DOWN PAYMENT ASSISTANCE PROGRAM
For many Arkansans, the largest obstacle to homeownership is saving for down payment and closing costs. In fact, this is a problem all too common among low to moderate income Arkansans who have little of their pay check left after paying for rent, utilities, transportation, insurance and groceries. To help, the Arkansas Development Finance Authority (ADFA) initiated the Downpayment Assistance (DPA) Program.
ADFA has DPA for qualifying applicants of a first mortgage. The DPA ranges from $1,000 to $6,000 for closing cost assistance. Cash back to the borrowers is allowed for expenses "paid outside of closing" (POC). In order for the funds to be replenished they must be designated as being paid up front by the borrower and be reflected as such on the HUD-1 Settlement statement. This applies only to the ADFA hard second mortgage. It does not apply to ADDI loans.
INTEREST RATE: VARIES
ADFA requires the borrower to attend a Home Buyers Counseling Program where a certificate will be issued on their behalf.
Both the first and second mortgages will be sold to the master servicer, who currently is U.S. Bank. The master servicer will issue one "Payment Statement" so that each month the borrower can remit one check to cover the first and second mortgage. The second mortgage is not subject to Recapture, and there is no prepayment penalty.
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