Many first-time homebuyers are surprised to learn that reaching an agreement with the seller on a price is only one step in the purchasing process. In addition to a down payment, buyers typically have to come up with closing costs — which can be several thousand dollars. This adds up to a lot of cash that buyers have to bring to closing, and many could use a helping hand.
The Rochester City School District has joined a number of other local companies that offer employees assistance in closing costs. During in the 2013 to 2014 school year, the district will provide up to 10 applicants with $3,000 grants to apply to a down payment or closing costs toward a city home. And first-time homebuyers who purchase in the city can double that figure if they qualify for a similar grant with the City of Rochester.
Six thousand dollars toward closing costs is nothing to scoff at; it can mean the difference between being approved for a loan or rejected. So what’s the catch?
Both the city and the Rochester school district do have an agenda; they’re trying to encourage employees to live and invest in the city. Though it’s not a condition for receiving the grant from the school district, there’s a good chance employees will send their children to a city school, too.
But the problem with residency benefits is that employees are often slow to use them. And access to affordable health care, disability insurance, and life insurance are much higher priorities to employees.
Also, the school district’s residency benefit requires the grant recipient to remain employed with the district and live in the home for at least five years. Some buyers may not want to make that commitment.
Smart buyers will use the money to purchase a duplex or a triplex, and live in the property for five years. Then use the money saved from the tenants’ help paying the mortgage to buy another property.