New Home Buying Grant for Middle-Income Households and other Homebuying Tips
Blog
June 4, 2024
by
American Riviera Bank
Buying a home on the Central Coast can be difficult with affordability continuing to shrink as home values climb and rates remain at higher than pre-pandemic levels. This National Homeownership Month, we have some solutions and tips to help simplify the home buying process, including a new grant for down payment assistance if you meet certain requirements.
New Grant Program- Do you qualify? ¶
American Riviera Bank was just approved as a participating lender in the Federal Home Loan Bank’s (FHLB’s) Middle Income Down Payment Assistance grant program, and we can facilitate a $50,000 grant to qualified borrowers for down payment assistance! This program is unique in that it is an outright grant rather than a grant that is forgiven over a specific retention period. You only need to be income-qualified, and to save at least $10,000 of your own funds (or a gift from an acceptable donor) to contribute to the home purchase. You must also credit qualify for the loan through one of our participating lenders.
A qualified borrower must be: ¶
- First time homebuyer (cannot have owned property in last 3 years);
- Have $10k of own funds to contribute to the purchase;
- Household income to be within 80.01% to 140% of Area Median Income*
- Santa Barbara County:
- 2 Person Household income - $104,250-$182,140
- San Luis Obispo County:
- 2 Person Household income - $81,550 - $142,660
- Complete Homebuyer Counseling Program
Contact us by phone at (805) 730-4987 or click the link below to get started.
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*The maximum income for a family of 2 and may be more or less depending on the household size.
Simplify the Homebuying Process¶
Our expert residential lenders can help explain not only what you can afford and what to expect during the process, but other factors to consider when determining the right time to buy a home. Additionally, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. both have resources to help demystify the homebuying process.
Whether you are refinancing or purchasing your home, American Rivera Bank can help you determine:
- The ideal loan amount and products to meet your budget requirements. We can review the mortgage process in detail and flag ideal programs and loan features.
- How mortgage rates, the loan amount, property taxes and insurance premiums affect payments. This will help you set a home budget to help you manage your homeownership expenses.
- Your rights and obligations under your mortgage contract. Today’s consumers have many financing options—each with unique stipulations outlined in the fine print.
- Suitable government-sponsored programs. In addition to federal homeownership and home-buying assistance programs, we can recommend state, local government, and specialty programs for consideration. For those who qualify, FHA loans only require a 3.5 percent down payment and typically have higher loan-to-value ratios and lower credit score requirements than conventional loans (though buyers will have to refinance if they want to avoid paying private mortgage insurance for the life of the loan).
- Additional resources to help you create a budget and set financial targets. We offer helpful resources on our learning platform (https://americanriviera.bank/p...). You can also find other free online educational tools at www.hud.gov.
5 Questions to ask yourself before buying a home¶
- How much money do you have saved up?
Start with an evaluation of your financial health. Figure out how much money you have for a down payment or deposit on a rental. Down payments are typically 5 to 20 percent of the price of the home. Security deposits on rentals are usually about one month of rent and more if you have a pet. But be sure to keep enough in savings for an emergency fund. It’s a good idea to have three to six months of living expenses to cover unexpected costs. - How much debt do you have?
Consider all of your current and expected financial obligations like your car payment and insurance, credit card debt and student loans. Make sure you will be able to make all the payments in addition to the cost of your new home. Aim to keep total rent or mortgage payments plus utilities to less than 25 to 30 percent of your gross monthly income. Recent regulatory changes limit debt to income (DTI) ratio on most loans to 43 percent. - What is your credit score?
A high credit score indicates strong creditworthiness. Both renters and homebuyers can expect to have their credit history examined. A low credit score can keep you from qualifying for the rental you want or a low interest rate on your mortgage loan. If your credit score is low, you may want to delay moving into a new home and take steps to raise your score. For tips on improving your credit score, visit aba.com/consumers. - Have you factored in all the costs?
Create a hypothetical budget for your new home. Find the average cost of utilities in your area, factor in gas, electricity, water and cable. Find out if you will have to pay for parking or trash pickup. Consider the cost of yard maintenance and other basic maintenance costs like replacing the air filter every three months. If you are planning to buy a home, factor in real estate taxes, mortgage insurance and possibly a home owner association fee. Renters should consider the cost of rental insurance. - How long will you stay?
Generally, the longer you plan to live someplace, the more it makes sense to buy. Over time, you can build equity in your home. On the other hand, renters have greater flexibility to move and fewer maintenance costs. Carefully consider your current life and work situation and think about how long you want to stay in your new home.
Have questions? Our residential real estate experts are here to help!¶
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