Today's guest post comes from Brandon Laughridge of Mortgage Loan Place, which specializes in educating consumers on all types of mortgages with an emphasis on government loan programs.
Prospective homebuyers can now get significant financial help to purchase foreclosed properties, thanks to a federal grant program aimed at revitalizing blighted communities.
These incredible deals for purchasers -- with some down payments as low as 1 percent -- may also spur a rebound for many cities devastated by deep recession and a flailing housing market.
“One of the most important competitive investments in the Recovery Act is the additional $2 billion we've invested in the Neighborhood Stabilization Program to help communities purchase and convert foreclosed and abandoned properties into new affordable housing, land banks, or other options that preserve neighborhoods,” U.S. Housing and Urban Development Secretary Shaun Donovan said during a recent speech in Chicago. “These competitive funds will not only turn foreclosed properties into homes again, but also ensure that communities go about the rehabilitation and purchase process in a smart, collaborative, and, above all, sustainable way.”
About $4 billion is available for municipalities and individuals nationwide. The Neighborhood Stabilization Program offers significant financial aid for low- and middle-income buyers interested in foreclosed homes.
Qualified buyers are required to put down at least 3 percent of the purchase price as a down payment, but only 1 percent of that has to come from the buyer’s own pocket. The remainder can be covered by approved external funding sources, including Federal Housing Administration loans.
Buyers can also pay for properties in cash.
The NSP loans can cover almost a quarter of a property’s purchase price. There is no interest, no monthly payment and loan balances are due upon completion of the loan agreement, which is anywhere from five to 15 years.
As with many governmental lending programs, there is a laundry list of eligibility criteria.
The program is restricted to foreclosed properties only. A potential site must be vacant upon listing and either a one-unit single family home, a condominium or a townhouse.
Buyers who own a primary residence must have been leasing the property for at least a year before applying for a Neighborhood Stabilization loan.
The NSP also aims to boost homeownership among low- and middle-income ranks. Prospective borrowers cannot have a gross income (before taxes) greater than 120 percent of the average median income for they county in which the property resides.
This could be a great opportunity to get a bargain basement price on a home with favorable terms. Contact your local HUD office to find a list of eligible properties in your area.