Why "Free" money is not free

There are a number of programs in the Phoenix area that advertise "free money".  The truth of the matter is that the money isn't free at all, there are several hoops to jump through first.  Every program is different, but you can't just go with a hand out and expect someone to plop a bunch of dollars into it.  Here are some of the requirements and restrictions that apply to free money.  Not all of these apply to every free money program.

1) Income limits - you have to be under a certain income limit to qualify for the money.  Usually, everyone in the household is considered.  I once had a client denied because of his daughter's part-time job a a theater put him $45 over the family income limit

2) Education Requirement - Often, you must attend classes to qualify for the free money.  The hourly requirement for classes goes from 8 to 40 hours spread over 5 - 10 weeks.

3) You must occupy the home for a minimum amount of time - Usually, if you sell the home within 5 years, a portion or all of the money must be repaid from the proceeds of the sale.  This includes situations where you must move for a job, or if the neighborhood declines.

4) Participation is not guaranteed - Just because you meet all the qualifications, you may not be allowed to participate because the handouts are overseen by a board.  If the board does not like you, you won't get your money.

5) You may not get all the money offered - for example, there is a program that is supposed to give you 5% of the purchase price towards your down payment.  What they don't explain is that half of that goes towards administration fees, so you only really get 2.5%.  However, that part is still free.

6)  It takes a long time - your seller must be patient, because the review process to be certain that you qualify can take up to a month or more.  This is in addition to the regular escrow process, so you could be looking at 2 - 3 months for the home to become yours.

7)  You can't have any other debt - you may have to pay off credit cards and other loans in order to qualify.

This list of restrictions is not complete, but covers the major hurdles in obtaining free cash for a house purchase.  One good thing is that you can often combine programs in order to get enough cash for a down payment and your closing costs as well.  You can get into a home for $0 out of pocket.

Have  a great day!

Tim


#FreeMoney  #FirstTimeHomeBuyer