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Closing Costs Assistance Programs for North Carolina

By Tabitha Jean Naylor

Are you one of those potential home buyers struggling to figure out how you can break into the housing market when you can't afford the out of pocket cash needed to pay the closing costs? If you are a North Carolina resident there is good news. There are several different programs available to help you with closing costs.

The North Carolina Housing Finance Agency offers a home advantage mortgage that is specially designed to help out buyers with down payment and closing costs. If you qualify. you may be able to receive a second (silent) mortgage up to 3% of the first mortgage loan amount that is tax free, deferred and forgivable. You only repay this second mortgage if you sell, refinance or transfer the home before year 15 of the loan. The down payment assistance is forgiven at 20% per year once you have lived in the home for a period of 10 years. If you live in your home 15 years the loan is fully forgiven.

You may be eligible for a home advantage mortgage if:
  • You are buying a new or existing home (townhouse, new or previously owned single family home, condominiums, duplexes or new manufactured home)
  • You are a first-time or move-up buyer
  • You are buying a home North Carolina and will occupy it within 60 days of the closing date.
  • Your annual income does not exceed $85,000
  • You are applying through a participating lender for an FHA, USDA or VA loan and you meet the state price limits of the specific type of loan.
  • You are a legal resident of the United States
  • Your credit score is 640 or higher
Some North Carolina mortgage companies offer a no closing cost mortgage. These loans are true no closing cost loans. That means there are no points, no origination fees or associated costs of any type. The traditional closing costs are not rolled into the total mortgage loan amount as happens with other lenders. With a true no closing cost loan the lender pays all closing costs. You would pay $0 origination fees, $0 Appraisal fees, $0 Application fees, $0 attorney fees, $0 title insurance fees and $0 recording fees.

You should speak with a mortgage loan office to determine what type of mortgage loans they offer and if a no closing cost loan is right for your situation.

The City of Raleigh offers homebuyer assistance programs but all participants must have a homeownership Class Certificate in order to participate in the programs. The City of Raleigh offers three homebuyer programs.

Citywide Homeownership Program

This program is specifically for first time homebuyers who meet income qualifications and want to buy a home within Raleigh's city limits. The program provides a second mortgage up to $20,000 as a low-interest loan to help with closing costs, down payments or gaps in financing. Homebuyers must be able to qualify for a first mortgage through a participating lender.

The OWNER (Ownership Within Neighborhoods to Encourage Revitalization) program

This program is designed to encourage revitalization. It is open to all buyers but it has both targeted area limitations, and income limitations. This program offers a 0% interest second mortgage up to $30,000 after the homebuyers have qualified for a first mortgage through a participating lender. Make certain to contact staff personal to understand exactly what areas of Raleigh qualify under this program.

Homebuyer Rehabilitation Program

This Raleigh city program assists homebuyers with the purchase and renovation of a home that is in need of repair before the owner can move in. There are strict limitations governing this program so check with the city regarding specifics. The program offers a low-interest loan and the amount depends on the cost of the purchase and the cost of rehabbing the property but monies can be used to cover any closing costs as well as down payment, purchase and rehab costs.

Check with your realtor and your mortgage broker for the most current closing cost and down payment assistance programs specific to the area where you want to buy.

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