Free Money For Your House Down Payment???

It sounds too good to be true, but it is legit. There are several grants available to potential homeowners to help them buy a home.

For this podcast, we are joined by Kelly Fleck, who is the Homeownership Manager for Next Step, where she leads her team in implementing comprehensive factory-built housing homebuyer education and counseling training program. Kelly graduated from Morehead State University and has over 20 years of experience in affordable housing.

If you are interested in down payment assistance programs visit Next Step’s down payment assistance finder.

The following transcript was lightly edited for clarity purposes.

Intro: Hey look, it’s the Doublewide Dudes.

Mauricio Chacra: Alright, alright, welcome back to another episode of the Doublewide Dudes. We’re going to continue the conversation on affordable housing. In this episode cover a little bit more on down payment assistance from an awesome program that we’re working with. And today we’re joined by Ms. Kelly Fleck. Glad to have you on the show.

Kelly Fleck: Glad to be here. Thanks.

Alberto Piña: Yeah. For our audience. Kelly’s the home ownership manager at the Next Step Network, which we’ve talked about on the podcast before. And she leads the team in implementing comprehensive factory build housing, home buyer education, counseling and the training, right? So much, especially first-time home buyers is about educating them on what the process is and what to expect. Graduated from Morehead State University and over 20 years of experience in the affordable housing space. So, we’re excited to have you and talk about this program. For starters, what is the Down payment Assistance Program Kelly?

Kelly Fleck: Well, a Down payment Assistance Program is really just a program to help potential home buyers overcome barriers to home ownership. We know that saving money for a down payment is one of the largest barriers for folks to obtain home ownership. And many nonprofit organizations or government agencies will offer down payment assistance to help bridge that gap.

Mauricio Chacra: Yeah. I know talking so much to my customers, that’s a big concern of theirs. We never really ask for a down payment or money up front to assist these families, but coming into that idea, I think they’re hesitant to speak about. Right? Because it’s something that they feel they need immediately to get started and the home buying process, but it’s awesome that something like this is now coming into existence and all that. It does sound too good to be true though, right? Down payment assistance, just getting free money. Why would people just give money towards a down payment of someone else’s house? How would that work out?

Kelly Fleck: Well, most down payment assistance programs are offered by organizations that have some sort of social mission. The assistance likely comes from, like I said earlier, a non-profit organization or a government entity. And that just really helps to bridge the gap of home ownership and make home ownership available to more folks. And the good news is that there are over 2,400 programs that are offered across the country. And home ownership is a common way for Americans to build wealth. These programs address the critical need.

Alberto Piña: Yeah, a 100%. And I imagine from the government side, some of their thinking is, if we help bridge that gap, then that’s a broader tax base to fund our schools, our roads, our community as a whole. For our audience, if someone’s listening and they need assistance on the down payment, are these… Is it like a loan where they have to pay the money back? Or is it a grant or how does that work? Kelly,

Kelly Fleck: It’s really going to depend on the type of assistance that the potential buyer would receive. If it’s a grant that is a gift and there is no repayment that is expected. If it’s a second mortgage, these are loans that are offered at a very low interest rate or maybe a 0% interest and the payment can be deferred or forgiven incrementally each year. And so it really is just going to depend on the program and these programs will vary state to state.

Alberto Piña: Mauricio, you and I were on there, what about a month ago? Looking through it for one of your customers?

Mauricio Chacra: Yeah. We were checking it out.

Alberto Piña: There’s a lot of Texas specific programs on there too. Right?

Kelly Fleck: There are. Texas is one of the largest programs is… vary by state. I think it’s second, maybe only to California.

Alberto Piña: Well, Texas, doesn’t like to be second at anything. So, we’ll have to work on that. But I remember when Mauricio and I were looking through it, it looked like there were programs specific to first responders, to veterans. So, this isn’t just a low income thing, there’s programs for all sorts, right?

Kelly Fleck: That’s correct. There are programs that might be aimed at first time home buyers, there could be programs that are specific for community service workers. So if you are working as an educator, you’re in the medical field, a first responder, a police officer, law enforcement. There are programs out there that are available and it’s really a nice contribution to your community. It’s a way to give back to those who take care of you every day.

