Congratulations! You're heading on the right path. I'm closing next week on a deal that Neighborhood Housing Services of New York City East Flatbush (NHS) READ:
WHAT A GREAT ORGANIZATION! This grant is an assistance towards your closing cost. However, it is a process. These funds are given after you have a fully executed contract, a committment, and NYC have approved your paper work. Where does this leave you? As part of the 5 MAJOR Steps to buying a home, YOU MUST GIVE CONSIDERATION before having a fully executed contract (Your down payment). Do you have it?
If you qualified for the FREE $8000 TAX CREDIT for FIRST TIME HOME BUYERS, great! Read:
You must have your initial investment, If FHA, you will need 3.5%. This can be gifted! Begin your search now while you COUNT DOWN TO THE FINAL DAY! Read:
Good Luck finding a condo in Brooklyn, NY for about $130K! I'm not saying it is impossible, but may be difficult depending on how many bedrooms, location, etc. Just be flexible!
I don't know how much you were approved as grant assistance, however, with the grant andf at the price of $130K, the $8000 plus an additional amount of approximately $1750 is enough for this deal.
If you have a realtor, loan office and a broker who have connections, they may have your closing costs deferred to the day of closings, but you do need the initial investment on CONTRACT!
You should be aware that currently the $8000 tax credit runs out November 30. That means you have to close by that time. In NY, most closings take three months. So if you're going to receive the $8000, you need to purchase immediately and then try to get the whole process going very quickly. There are many proponents of extending that tax credit but you should be fully aware when making your plans that this may not be available. While I have heard about some banks offering the $8000 as a bridge loan, they will certainly make money lending you the money (on top of your mortgage). If your limit is $130K, a condo in Brooklyn is probably not feasible. You may be able to purchase a coop but most coops require a down payment of at least 10%. Do you have a 401K plan with any significant amount of money in it? If you do, you can withdraw a good portion of that money for the purchase of a primary residence without getting hit with early withdrawal penalties. (The other exceptions would be withdrawals for health care and college tuition.) You should be careful when looking for loans - if it sounds too good to be true, it usually is. If you'd like to discuss this further, please do not hesitate to contact me.
Century 21 Princeton Properties
Firstly, I am not a proponent of having mortgages borrow of the 8000 tax credit that you'll be receiving. Using this as a bridge loan will probably not be the most cost-effective method of justifying the credit itself (think of the interest for this type of loan!). Just brainstorming, what will you proceeds do you have to close the loan? There are other fees besides the down payment. Think legal, title, mortgage insurance, underwriting, inspection, moving fees, board applications, credit checks etc. Do you have enough to cover these necessary and immediate expenses to close the property? Do you have access to a friend or family member who can loan you this money to close this property? If that's possible, you can close the property, and get the grant and credits post closing and repay that person at a reasonable rate of interest.
Best of Luck!