If you haven’t already heard about this you had better hold onto your hat. There are 2 companies out there that are currently offering your buyers a grant to use as purchase money when they buy your house. Nehemiah and Neighborhood Gold. And what your buyers need to qualify for this program is a pulse. Literally! The interesting part is that you, the seller, pay the company back for the grant plus a fee. The fee is approximately 1% of the purchase price of the house. So in effect what you have here is a totally legal, lender accepted, way to provide the down payment money your buyer needs from the proceeds of the sale. It’s totally up and up because the lender is fully aware of what is going on and is consenting to it. Bank fraud comes when you and or the buyer intentionally hide something from the lender. We aren’t hiding anything here.
How much can you contribute? It depends on the particular lender and loan program the buyer is using but for the most part it’s more than you will ever want to contribute in cash.
What lenders are participating? TONS! Including FHA! You can see lists of participating lenders at each of the companies web sites.
How does it work? Here’s a 1, 2, 3. You have a house to sell. You include in your advertising that the buyer can do a true zero down, not a red cent out of their pocket deal, and then get ready for your phone to melt! Your “A” buyer emerges and can qualify for a 97% loan on your $100,000 house but doesn’t have a dime in cash. They have great credit and good income but not a dime. Sound familiar? To close the deal it will take about $102,000 because of closing costs. You contact one of the grant providers and arrange a $5,000 grant. The provider wires the $5,000 to the closing agent, the bank funds $97,000 and you have the $102,000 needed to close. The title company is instructed to hold back (form your proceeds) the $5,000 grant plus an additional $1,000 fee (1%) which they send back to the grant provider. So how it ends up is like this. Total cash on the table $102,000 minus closing costs of about $3,000, minus the $5,000 grant, minus the $1,000 fee leaves you about $93,000 cash for your house. Now your saying that that looks expensive and it does at first glance. But consider this. If the buyers had the cash needed you would have netted about $97,000 after paying yours and most or all of your buyers closing costs and you know that you’ll have to. Then you take into account the 2 or 3 payments you didn’t have to make to your lender because the house sold so quickly, and all the tire kicking buyers and headaches and stress you didn’t have to deal with and I say you are ahead! Way ahead!! Oh and let us not forget that selling on these terms would certainly afford us a premium price for the property right? :^) I say these programs make us money in the end.
If you would like to learn more about Nehemiah and Neighborhood Gold directly you can go to their web sites. Links to their sites are located on the Links Page