Home Buying in 19128>Question Details

Ronan Mcdaid, Home Buyer in Philadelphia, PA

Down payment and closing cost help

Asked by Ronan Mcdaid, Philadelphia, PA Sun Feb 1, 2009

Are there any grants or loans in PA available to first time home buyers to help with down payment and closing costs??

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I am answering this question for you and for many others who may end up reading your question and want options. If you do not have a lot of money to spend on closing costs or you do not want to put all of your money into your closing costs then there are options for you.

In addition to grants that you may qualify for, many sellers may be willing pay for some of your closing costs if your offer price is attractive enough.

Let's say you put a bid in on a home listed at $95,000. Lets say you offer $100,000, just to use round numbers. And lets say your closing costs are total of 5%, again lets use that just to make the math easy.

Sale Price: $100,000
Total Closing cost: $5,000

Since you have offered $5,000 over the seller's asking price (which by the way over 30 years is a small amunt of money), you may be able to ask the seller to pay for your side of the transfer taxes. (In Philadelphia that is 2% for the buyer and 2% for the seller, a tatal of 4%) So in essence you will only need $3,000 at closing rather than $5,000.

Many people, buyers and sellers alike, do not fully understand the concept of "assist" in a real estate transaction. It can be complicated. In our neck of the woods (Philadelphia, PA) many of the grant programs are no longer available and FHA type loans are the best product out there right now. With FHA Loans the buyer needs to have a certain % of their own money in the deal. As a buyer it is important important that you, your mortgage person, and your realtor work together in the buying process. The loan rep. will help you get the most closing cost assistance within the parameters of the loan guidelines and your realtor can help you formulate and negotiate extra assist through a creative positioning of the terms of your offer to purchase.

Ultimately, you are looking for a win-win offer package. You can not take without giving even in a "buyer's market" . Good Will and Generosity always win in the end.

I wrote a blog post about how to present a good offer package that you may be interested in reading: http://activerain.com/blogs/thesomersteam/tags/buyer
1 vote Thank Flag Link Mon Feb 2, 2009
help with down payment and closing cost706
0 votes Thank Flag Link Sun Jul 26, 2015
Was going to answer but The Sommers have doen a great job of answering this one. Thanks, Sommers Team!
0 votes Thank Flag Link Mon Feb 2, 2009
In addition to PHFA there may be county programs in your area that can help with down payment and closing costs. Many of these programs, just like PHFA, will be resrictive in amounts based on either or both total household income and/or purchase price limitations. You can speak to your realtor during negotiation about seller assist that can help with closing costs but not down payment assistance. You can also check out "rural housing" programs through the USGA that allow 100% financing of the purchase price, but closing costs may be obtainable through county agencies.
0 votes Thank Flag Link Mon Feb 2, 2009
Hi Ronan:

PHFA (Pennsylvania Housing Finance Agency): http://www.phfa.org/consumers/homebuyers/homebuyers.aspx
0 votes Thank Flag Link Mon Feb 2, 2009
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