My fiance and I just bought our first house. We are a year out of college. I just got my first real job. We’re getting married in 6 weeks. Needless to say, we’ve got a lot on our plate. We both hope to be successful in the years to come, but there is definitely a process to becoming successful. One thing that we both wanted, as we started our marriage, was a place to call our own. When we talked to some of our close friends about their recent purchase of a home and found out that their mortgage payment was less than either of our rent payments, our mouthes hit the floor.
Yes, both of us are college graduates and promising contributing members of society. But of course we didn’t have thousands of dollars laying around for a down payment and closing costs. Low monthly payments is definitely a good thing, but how would we scrape together enough money to close on a house? Many lenders want between five and twenty percent down which can amount to anywhere between $5,000 to over $20,000 up front. That was unrealistic for the two of us.
So we asked our friends, who were in the same financial boat that we were in, how did you make the down payment and closing costs? First time home buyers grants. I don’t know about you, but the word “grant” is a very exciting word, much better than “loan”). Logically, our next questions pertained to these grants and what to do to get them.
As first time home buyers, we could have never prepared ourselves enough for what we’d have to go through to purchase our first house. As is with any business, there’s a lingo involved that might as well be its own foreign language. When we started our adventure into home buying, we came across first time home buyer grants. Basically, these grants are free money given to people buying a home for the first time in an effort to educate them in the important aspects of home ownership. Nothing free is ever easy, if it was easy, it wouldn’t be free. So to get these grants, stretch your legs to jump through some serious hoops.
We got two grants–one from our county and one from the government through HUD. Yes, as I said, you have to meet various requirements to qualify for these loans. First of all, there’s a maximum income for the grants. The assistance is there for low income homeowners-to-be. What a lot of recent college graduates have is education, potential, and a positive lookout for future employment. Those components are all very attractive to a lender. And if you’re not a college grad, that doesn’t mean you’re an unattractive client. However, you will have to provide proof of employment as well as pay stubs to verify your income. These grants are available to those who make up to a certain amount income, not for those who have well established careers and income.
I believe that the grant amounts will vary depending on the location in which you are hoping to buy. However, each of the grants is forgivable 20% for each year you live there. In English, if you live in that home for five years, it’s free money. If you live there for two years, you will have to pay back 60% of the amount that you were granted. I’m pretty sure that after you go through the rigmarole of purchasing a home, you’ll be content to not have to go through it again for at least five years.
The key to securing the grants is to find a home that is within the realm of your financial reality. Remember that, even though you’re getting these sizable grants, you’ll still be making monthly payments that will reflect the gravity of the purchasing price. If you have the time and the know-how, I suggest looking at your first home as a serious investment into your future. Chances are, you’re not going to find the home of your dreams at an affordable price during your first go-around.
We purchased a home that was structurally sound and needed a cosmetic makeover. As previously mentioned, we had at least five years to live at that home before we owed zero money back on the grants. We looked at it from the perspective that we had at least five years to prepare the house to sell for profit. If you’re committed to remodeling, five years is a long time. By choosing a home that was structurally sound, we would greatly cut refurbishing costs. Our finances could then be focused on a whole-house face lift.
The home we purchased cost us $71,000. We received $8,000 in grants. Our mortgage is for $63,000. Our monthly payments are $530. It took us about four months to get there, but we found just the home we were looking for, in a great neighborhood, with very promising resale value. It may have been an arduous process, but well worth it. If you have any other questions, comment or message me and I’d be happy to help you with anything you’d like to know!
