes, or carrying pepper spray.

#6 Know the neighborhood.

Be familiar with the location of police stations and where the busiest streets are relative to the property’s location. Have a good sense of where open restaurants, gas stations, and retailers are in the vicinity. Finally, be aware of poorly lit walking paths that are too isolated and dark alleys that might trap you in a dead end.

#7 Have a code word for a rescue call.

It’s always smart to have someone you can reach by phone during a showing. Set up a code word that means “SOS” in order to request assistance without the client realizing a signal has been sent. Perhaps, simply say “I’m sorry, another agent with buyers is on his way from our office right now.”    

 

Better yet, instead of relying on any one, single method, use multiple approaches to ensuring your safety and that of your clients. Nothing could be more important.

Mortgage loans are like power tools: You get the best results by using the right one for the job at hand. For many borrowers that may mean bypassing the conventional route to find the one that fits your budget today and is the least likely to cause financial stress in the future.

Affordability and the Federal Housing Administration (FHA) Program

For a borrower having trouble pulling together a down payment or who may have a weak credit history—or no credit history—an FHA mortgage effectively levels the playing field. The program was designed to open up homeownership to as wide a group of borrowers as possible, even those who may have experienced some financial missteps, like a foreclosure or bankruptcy, in their recent past.

What most borrowers don’t realize is that the FHA doesn’t actually issue mortgages. The agency provides insurance on the payments for the issuing lender. This insurance helps make an application more attractive for a lender to approve since it addresses any concerns the lender might have regarding repayment.

Why You Might Want to Do This

It’s natural to think a government program would result in more paperwork and hassle than going the conventional route. FHA loans do require extra forms, but on the lender’s side of the transaction, not yours. Better yet, qualifying for an FHA loan is only slightly more cumbersome than applying for a conventional mortgage.

Here are some other things you should know about FHA mortgages.

 

Previously, FHA mortgages offered the added advantages of lower down payments and higher borrowing limits over conventional mortgages. Today, conventional mortgages can be made with as little as 3 percent down, and borrowing limits are now the same for both loan types at $625,500. Another advantage FHA mortgages offer is that they are still eligible for a “streamlined” refinancing at a lower interest rate. Now that regulatory changes have greatly lengthened the refinancing procedure for conventional mortgages, this aspect can save time and money. FHA mortgages can also make a property more attractive on resale since they are assumable by the new owner, unlike a conventional loan.

Never Assume

The impact FHA insurance premiums have on the overall cost throughout the life of mortgage usually makes a conventional mortgage cheaper in the long run. Even when a conventional mortgage carries insurance, more commonly referred to as “private mortgage insurance (PMI),” PMI is only required until the borrower’s equity in the home reaches 20 percent. If you are only expecting to stay in your home for a few years, the FHA mortgage can be the better bet, even with the insurance.

With so many moving parts making up each loan, always have your lender run a comparison across all of the mortgage programs available to you. There is no reason your mortgage shouldn’t provide a custom fit to your current circumstances and your long-term plans.