Buying a house is a commitment. Not only is it a big step financially, but it takes time to find the right house and make sure everything is ready to go. So can you get any help?
The Down Payment Toward Equity Act reduces the amount of down payment you need to make on your home purchase. The program can help you get a house sooner while lowering the overall cost.
So in this article, we’ll discuss more about the Equity Act, as well as why you should get it.
What Is the Down Payment Toward Equity Act?
The Down Payment Toward Equity Act (DPTEA) is a piece of legislation proposed by Rep. Maxine Waters on July 16, 2021. It aims to make homeownership accessible to low-income Americans.
The Act would create a program whereby aspiring homeowners would receive up to $25,000. They would receive home down payment assistance in the form of grants to help them purchase a home. This program would receive funding from closing corporate tax loopholes.
As a result, this legislation aims to address the systemic racism in housing that has prevented low-income Americans. It especially protects people of color. They will have the same level of prosperity through homeownership enjoyed by white Americans.
The DPTEA would also create economic security for individuals that have been struggling for decades. It should provide an opportunity to build wealth and assets. And it aims to create a path to economic security and stable housing for generations to come.
Who Can Qualify?
This program provides financial assistance to qualified low-income and moderate-income Americans. It helps those who are unable to manage the down payment necessary to purchase a home without resorting to high-cost loans.
To qualify for the DPTEA, individuals must be first-time home buyers. They must be a U.S. citizen or permanent legal resident. They must also exhibit a history of home mortgage payments.
They should have a FICO score of 580 or higher. They should show consistent income over the past two years. And they should have sufficient current income and cash reserves for the down payment.
How Does One Apply?
The process to apply for the DPTEA is fairly straightforward. First, you need to visit the government’s official website. The website provides information on the program’s guidelines and application requirements.
Then, familiarize yourself with the program’s eligibility. The requirements outlining who the program applies to vary by program type.
After that, request an application form. You can get the form by visiting the website or by calling the hotline.
Provide the necessary information and attach documents verifying your intention to buy the property. Then submit the application to the relevant authority.
Wait for the government to process the application. It can usually take 6-8 weeks for processing. Once approved, sign the relevant documents and any other paperwork necessary to start disposing of funds.
It’s this simple. Just make sure you fully understand the guidelines per program type before submitting an application.
The Potential Benefits
The DPTEA helps homeowners build a stronger financial future by encouraging them to own their own homes. It provides an incentive for lenders to not only offer larger loans but to offer them at lower interest rates.
Homebuyers benefit from this by being able to receive a larger loan with lower costs over time. This gives them more equity in their home and more financial stability in the long run.
Homeowners with high down payments can also receive even better loans with the same interest rate and payments. This means more money is invested into the home in the form of equity.
The DPTEA is particularly helpful for first-time homebuyers. This is because it provides a much-needed boost in down payment help. And it encourages acquiring home equity early on in the ownership process.
The Potential Drawbacks
The main drawback of this Act is that it doesn’t provide financial assistance to those who can’t afford the down payment. In other words, it only helps those who already have some of the money needed for the home purchase.
The down payment requirement is only for a single-family home purchase and does not cover duplexes, condos, or townhouses. This can be a huge obstacle for those who would prefer to buy any of these types of properties.
The Act also requires that buyers have a specific amount of money in the bank before being approved for the loan. This can be difficult for some people.
Finally, this Act does not cover closing costs such as title search fees and homeowner’s association fees. These fees can quickly add up for a first-time homebuyer.
As a result, the DPTEA may not be suitable for everyone looking to purchase a home. So if you plan on applying for the loan should it become law, you’ll need to consult with these commercial real estate lawyers. They will help you understand if the loan will be good for you or not.
How Much Will You Need to Pay Back?
The amount of money needed to pay back depends on the housing market and the amount of equity the buyer can put down. Generally, the more equity you put down, the less money you need to pay back over time.
Ultimately, the amount you need to pay back will depend on the interest rate of your mortgage. And it will also depend on how much you’ve been able to accumulate in equity.
How Likely Will the Act Pass Into Law?
Although the Act has been proposed, there is no clear answer on whether it will pass. The Act is strongly supported by the National Association of Realtors. But there is some opposition from powerful politicians.
For now, the fate of the Act rests in the hands of Congress and the Senate. With the right amount of support, the Down Payment Toward Equity Act could likely become a reality. However, it is unclear whether that will happen before the year ends.
The Down Payment Toward Equity Act Will Benefit Many People
The Down Payment Toward Equity Act is a great opportunity for qualified mortgage borrowers to access their equity. This program helps people in better financial situations and unlocks economic opportunities. It could help people buy a home and expand their wealth.
So once it passes into law, do more research. If you qualify and are interested, take advantage of this new policy.
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