Home Buyers’ Undiscovered Treasure Trove

By Ryan Dosen

 

Much has been made of late regarding the federal government’s efforts to prop up the housing market with special new programs designed to encourage home ownership.

The programs have been both lauded for their potential positive impact on the economy and real estate market, and harshly criticized as overreaching and irresponsible measures similar to those that led to the real estate collapse of the late 2000s. For better or for worse, the programs are here, and the result will be more people qualifying to buy homes and more people buying homes.

But government assistance to the housing market does not stop at the federal level. Many do not know that there is a treasure trove waiting out there with state and even county funds to help individuals purchase homes by providing down payment assistance.

Down Payment Resource

Earlier this month, RealtyTrac released the findings of their recent study on down payment programs in America. To help them conduct their study, RealtyTrac enlisted the help of Down Payment Resource, or DPR, an organization that “helps potential homebuyers become qualified buyers by connecting them to down payment assistance funds they may not have otherwise known existed.”

RealtyTrac examined 2,290 down payment programs from DPR’s Homeownership Program Index and found that 87 percent of the single family homes in the 1,792 counties surveyed would qualify for a down payment program.

Down Payment Assistance in Pennsylvania

To help figure out what programs are available to Pennsylvanians and Chester County residents, I sat down with local mortgage expert Karen Jackson of Waterstone Mortgage in West Chester. Jackson confirmed that there is state down payment assistance available through the Pennsylvania Housing Finance Agency (PHFA), as well as at the county level through The Housing Partnership of Chester County.

The PHFA has down payment assistance available for up to 4 percent of the purchase price or $6,000, whichever is lower. This assistance comes in the form of a zero percent interest second loan that is paid back over 10 years.

Jackson says that a 3 percent down loan through the PHFA, which will require no primary mortgage insurance (PMI—normally around 0.85 percent of the mortgage amount), could come in with a rate as low as 4.6 percent. That number may seem a little high given today’s low rates; however, most low down payment programs require PMI. Jackson notes that overall, a great many individuals will see better overall payments with the PHFA programs, while still enjoying the down payment assistance.

It should be noted that the PHFA’s program has income limits. Depending upon the number of persons in your household, there will be an income cap in the neighborhood of $95,000 to $110,000. Given the income caps, some homes will simply not be able to be purchased with the PHFA’s programs. Despite this fact, Jackson says that a larger family could easily be able to purchase a $350,000 house with the PHFA’s program.

County Down Payment Assistance Rarer But Powerful

Chester County has an assistance program that sounds attractive, but that will not be available to many.

Its programs offer up to $10,000 in assistance in the form of a second loan that requires no monthly repayment (i.e. it is simply paid off when you sell or refinance your home). Many people will not qualify because a family of 4 would have to have a combined reported income of less than $63,050, while also finding a home in Chester County that they could actually qualify to purchase with a sub-$63,050 combined income. Chester County’s properties are generally more expensive than the national average, but there are certainly still opportunities out there for individuals that met these criteria.

A Little Something Extra

Jackson says that the PHFA also has a very helpful tax credit program. To qualify for the PHFA’s tax credit program, you need only have your lender sign you up for it when you are applying for a PHFA mortgage.

But don’t forget to get signed up during the loan application process. If you don’t get signed up ahead of time, you won’t get a tax credit that could have saved you up to $2000 per year.

There are lots of programs out there to help you buy a home. Daren Blomquist, vice president at RealtyTrac, sums it up pretty well when he says that “prospective buyers—or their agents—willing to put in a few minutes of time to find out what programs are available to them, will put themselves in a much better position to successfully purchase a home.”

Do your homework and make sure that you are dealing with knowledgeable and reputable real estate and mortgage professionals that will help you analyze all of your home buying and loan options.

— Ryan Dosen manages The Wayne Megill Real Estate Team of Keller Williams Brandywine Valley in West Chester. Contact Ryan Dosen for buyer or seller representation or for more perspective on the local and national real estate market by emailing rdosen@megillhomes.com or calling 610-399-0338. Please also visit The Wayne Megill Team blog at www.PAHomesAndRealEstate.com.

 

This article was published by 21st Century Media and the Daily Local News (West Chester, PA). To read this article on the the newspaper’s site, please visit the Daily Local News.

 

 

To view all of Ryan Dosen’s 21st Century Media real estate columns, visit http://www.dailylocal.com/search?text=dosen.