Most first time home buyers use some type of mortgage down payment assistance or down payment gifts when buying their first home.

Without programs such as this, many first time home buyers would find it impossible to make that first purchase. Down payment gifts are heavily regulated. Since many first time home buyers are lacking funds, this makes down payment assistance programs useful.

So in this brief article I want to help you understand how they work. Try to put yourself in the shoes of the lender. When using down payment assistance or down payment gifts the lender assumes 100% of the risk.  Lenders like to see the buyer have a state in the purchase.

So then, when a buyer obtains down payment assistance, which in some cases could cause the loan to value to be 100%, this makes the lender nervous. I’m sure you can see why since you have no real investment in the property.

If this type of mortgage down payment assistance was not regulated, there could become a lot of loan sharks out there. That is why the only proper way for this type of help to work is it has to be a gift. Now you may be wondering, how can I get a gift like this?

All FHA loans allow for down payment assistance for first time home buyers. The gift for the down payment can come from an immediate family member, a relative or a charity.  In all cases, there has to be documentation that this is a gift and not a loan. This establishes for the lender a guarantee that you have a small interest in the property. That interest of course is equal to the gift which was used as the down payment.

Now, in the case that a family member or relative cannot help you with the down payment assistance, we can use a charity. However, it is not exactly the same as if you had gotten a gift from a family member.

So then, if we do not have a family member that can help and if we have a problem finding the charity, we can ask the seller to offer the down payment assistance. There are charities out there that will use the seller’s proceeds as the down payment assistance for you.

It works kind of like this, the seller makes a donation to the charity and the charity then makes the down payment for you. Now you may wonder, how can this actually be? Do you mean that the seller is going to make my down payment? No, that is not actually what takes place. The seller makes a charitable donation and the charity makes a gift to the lender equal to the amount of your down payment.

There will be a gift letter involved from the charity stating that you do not owe them any money.  This gives the lender what they want, and it gives you what you want.

The only way that this can work is if the down payment gift, which actually is equal to about 3% of your loan amount can be factored into the sale price of your home.  So this means the seller is actually taking a little bit less for the home, in order to make the donation to the charity, who then gives the money to the lender.

Now I realize that this type of mortgage assistance program may not make a lot of sense to you. All you need to know as a first time home buyer, is that your down payment gifts are in place and are legal.

I do not know any other way to explain this other than it is what I call a legal way to launder money! As the buyer of a home, you know you need to make a down payment, so this type of mortgage down payment assistance program is available to you.

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About the Author:
Jeffrey Ragan has several years of experience helping people reach their goals and wants to help you learn more about assistance for first time home buyers available and other helpful information on their website, First-Time-Home-Buyer-Solutions.com.
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Foreclosures are not likely to go away for a while in the current economic climate. There are a few things homeowners can do to stop foreclosure depending on at what stage they are in the mortgage payment troubles. The earlier the homeowner acts the less burdensome the solutions will be. However, they need to act regardless of how difficult their situation is. This article goes through the possible solutions at several different stages to foreclosure. 

Refinance home mortgage loan could be a solution at the very early stages of problems. There are many homeowners facing foreclosure and there may be many more in the years to come. If the problems ahead anticipated, the homeowner could look to refinance mortgage to lower the burden of debt. Over the years many homeowners keep accumulating debt in the form of more expensive and immediate debt solutions. The homeowner with good credit score can get several credit cards with reasonable credit limit each. So they could easily accumulate as much as $50,000 on credit cards that have high interest rates as well as other loans. Refinance mortgage loan would allow these people to reduce their overall debt burden and give them longer time to pay by consolidating all their debt with one mortgage. This will give them a chance to take control of their finances and make the affordable payments to stay out of trouble.

Banks and mortgage lenders are keener than ever to stop foreclosures. They already have many foreclosed properties in their books and they do not want to add any more. If the home owner faced a sudden problem and fallen behind the mortgage, they should start talking to their existing mortgage lender. They should prepare a good argument to the lender as to why they have fallen behind the mortgage and how they will catch up and keep up with the home mortgage loan. They could convince the lender to give them a mortgage loan modification with lower interest rates and longer payment periods. What sort of loan modification they may get depends on their existing lender and how convincing they are. They need to prove that they are not bad risk to the mortgage company, they were just unfortunate to be in the situation that they are.

Failing that mortgage forbearance agreement could be another alternative. With this agreement, they get their lender agree not to exercise its legal right to foreclose on a mortgage by agreeing to a payment plan negotiated with the lender. A forbearance agreement can be a solution for home owners who had problems in the past, but they can now start paying their monthly payments and a bit more towards the past arrears. Lenders agree to give time to the borrower and put a stop to foreclose as long as the homeowner keeps his end of the bargain. Mortgage forbearance plans typically last between three to six months.

Real estate short sale agreement would be better than foreclosure, if the home owner convinced that trying to keep up with the payments is not possible or practical. The homeowner needs to get the lender agree to a possible sale short of mortgage on the property. Some lenders may agree to settle for the sale price of the property and let the homeowner walk away, others may still go after the borrower for the shortfall between the sale price and the loan amount. Bank loss mitigation departments handle these sales. It may be wise to consult a short sale specialist or real estate lawyer, as short selling is a complex process that can take four to six months to complete.

Deed in lieu of foreclosure is last option available to borrowers facing mortgage foreclosure. At this final stage, borrowers give the property back to the bank and walk away. Again, some banks issue deficiency judgments when property is sold for less than the mortgage amount and some may decide to write of the loss.

There are many people with payment problems in this period of tight money and jobs. However difficult their circumstance may be the homeowners should not just wait for the bank make the final move.

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About the Author:
JS Lee is a former mortgage broker who is now the webmaster of Refinance Home Mortgage Loan and Refinance Mortgage Loan where you can get your free credit score, check today’s rates and get mortgage quotes.
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Please Note... All links within articles are placed by their author-owners and not by this blog.Products with in those links may or may not be the best in the world.If it sounds too good to be true it could be a scam.Articles are posted for their info,ideas and or entertainment value only.

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