Home Grants - Home Grants Through Gift Giving Entities?
Down payments for any type of real estate has been a difficult thing for a lot of people to come up with, and that's why a lot of people seek help from programs that offer some sort of home grants to ease the burden of the down payment. Over the years, would-be buyers have gotten really creative on securing down payments. Some of them borrow money from friends or relatives. Some even sell their cars to get enough money for the down payment on the house of their dreams. Amongst all of that though, one very popular way to come up with the down payment these days is through a nonprofit organization that will issue a home grant for the down payment.
Mortgage companies really frown on sellers being the ones to offer home grants to the buyer, so if the seller wants to be able to sell his home, he needs to get around the mortgage company by involving a third party who will then indicate the help as being a "down payment assistance program". Borrowers who have good credit can turn to a nonprofit corporation to provide a solution for their down payment issues. These companies and those similar to them can earn a fee from the seller for offering this service, and they collect their part once the transaction has been closed.
The simple process of these home grants involves a stage where both the seller and the buyer agree to use a down payment assistance program. Then the company that is offering the home grant will contribute funds with a no strings attached gift to the buyer, which they in turn use as assistance for their down payment. After the sale is finalized, the seller then donates that amount, plus a nominal service fee, to the assistance program company.
The Nehemiah Corp. is an example of a company that offers such home grants to those who need help with securing money for their down payment. They specialize in affordable housing, home ownership, and community development, and they are also the largest privately funded down payment assistance program in the United States. The company has provided over $900 million dollars in assistance over the last decade for down payments that have helped over a quarter of a million people in this country buy homes. Critics of programs like this argue that sellers raise their sales prices to a high enough level to make up for the donation, and then buyers transfer the higher cost onto their new mortgage. This is one of the assistance programs that HUD finds suspect.