How Loan Officers Can Convert Renters into Buyers: Part 2 - Cash to Close; Creative Ways to use “Free” Money!

For Part 2 of our “ How Loan Officers Can Convert Renters into Buyers” series, we will discuss various ways to get a new home buyer the funds needed for closing.

There are 2 parts to figuring out the Cash needed to get through the closing transaction when buying a home.  First you need to make sure you have the Down Payment and second, you need to make sure you have the Closing Costs.  Many first time buyers do not consider the closing cost portion of the equation. 

So how can you be prepared, as a Loan Officer, to provide the service needed to get these clients to the closing table?

Make sure you have access to every tool and program available.

• Loan Programs - FHA, VA, Home Ready, Home Possible, USDA - These all are amazing options for putting down 3.5 % or LESS.  VA and USDA loans require NO Down Payment!
• Talk to the buyers realtor EARLY in the process to make sure they know the buyer may need to ask for Seller Credits.  This needs to be part of the initial offer and negotiation so be in touch with the realtor as soon as you know you may need that 
• Lender Credits - make sure your lender will allow you to increase the rate slightly to apply additional yield to the buyer’s costs.  If the higher rate is acceptable with your client and the debt ratio supports it, then that could also be an option.
• Down Payment Assistance.  We offer 1%-6% DPA funds which is some cases are not even a 2nd mortgage and are simply a grant that does not need to be repaid.

Here is an example:  First-time Buyer chose to BUILD a new home.  We used FHA Construction to Perm loan program. 

EMD = 2500 - Borrower’s Funds

Seller Credit = $7,380

DPA Grant  =  $8,610

Lender Credit = $1,000

Cash to close = $958

This was a $246,000 Home Purchase and Build!  "FREE MONEY" = $16,990.

Check out more specifics about loan programs available to our MLOs and DPA HERE

For more information on how we help our clients at Innovative Mortgage, please reach out to us.

And Stay Tuned for PART 3 of our series on converting renters into buyers - Overcoming Renters Assumptions that they cannot buy

For more information feel free to contact us with any loan origination questions, 727-372-8059.

And Stay Tuned for PART 3 of our series on converting renters into buyers - Convincing Renters that Buying is Within Their Reach

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