I was sitting at a model home for a local builder when a young woman entered and asked, “How do people afford these homes?” This was not an unusual statement for I have heard it many times before.
“Are you interested in purchasing a home”, I asked. She replied, “Oh I would love to own a home, but I can’t afford it. I don’t make enough money and my credit isn’t very good.”
I introduced myself and asked her to take a seat. She accepted my invitation and told me that her name was Mary.
“Mary, how much do you currently pay in rent per month”, I asked. She replied, “I pay $850.00 a month plus utilities.” I asked, “Have you already filed your tax return for last year?” “Yes I have. I had to pay $200.00”, she stated. I asked, “Do you have any credit problems? Are you behind on making any payments?” She replied, “If anything I don’t have any credit. I pay cash for most things so I don’t have any late payments.” “That sounds great Mary. One last question. Are you working with a real estate agent at this time?” She replied, “No”.
Now that I had most of the answers I needed, I presented Mary with the following.
“Mary, what if I could get you into this brand new 2000 sq.ft. , 3 bedroom, 3 full bath house, with the fireplace and all of the appliances included for about $700.00 a month. Would you be interested in that?”
Mary responded, “Boy would I, but I don’t have very much money to put down as a deposit.” I replied, “Except for a small earnest money deposit, there is no down payment required, there are no closing costs and I can probably get you a fixed interest rate of around 2% or less, which is why your monthly payment will be so low.”
The smile on Mary’s face literally lit up the room and her eyes actually glistened when she asked, “Are you serious? You can help me buy my first home? I’ve been to other model homes and they just tell me to come back when I have more income. How can you do this when they cannot?”
“Mary, there are a number of programs available for home buyers these days. Unfortunately most buyers are not aware of these programs and most real estate agents seldom talk about these programs due to lack of knowledge or because they would prefer a quicker transaction. Some of these programs can take a few months to implement and complete. I don’t mind filling the pipeline if it helps someone like you fulfill their dream of home ownership. There is no cost to you for me to assist you. Would you like to get started?”
Of course, Mary gave me a resounding YES and we completed a short application process. Less than a month later, Mary came back and wrote a contract for her first home. By using a combination of available programs such as House Charlotte, Community Link, NACA, NC Bond, MCC, USDA and the First Time Home Buyer Tax Credit, I was able to secure a monthly payment of $720 a month for Mary. This payment included principle, interest, property taxes, insurance, PMI and HOA costs. There was no down payment required and the only closing costs she had to pay were the pre-pays for pro-rated taxes, etc.
Current market conditions dictate that real estate professionals be better equipped to assist customers with less than perfect credit, limited income and/or little to no down payment resources. I recognized this need several years ago and I, as well as my staff, continue to assist buyers everyday in an effort to attain their dreams, regardless of how long it might take for a closing to occur. Since January, we have placed over 50 customers into home buying programs, many of which who have already completed the programs and purchased a home. When it comes to buying real estate in tourist areas, many people search for real estate online, such as real estate in Oahu, through the page hawaiitrustedrealty.com/houses-for-sale-honolulu/oahu. In this way, you can form an initial idea of the value of real estate in the region where you want to buy a house.
One of these customers, I met by chance. I was visiting a new home builder community to see a specific inventory home still under construction. After getting the key to the home from the on-site agent, I drove up to the home and parked, I noticed a couple sitting in their car over to the side of the house. As I exited my car, the woman rolled down her window and asked, “Do you know anything about this house?”
I asked, “Are you currently working with a Realtor®?” She replied, “No.” I replied, “Okay then, would you like to come inside to take a look? I’ve got the key.”
The woman and her husband quickly exited their car and we introduced ourselves to each other. As we toured the home for the first time together, I asked them some pretty basic questions and ascertained that they did not have much income and very little available for a down payment. As we left the home, I asked, “Have you ever considered getting some home buying assistance from a real estate professional like myself? I think I can help you purchase a very nice home for less than you would think.”
My comment sparked their interest and for the next hour we talked about the different programs that were available to them. Long story short, about 60-days later they moved into a brand new home in Rock Hill, SC. The house was purchased for $197,000.00, yet with no down payment and no closing costs, their total monthly payment is only $832.00. This couple who was originally told by another source that they could only afford an $86,000 home, now lives in a really great home in a very nice community. Not only did they purchase much more house than they ever thought possible, they just received their $8000 tax credit check as well. The husband called me when he got the check and said, “It’s as if we were paid a bonus just for buying a home.” Over and above the tax credit check, as a homeowner, he can now claim his interest and property taxes as expenses on his taxes. Some renters don’t realize that home ownership is not only the way to say bye-bye to the landlord, it is also a tax benefit.
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Home buying programs are not only for the credit challenged. Many of these programs are being used by people with great credit who just want to secure the lowest possible interest rate. Some programs will allow you to buy-down the interest rate to as low as 0.01%. There are some purchase price limitations, but for the vast majority of homebuyers, these programs are a major asset. Some programs are for first time homebuyers, yet others are not. In most cases you cannot currently own a home and use these programs to purchase a second home or investment property.
There are also several credit repair programs and lease/purchase programs available to consumers as well. Remember, credit repair programs cannot collect an up front fee for credit repair. Fees can only be charged once the credit repair process is completed. This is an FTC law. A small fee for pulling a credit report is acceptable, but this is usually $30.00 or less.
Lease/purchase programs are great for someone who has a home to sell and can’t close on a new home until they close on their current home. They can lease a new home based on these conditions. Another time a lease/purchase program is a great option is if a buyer has a year left before their 2-year anniversary bankruptcy discharge date. If they have a steady and good income they can usually qualify for a lease/purchase of a new home, but the closing date is scheduled for 12-months down the road once the discharge has reached the two-year mark. (in most cases a buyer cannot secure a mortgage if discharge date is less than two-years.)
Read More:
Important First Steps to Buying Your First Home In Hawaii
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