Mauricio Chacra: Yeah, I agree. I know it’s awesome that some of the grants are there and not have to be paid back. Right? That’s the idea. But even if it’s a second mortgage or loan, the interest is low, the terms are lenient. And even if they have to pay it back, it’s it still sounds like really good assistance. With the idea of wanting to become a homeowner and taking that journey in life, a lot of people expect to start saving. But when they hear a program like the Down Payment Assistance and that’s free money, or I’m getting this handed over to me so I can buy my house. Is that enough for folks? Or should they start saving aside from what they’re actually getting assisted with? Or what would you recommend?

Kelly Fleck: I always suggest that a potential buyer would start saving. Although these programs will lower the amount of money that you have to come to closing with, you’re still going to have prepaid costs. Prepaid items are things such as homeowners’ insurance, property taxes, mortgage interest. So, it’s a good idea to still have some money on hand, you’re going to have moving expenses as well. So, these programs will really help reduce the amount that you have to have upfront, but you’ll still want to have some money saved.

Mauricio Chacra: Yeah, those are good points. I know, because when prepaids and all that can get confusing into new homeowners, right? And what’s needed and closing costs and et cetera, there’s just so much to it. On the down payment assistance, most of the loans that we come across in the MH space, mobile home space, they’re just paying the down payment of what’s required on the loan and then everything else is included into the loan. So that’s common, but I also recommend, when people are saving and wanting to see what their out of pocket expense is, it’s always good to have a backup, right? We don’t want to stretch people thin just become a homeowner, and then next thing you know, it’s… they’re having trouble paying the mortgage. Saving, having some cash as a backup and these programs exist to get some help and a hundred percent take advantage of that.

Kelly Fleck: One of the greatest myths out there is that you have to put 20% down on a mortgage loan. And that’s really not the truth. The truth is there are many loan programs out there that are at least a low down-payment, or even no down payment programs. I always suggest that people start as early in the process as possible and find out what is available to them in their communities.

Alberto Piña: Yeah. That’s… echoes a lot of the things we tell folks. It’s a massive decision and there’s a lot that goes into it. There’s still stuff, Mauricio and I are learning every day and heck I’m 12 years into this. But USDA zero down, VA zero down, so lots of different programs. If a customer finds that they want and need and would like to take advantage of some of these Down payment Assistance Programs, is there training? Or education? Or… they don’t just raise their hand and they get money handed to them? Right? How does that work and what could they expect the process to look like for this?

Kelly Fleck: Well, they could expect the process to look very much like the typical loan application for a first mortgage. But you are going to have to seek out what programs are available to you in your community, and you’re going to have to take that step to apply on your own behalf. Consumers could go to the Next Step website, which is nextstepus.org. And we have a tool that is called the down payment seeker, and consumers could actually go in there, enter some data. It’s basically just your household size, what your annual income is, where the home is located that you want to purchase. And answer some questions, whether or not you work for a community service type of industry. And then you will receive an email that has matched programs that you might be eligible for.

And then it would be up to that buyer to go and research those programs. I mentioned earlier that there are over 2,400 down payment assistance programs, but what Next Step has done, is we have taken the work out of that for you. And we researched the down payment Assistance programs that allow manufactured housing as a home option. So, you don’t have to sort through 2,400 different programs to see if you’re eligible for MH with that program.

Mauricio Chacra: With that, I mean, is there any other common requirements that would be necessary for people to receive, down payment assistance?

Kelly Fleck: Requirements will vary from program to program. However, there are some universal requirements such as there may be income eligibility requirements that you would have to meet, first time home buyer. And it’s important to remember that HUD counts anyone who has not owned a home in the last three years as a first-time home buyer.

Alberto Piña:   Oh, wow. I didn’t know that.

Kelly Fleck: Yeah. That’s an important thing to keep in mind. And almost all programs will require that a home buyer education course be taken, and it has to be an approved home-buyer education course. And of course, there might be restrictions on the property, where it’s located or the property type.

Alberto Piña: Got you. And I think you said before the best… the tool that you all have helps them find the programs and then it’s really up to them to do the research and see what might be required from them.

