Down Payment Assistance Programs: All You Need to Know – TJ Peters
On this episode of The Closing Table, we sat down with TJ Peters!
To watch the full episode, check it out on YouTube below. In the meantime, here’s a summary of the conversation…
Here’s what you missed from TJ Peters…
The conversation began with a fill-in-the-blank icebreaker on the key to a successful real estate transaction, the biggest risk in real estate investing, and more. TJ then introduces himself as more than just a real estate professional. He is a husband, a father, and a community ambassador for the Chamber of Commerce in Bay County. Additionally, he owns a pool and billiards company and runs a pool league.
TJ’s services extend to the Great Lakes Bay Region, which encompasses several notable landmarks and sports teams. In terms of hockey, there’s the Saginaw Spirits. Midland is home to the Great Lakes Loons, while Bay City boasts the Saginaw Bay and hosts numerous fishing events and leagues. In his area, on average, property listings remain on the market for 10-14 days, indicating an aggressive seller’s market.
When it comes to struggling to save for a down payment, TJ Peter offers valuable advice. He emphasizes the importance of paying attention to one’s credit. Reflecting on his own experience, he shares how he was in the army after high school and didn’t worry much about income since it was consistent, although not substantial. This led him to handle his credit card irresponsibly, resulting in a poor credit history that took time to rebuild. He also dispels the misconception that having a low credit score means getting a cheap loan. While funding fees may be lower, the interest rate for credit-approved buyers remains significantly higher compared to those with good credit. Therefore, having good credit is crucial for securing favorable loan terms.
In terms of clients utilizing down payment assistance programs, TJ reveals that a significant portion of his business involves MSHDA (Michigan State Housing Development Authority), particularly with first-time buyers. However, there are also other programs available, such as Premiere Home Finance, which offers non-MSHDA-backed down payment assistance. Nonetheless, approximately 70-80% of TJ’s clients utilize MSHDA due to its competitive interest rate of around 6.25%. TJ clarifies that utilizing MSHDA doesn’t mean clients don’t have any money; rather, it’s simply a better program. He believes that the misconception around this is driven by the industry but can be overcome by breaking down barriers as sellers’ agents and adequately preparing clients.
Following that, the two talked about the recent allocation of $382 million by HUD to the Housing Trust Fund has significant implications for the availability of affordable housing in Michigan. TJ Peter sheds light on the distribution of funds, mentioning that around $8.5 million was allocated to Michigan. He anticipates that a substantial portion of this allocation will go towards supporting MSHDA (Michigan State Housing Development Authority), potentially increasing the number of supported households from 7,500 to 10,000 across all areas. However, he notes that the construction of low-income housing remains limited, although certain programs in the city provide assistance. Despite the allocated funds, the rising costs associated with construction can pose challenges in effectively utilizing the allocated amount.
In TJ’s experience, the key challenge lies in expanding the inventory of affordable housing and doing so at sustainable rates. While subsidies and funding support are available, the increasing costs of new construction projects raise concerns about long-term sustainability. One-time builds and the creation of low-income communities can address immediate needs, but the challenge lies in maintaining the infrastructure and ensuring ongoing affordability. Historically, there have been instances where housing projects were not adequately maintained after their initial construction. TJ emphasizes the importance of finding ways to sustain affordable housing initiatives once they are built. Additionally, he highlights the value of financial education, as many individuals lack the necessary knowledge due to a lack of exposure during their upbringing.
When it comes to the role of a real estate lawyer in the mortgage buying/selling process, TJ Peter explains that their involvement is more prominent when dealing with land contracts, particularly for individuals seeking rent-to-own agreements due to their inability to obtain traditional financing. In such cases, a real estate attorney is responsible for drafting the land contract. However, in TJ’s day-to-day operations, he rarely deals directly with attorneys. If he does require legal advice or assistance, he typically reaches out to a legal hotline.
Regarding the allocation of over half a million dollars from the American Rescue Plan Act to assist Bay County residents with overdue utility bills, mortgage and rent payments, and past-due taxes, TJ considers the impact on the current supply and demand of properties in the market. He notes that many of these past-due bills primarily involve renters. In terms of the supply and demand dynamics, TJ suggests that the inability to pay bills due to COVID-related restrictions on evictions may not significantly affect the market. However, he acknowledges that individuals facing financial struggles may be forced to prioritize their expenses, such as choosing between paying for utilities or putting food on the table. The potential impact on supply and demand may be indirect, as frustrated landlords dealing with non-payment issues may opt to sell their properties.
Reflecting on the changes in his market since he began in 2019, TJ Peter highlights the transition from a less competitive environment to the current state of affairs. Initially, negotiations were more feasible, with room for settlement and repair negotiations based on appraisals. However, as time progressed, the market became more hectic and chaotic. Appraisal gaps and inspection waivers have become more common, indicating a shift towards a strong sellers’ market. TJ acknowledges that this level of competitiveness cannot be sustained indefinitely, but the lack of inventory suggests that the market will likely remain tilted in favor of sellers for the foreseeable future.
The conversation wraps up with Kevin asking TJ what approach would he take to own a home if he know what he knows now. TJ shares that he would definitely consider purchasing a multi-unit property, such as a duplex. He would choose to live in one unit and rent out the others, allowing the rental income to cover his mortgage expenses. This strategy would enable him to start building equity while simultaneously saving the rental income. With the accumulated equity and savings, he would then aim to acquire another property and continue this cycle of building wealth through real estate investment.
Check out TJ Peters:
https://www.facebook.com/thomas.a.peters.7
https://www.facebook.com/realtortjpeters
https://www.tiktok.com/@tjpetersrealtor
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