When you buy a home, you're not just paying the price listed. There are extra costs called closing costs, which cover things like appraisals, lawyer fees, and loan setup fees. These can add up quickly and surprise many buyers.
Thankfully, there's help available through what's known as closing cost assistance. This help can come as either grants that you don't have to pay back or special loans with friendly terms designed to ease your financial burden.
Check out: Can You Buy a House Without Putting Any Money Down?
How Does It Work?
Closing cost assistance often comes hand-in-hand with down payment help. This means you could get extra money to help with not just the down payment but also the closing costs.
There are several ways to get this assistance:
- Grants: These are gifts that don’t need to be repaid. They’re great because they reduce what you have to pay without adding to your debt.
- Forgivable Loans: If you stay in your home for a certain amount of time, these loans don't need to be repaid.
- No- or Low-Interest Loans: Some programs offer a secondary loan to help with costs that you pay back under more favorable terms than a regular loan.
- Deferred Payment Loans: These loans don't need to be paid back until you sell the house, refinance, or pay off the main mortgage.
- Matched Savings Programs: Some programs will match the amount you save towards closing costs, effectively doubling your money.
- Lender Credits: In exchange for a slightly higher interest rate, your lender may cover some closing costs.
- Seller Contributions: The seller may agree to pay some of the closing costs to finalize the sale.
Finding Assistance
To find these grants and programs, start with your state or local housing finance authority. They can guide you to programs for which you might be eligible. Remember, each program has its own set of rules.
While some are only for first-time buyers, others are open to anyone who meets the criteria, like income limits or a minimum credit score.
Read more: First-Time Homebuyers Navigate the Market with Government Loans
Qualifying for Assistance
Generally, to qualify for assistance:
- Your income should be within certain limits.
- You might need a minimum credit score.
- The home you're buying usually has to be your main home.
- The type of mortgage you're getting can also matter.
Conclusion
Closing costs can be a surprise for many first-time homebuyers, but with a little research and planning, there are ways to get assistance.
Whether through grants, loans, or other programs, there's help available to make the dream of homeownership more affordable and attainable.
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