Kelly Fleck: That’s correct. Next Step has actually developed a consumer course. It’s called the beginner’s guide to down payment assistance. And it’s a free course that you could go on. It’s just basic information around down payment assistance. And you can find that at learnnextstep.org

Alberto Piña: In terms of timing, Kelly, a lot… that goes, factors in a lot with our customers, we’re trying to help. Some families need… they got a month to get into a new home, some have a few to take their time. What kind of timeframe do these programs typically take before that down payment’s available?

Kelly Fleck: That’s really going to depend on the lender that the buyer is working with. But most providers can get a loan through the pipeline in the same amount of time that it would take a standalone first mortgage. So, some of the programs will require that you work with an approved lender and that’s because those lenders are familiar with the programs, they know how to layer the financing and they can get it done quickly.

Alberto Piña: Makes sense.

Mauricio Chacra: Nice.

Kelly Fleck: Of course, there might be hiccups along the way that might happen with any loan. You might be waiting on a third-party inspection or something like that, that might hold it up. But for the most part, it’s really going to mirror the first mortgage process.

Alberto Piña: Very cool.

Mauricio Chacra: Yeah. And I guess just when we’re applying or helping people submit an application through the lender. Just have that as an expectation saying, it’s partly borrowed and working with these programs, that way they know what to expect, and there’s no timeline efficient or things that intersect it.

Kelly Fleck: Right. And again, starting that process earlier rather than later, that’s really going to help you in that time log, it’s going to speed it up, the process.

Alberto Piña: Yeah. There’s definitely… buying a home, sometimes it’s got to be rushed and we get that things happen. But if you can take the time to get it done the way you want it, it’s a big decision. You want to get it done right.

Mauricio Chacra: Yeah. Thinking on a larger base and the local community, right? Does down payment assistance say only impact the person who receives that down payment assistance? Or these programs affect a larger community? If any.

Kelly Fleck: I think these programs can really have a large impact on the greater community. Earlier we mentioned, it’s going to increase the tax base of that community. We know that home ownership, it improves health rates, it improves a lot of social factors, such as lower crime rates. So, there’s a lot of impact that down payment assistance and home ownership can have on the greater good of the community.

Alberto Piña: If people are in stable residences, then other programs that might be necessary when they’re not. Those no longer have as great of a need as they would, if we can take the first step at the beginning to spread that stability across the community. Well, this is an awesome program. I know at Braustin, we are guilty of not talking about this enough. And I think part of it was, and what we learned a little more today is, what exactly it is, how it works, how to find it. For our audience, you mentioned the website and we’ll be sure to link to that. But one more time if they didn’t catch it the first time, Kelly, can you tell them exactly where they can find the tool?

Kelly Fleck: Yes. You can find the down payment seeker on the Next Step website, which is nextstepus.org. And if you’re interested in taking the beginner’s guide to down payment assistance, you can find that on learnnextstep.org.

Alberto Piña:  All right. Awesome. And again, we’ll be sure to link to that in our podcast notes.

Mauricio Chacra: Other than those programs, what are some other great programs that they can find on that website? Is it just down payment assistance? Is there any other tools that they can have resources to?

Kelly Fleck: We do have a resource tab and we have a total home calculator. And that’s a tool that is designed to help a consumer think about what’s important to them in a home, energy efficiencies, that kind of thing. And then it will actually give them an idea of what the cost of a home might actually be. So that might be a helpful tool when somebody’s early in the process looking for a home.

Mauricio Chacra: And that all can be found on the same website?

Kelly Fleck: Absolutely. Yes, same website.

Mauricio Chacra: Very cool. Well, a lot of good information. I know these programs are awesome and definitely going to start recommending them more and see how we can help out future homeowners. I really appreciate you jumping on Kelly and talking to us about this.

Kelly Fleck: It’s my pleasure.

Alberto Piña: Yeah. Thank you for joining us. It’s such a cool program.

Kelly Fleck: Well, I look forward to working with you guys and if I can be of more assistance, let me know.

Alberto Piña: Will do.

Kelly Fleck: All right.

Mauricio Chacra: All righty, well that does it for this episode. Thanks for tuning in and we’ll catch you guys in the next one.