| The federal government wants you to own your own | | | | down payment funds, so the gift assistance programs |
| home. In fact there's $200 million available right now to | | | | step in to "work around" those laws. |
| prospective first-time home buyers. President Bush | | | | For example, you find a home you want to purchase |
| signed into law the American Dream Down-Payment | | | | for $250,000. The seller needs at least $200,000 to |
| Initiative (ADDI) also known as The American Dream | | | | pay off his mortgage, so he is asking to make $50,000 |
| Act. The act helps first time homebuyers with down | | | | profit. But, the seller is also willing to settle for only |
| payment and closing costs, usually the biggest hurdles | | | | $25,000 profit. The seller enrolls the home in a gift |
| in the way of a first time home purchase. | | | | assistance program at the value of $250,000. The gift |
| The American Dream Act is known as a government | | | | assistance program sets aside the $25,000 down |
| home buyer program. shows there are four primary | | | | payment plus a participation fee. shows fees are |
| way for a home buyer to purchase a home with no | | | | usually 0.75% of the home's selling price.) The buyer |
| money down. | | | | then secures a loan for $225,000 from a lender, |
| Lender provided financing is simply what is stated. | | | | expecting a $25,000 down payment. At closing, the gift |
| Some lenders provide 100% financing, while others | | | | assistance program wires the $25,000 already set |
| provide 103% financing, where the lender actually | | | | aside, to the buyer as down payment. The seller |
| includes the down payment in the lender originated | | | | basically cut his profits in half to give the buyer $25,000 |
| loan. | | | | cash down to satisfy the loan from the lender. But, |
| Some government agencies such as Fannie May and | | | | keep in mind, the seller's bottom line was $225,000 to |
| FHA provide what shows as a Flex 97 mortgage. | | | | begin with. From the seller's perspective, his home |
| Those mortgages allow the buyer to finance 97% of | | | | actually sold for $225,000, while the buyer purchased a |
| the purchase price and get creative with the down | | | | $250,000 home. |
| payment. Creative sources such as "a gift from a | | | | Buyer-Seller Negotiated No Money Down Real Estate |
| family member; a loan secured by a marketable asset | | | | Financing: |
| (such as a certificate of deposit, a 401(k), the cash | | | | lists three options for a home buyer under this |
| value of your life insurance, or other real estate); or a | | | | category. An assumable mortgage allows the buyer to |
| loan or grant from a nonprofit or government agency." | | | | simply assume payments of the current owner's |
| A federal or private grant is the second option shows | | | | mortgage. Purchasing Subject to a Mortgage allows |
| to prospective home buyers. The American Dream | | | | the buyer to make the monthly mortgage payments |
| Act or ADDI provides those types of grants. | | | | but the original owner is still liable in case of default. If |
| Here's how the program works: You must be a first | | | | you find a seller willing to finance, the seller agrees to |
| time home buyer, but that doesn't mean you haven't | | | | accept all or part of the purchase in the form of |
| ever owned a home. By definition under the act, a first | | | | monthly payments. |
| time home buyer hasn't owned a home for three | | | | Now time to get creative. A lease option or more |
| years prior to the purchase. So even if you have | | | | commonly known as rent-to-own is one option you'll |
| owned a home before now, you may still qualify. | | | | find at Basically, the seller carries the mortgage and |
| ADDI provides down payment, closing cost and home | | | | allows the buyer to take possession of the home, |
| rehabilitation assistance, if needed, up to $10,000 or six | | | | while making monthly payments toward the purchase |
| percent of the purchase price of the home, whichever | | | | price. The details will have to be negotiated. Some |
| is greater. To apply contact your local HOME | | | | sellers only allow a specific time period for rent-to-own, |
| administering agency or the state in which you live. | | | | and some only apply a portion of those payments |
| ADDI is an example of federal assistance, but there | | | | toward the purchase price. A warning; however, for |
| are private charities providing gift assistance much in | | | | the buyer: Some sellers require the buyer to find their |
| the same way. Those are known as Down payment | | | | own financing within a specified time period. If the |
| Gift Assistance programs. Those involve the seller to | | | | buyer's financing isn't approved, some seller's force the |
| participate. | | | | buyer to forfeit all previously made payments. |
| Home sellers usually include some negotiating space in | | | | And finally, get really creative! |
| their selling price. In a gift assistance sale, the seller | | | | Buyahome-no-money-down shows some sellers and |
| agrees to a higher price for the home, and basically, | | | | lenders allow the " use a gift from a family member; a |
| gives a portion of the proceeds back to the buyer to | | | | loan secured by a marketable asset (such as a |
| cover down payment or closing costs. Law prohibits | | | | certificate of deposit, a 401(k), the cash value of your |
| sellers from | | | | life insurance, or other real estate" as the down |
| LIVE THE AMERICAN DREAMgiving home buyers | | | | payment. |