At Blackmon Home Loans, we see many first-time homebuyers primarily focused on saving to afford the down payment on a new home. While this is important, they may overlook another significant expense associated with the home-buying process—closing costs. The good news is that these expenses can be negotiated, and help is available! Here’s a closer look at what you can expect from closing cost assistance, the types of aid programs available, and how to find the best one for you.
What is Closing Cost Assistance?
Closing cost assistance is exactly what it sounds like—financial support for aspiring home-buyers. Specifically, it’s used to reduce or eliminate the fees lenders charge to create your loan, which can comprise up to six percent of your loan amount. Alongside down payment assistance, closing cost assistance programs fall under the umbrella of home buyer programs. It is typically available to first-time buyers and low-to-moderate-income buyers, as well as for buyers with higher incomes in more expensive real estate regions.
Who Provides It?
Closing cost assistance is offered by the US Department of Housing and Urban Development (HUD)-authorized local or state housing commissions. The Nevada Housing Division is a great place to start when seeking information. Some private mortgage lenders and nonprofits also provide this financial support.
How Does It Work?
The amount of financial aid available depends on various factors, such as income, credit score, location, and assistance type. In many cases, these funds only need to be paid back if you move or refinance within a predetermined number of years. Keep in mind that not all mortgage lending companies accept these funds, so be sure to practice due diligence when evaluating lenders.
Types of Closing Cost Assistance
- Grants don’t have to be repaid.
- Forgivable loans only have to be repaid if you stay in the home for a predetermined time.
- Deferred-payment loans postpone repayment until you sell the home.
- Zero-interest or low-interest loans are a “second loan” that increases your borrowing power.
- Lender credits exchange credit for a higher interest rate on your mortgage.
Find the Right Closing Cost Assistance For You
Looking for help navigating closing cost assistance in the Las Vegas area as a first-time home buyer? Blackmon Home Loans is eager to help you achieve your home-buying goals with great rates and a variety of loan types and funding options. Contact us for more information on what program may be the best fit, and apply today.