One of the things that is part of the equation throughout the housing market and needs to be considered by everyone participating in it is can you reduce your risk by getting some help from the government? For most folks, especially first time buyers, the answer is yes. In fact, you may be able to get the government to assist you for free with your down payment and closing costs.
There are several programs available for this type of help. Here are some broad strokes on one of them. The Illinois Housing Development Agency has a program that will provide a forgivable (meaning never has to be repaid) second mortgage loan for up to three (3) percent or six thousand dollars ($6000) of your purchase price. This goes to a maximum of $200,000 in purchase price and is calculated on a per transaction basis.
This loan is made at closing and is due in ten years. However, every month, just by the flipping of the calendar, 1/120th of the loan is forgiven. At the end of the ten year period, the loan is considered paid in full. This allows the home buyer to “repay” the loan by simply remaining in the property.
This program allows a first time buyer who has been worried about jumping into the housing market to do so for very little cash. In fact, if combined with an FHA loan which can only require a 3.5% down payment, a buyer could secure financing for the home and only have to put $1000 (one thousand dollars) of their own money into the transaction. This allows people who have had trouble saving for a down payment to take advantage of so many homes being “on sale” in this market. It truly can help lower the last barrier to securing financing.
Why would the government make this sort of program available, you may ask? The answer is to help move the glut of foreclosed homes. You see, when a home is foreclosed on one critical thing happens to the government: property taxes stop rolling in. Things like snow removal, garbage collection and other government services become difficult to pay for. By giving a small incentive to someone to buy today, they allow the property tax engine to get jump started.
This is truly a win-win though. The buyer wins by getting a chance to participate in the market before prices start moving against them. They are able to buy now at a time when homes are more affordable than they have been in ten years. The government wins because they get the property tax engine moving again, has less vacant homes that are prone to squatters, drugs and general neighborhood decline. There is something in this program for everyone involved.
To learn more about this program, send an email to the loan officer whose name appears on the left hand side of the screen. Or pick up the phone and call them directly. They will be happy to answer any questions you have about this program.
