1st Time HomeBuyer Program Obstacle - Posted by Richard-(FL)

Posted by Carmen_FL on March 04, 2002 at 18:20:15:

The way I understand these programs (and I work with a Credit Counseling agency that gets a lot of these people into homes using them) is that the “loan” is “forgiven” after a certain amount of time - usually 5 years, in your case it may be 10. If the person owns the home for that period of time, the lien on the property is removed completely. If the property is sold within that time period, the entire amount of the loan is due (say, $10,000). I don’t think they penalize you on top of that, though - you just have to pay it off. Where are you in Florida? I can easily get info on most of the programs here in S. Florida to see what the deal is.

In any case, these buyers probably signed a “second mortgage” with the agency giving them the grant, which will be recorded in the courthouse (or they should have a copy with their closing papers)- it will probably give you the terms there (e.g. $10,000 mortgage, with no payments until the year XXX, and considered satisfied after that date, but with a prepayment penalty of $XXX if paid before XX date).

1st Time HomeBuyer Program Obstacle - Posted by Richard-(FL)

Posted by Richard-(FL) on March 04, 2002 at 17:26:24:

I received a call from someone who bought their home just 2 years ago and they are now behind on payments.

They used a “First-Time Home Buyer” program where the government helped them pay for closing costs when they bought the home.

They mentioned that the restriction of this program is that they were supposed to live in the home for 10 years before they could sell it.

I can take this property subject to and sell it on a L/O, but how will I get around the “10 year” restriction if/when I find a T/B to cash me out later on down the road?

Will the early “cash out” just amount to paying some heavy penalities (that I will need to figure into the holding costs of the property), or is there more to this than meets the eye?

Any help will greatly be appreciated.



Re: 1st Time HomeBuyer Program Obstacle - Posted by tang-0-rang

Posted by tang-0-rang on March 04, 2002 at 22:18:19:

after reading your post something came to mind. Does the restriction say they have to actually LIVE in the home for ten years, or just retain ownership for ten years. If they just have to retain ownership why not do a sandwich L/O, and then when your buyer exercises their opion, you pay them off and who cares about some clause anyway…right? well, I guess you would still have to worry about the downpayment payback thing, but at least you could postpone it for a while.good luck
anyway thats my 2 cents, can you make change? LOL
Todd Williamson (CO)

Re: 1st Time HomeBuyer Program Obstacle - Posted by Kim (FL)

Posted by Kim (FL) on March 04, 2002 at 21:57:59:

Carmen knows her stuff. I’m a lender in Central Florida. They’re typically “soft seconds” which are forgiven after the time frame. Just about everyone is doing 10 year requirements now. For most counties, you have to pay it back interest free on a graduated scale. So if you borrowed $5000 and you lived in it for 5 years you’d pay back 50% so $2500. They would have to pay that off at their closing. Have your title agent pull their mortgage to find out the exact terms.
Good Luck!

Kim (FL)