A brief overview of some of the financial assistance programs available to help you purchase multi family homes in foreclosure
Purchasing a multi family home can help you build your real estate portfolio and generate additional income each month. When buying multi family homes in foreclosure, financial assistance may be available in your area. Government agencies and community development organizations provide such programs to ensure continued economic development.
The type of financial assistance available depends on whether you plan to purchase a property at auction, buy it directly from the bank or private owner, or bid on a property being sold by the HUD Department of Housing and Urban Development (HUD). Financial assistance programs for buying multi family homes in foreclosure are usually available to buyers who are buying directly from a bank or bidding on a property in a foreclosure auction. HUD typically requires buyers to pay for everything in cash, so the agency does not accept any type of financing.
One federal program that assists buyers with purchasing multi family foreclosures is the Neighborhood Stabilization Program (NSP). The purpose of this HUD-administered grant program is to stabilize communities that have been hit hard by the economic crisis of 2008. With funds authorized by the Housing and Economic Recovery Act of 2008, HUD provides grants to all 50 states. The Dodd-Frank Wall Street Reform and Consumer Protection Act and the American Recovery and Reinvestment Act authorized additional funds.
Each state that receives funds from the NSP must use at least 25 percent of the money to fund programs that encourage the purchase of abandoned and foreclosed homes. The NSP does not give grants directly to individuals, but buyers can contact grantee organizations in their states for information about eligibility guidelines. These guidelines vary from organization to organization and paying close attention to the requirements for the programs available in your area is advised. Some programs require financial assistance recipients to use the money they receive to provide affordable housing to renters.
Another benefit of the NSP is that you may have to put as little as 3 percent down on a multi family property. Because traditional lenders typically require down payments of 5 to 20 percent, participating in this program can save you a significant amount of money. Unlike traditional lenders, the organizations that participate in this program only require buyers to put down 1 percent of their own money. The remaining 2 percent can come from loans or other funding sources. The money you save can help you finance property improvements for your new multi family property.
Once you receive financial assistance for multi family foreclosure buying, it is important to work with real estate professionals who have experience with multi family listings. QualitySmith can help by putting you in contact with local real estate professionals eager to assist you.