Buying a home – SMARTBUY PROGRAM got easier with the Maryland SmartBuy Program. This is a program that the State of Maryland rolled out in 2016 to help buyers pay their student loan debt and purchase a home. The original program could only be used for DHCD properties. The inventory was very low, so it did not really help too many people.
The State of Maryland expanded SMARTBUY PROGRAM last year. The program is now available for ANY property in the Maryland. The property must pass an appraisal inspection. And, the seller is willing to make repairs.
How the SmartBuy Program works – if you are buyer with $39,000 in student loan debt and looking to purchase a home for $285,000. The program will help extinguish ALL of your student loan debt at settlement. The buyer will qualify for the maximum assistance through the SmartBuy Program.
For example – A sales price of $267,000 will qualify a buyer for assistance up to $40,000 – $267,000 x 15%). That’s a pretty good deal, right?
HERE ARE THE SPECIFICS OF THE PROGRAM:
The program will help buyers with existing student loan debt that are in a repayment or deferred status. The minimum balance of $1,000 to pay it off in the form of a forgivable loan. The product will offer up to 15% of the home purchase price up to a maximum loan amount of $40,000 to pay off a buyer’s outstanding student loan debt.
The whole student debt of one of the buyers must be entirely paid off at the time of the home purchase. No remaining student loan debt may remain after the loan closing under this program.
TRANSACTION STRUCTURE – Mortgage Product
Up to 95% of the purchase price will be financed with a first mortgage – a 30 year conventional amortizing mortgage loan.
The second mortgage is a 5-year forgivable loan of up to 15% of the purchase price – not to exceed $40,000. This loan will be used to pay off the borrower’s outstanding student debt balance at the time of home purchase. The student debt loan must be in the borrower’s name and for the borrower’s education.
The second mortgage is a 0% interest deferred loan with no monthly payments. Forgivable over 5 years at 20% rate per year on each anniversary date (remainder due upon sale or refinance if the event takes place within the first 5 years from the settlement of the first mortgage).
DOWN PAYMENT AND SETTLEMENT EXPENSE ASSISTANCE
If the borrower desires it, a third mortgage will be provided by MMP as a regular Down Payment Assistance loan of $5,000, 0% deferred (due upon sale, payoff, transfer, or refinance of the first mortgage) subordinated to the first and second mortgage.
The entire State of Maryland.
Any creditworthy borrower, based on Fannie Mae and PMI underwriting standards with student debt of at least $1,000 meeting the MMP credit score requirements of 640 and household income limits.