What is the Good Neighbor Next Door Program?

Do you think homeownership is out of reach? What if we told you that you could buy a home for half the cost of the listing price and a $100 down payment? You would likely say we’re crazy, but the fact is, buyers eligible for HUD’s Good Neighbor Next Door Program (GNND) can do just that. But what is the Good Neighbor Next Door program and how does someone qualify? Let’s take a closer look at the program, the requirements, and some other similar programs available.

What is the Good Neighbor Next Door Program?

The GNND program is a community revitalization program that is sponsored by the U.S. Department of Housing and Urban Development (HUD). The idea of the program is to revitalize homes in certain neighborhoods while offering a significant discount to those that are eligible. The program is directed toward civil servants in the community and allows them to purchase qualifying HUD homes for 50% off the list price and a $100 down payment if you use an FHA loan.

The program requires you to hold two mortgages on your home. The first mortgage is for the 50% cost of the home, and you are required to obtain your own financing. The second mortgage is a silent mortgage that covers the additional 50% of the listing price. You will have no payments or interest on this second mortgage as long as you live in the home for at least 3 years.

Pros

• You save 50% of the homes list price
• Low down payment
• Ability to finance closing costs
• You can include home repair costs if you use a renovation loan, such as an FHA 203(k)
• Financial investment that builds wealth quickly
• You help revitalize the neighborhood you serve

Cons

• Home options are very limited
• Qualifying homes only stay on the market for 7 days in the program, so you must work quickly
• You must pay a penalty if you move before the 3-year term, as you must pay a percentage of the silent mortgage back. For example, if you sell the home after 18 months, you will be required to pay back 50% of the silent mortgage amount.
• If another GNND bid is placed on the same home, you compete with the other buyers through a lottery system.

Who qualifies for the Good Neighbor Next Door Program?

The Good Neighbor Next Door program is open to civil servants in the community. This includes police officers, firefighters, and EMTs working full-time for a federal, state, local, or tribal government agency. The program is also open to full-time teachers teaching pre-k through grade 12 at a state-accredited public or private school. If the teacher works for a private school, they must provide proof that at least one student at the school resides in the same neighborhood as the home they are purchasing.

All of those eligible must certify that they intend to remain an employee in their profession for at least one year and the home they purchase must be in the community they serve.

How do you apply for this program?

If you meet the requirements for the program, you can check the local listings in your area through HUD's website. Keep in mind that homes are only available for listing for 7 days. When you find a home that you are interested in, you can follow the instructions to submit your interest in purchasing the home. You then must obtain loan pre-approval on your own before the program can complete.

Alternatives to Good Neighbor Next Door Programs

If you aren’t a civil servant and do not qualify for the GNND program, there are some other alternatives available to help you purchase your new home. Here we offer information on a few of those programs.

1. Hero Home Programs

Hero Home Programs believes that everyone should have access to homeownership. Their team works with you to take advantage of available programs, grants, and other discounts designed to help you break the cycle of renting and become a homeowner. They have available programs for renters, educators, first responders, healthcare workers, and military personnel.

2. Teacher Next Door

Next Door Programs, including Teacher Next Door, is the largest national home buying program in the United States. They offer programs for teachers, military, civil servants, healthcare professionals, and first-time buyers. Programs include grants, down payment assistance, Fresh Start Credit Repair, and more to help you move from renting to homeownership as quickly and efficiently as possible.

3. Everyday Hero Housing Assistance Fund (EHHAF)

This is a program designed to help everyday heroes, such as police, firefighters, teachers, social workers, and medical professionals, with their out-of-pocket closing costs. They work with sellers to negotiate concessions and then will gift funds to cover the remaining closing costs. These funds are a free gift and do not require repayment.

4. Union Mortgage Assistance

If you are a member of a labor union, you may have access to special union programs designed to assist with homeownership.

5. Government loans

First-time homebuyers, military members, and veterans may have access to FHA, VA, and USDA loans that offer low or no down payment options, helping to make homeownership easier to obtain.

Homeownership is within your reach

Everyone deserves the opportunity to own a home and there are various programs available that can help just about anyone make the dream of homeownership a reality. At Hero Home Programs we understand how the home buying process can be intimidating and overwhelming. Our dedicated team has access to the best grants, rebates, and loans across the country and we are determined to help you find the right program and get you into the home of your dreams. Contact us today and let us help you get started down the road to your new home.

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How Much Rent Can I Really Afford?

Whether you are looking to move out for the first time or deciding it may be time to leave the roommates and find a place of your own, figuring out how much rent you can truly afford is the best place to start. What percent of your paycheck should go to rent? How much do you need to get an apartment? While many experts suggest you follow the 30% rule, that isn’t always possible. However, it doesn’t mean you can’t still afford your own apartment. It just takes a little planning and budgeting.

What is the 30% rule?

The traditional rule of thumb when it comes to determining how much you can afford to spend on rent is the 30% rule. This means that you should be spending no more than 30% of your before-tax income on rent. For example, if you make $60,000 a year, your monthly rent should not exceed $1,500. However, this is not always possible in today’s housing market, especially if you live in a larger city. The good news is with the right budget, you don’t always have to stay within the 30% rule.

Setting a realistic budget

A good way to evaluate your affordable rent rate is to look at all your monthly expenses. Another good breakdown to consider is the 50/30/20 rule. This breaks down to include 50% for fixed costs (rent, utilities, groceries, transportation), 30% for wants (memberships, entertainment, shopping, dining out), and 20% for goals (savings, reducing debt). This breakdown gives a little more wiggle room when compared to the 30% rule. For example, if you find a rental that includes utilities and is within walking distance to work, school, and shopping, you can afford a higher rental price because you will save in other budget areas, such as utilities and transportation.

When creating your budget to see how much rent you can afford, it is important to be realistic. If the numbers are getting tight and you are considering giving things up, such as gym memberships or regular dining out, make sure that this is something you can really live without. While you want to find a rental you can afford, you still want to be happy with your choices.

Consider your local housing market

Your local housing market plays a large role in determining how much rent you can afford and what changes you may need to make in your budget. In some larger cities, such as New York or Los Angeles, you may find that rental prices exceed 30% and, in some cases, even 50%. This may mean you need to adjust your budget further or consider looking for rentals in other nearby locations.

Think about your current lifestyle

When creating your rental budget, it is important to think about your current lifestyle and what changes you may need to make to reach your goal. If you have been living at home or with roommates, you may have had all your groceries provided for you or had to share grocery expenses. Getting into your own home will mean you have to fill your fridge, adding additional expenses to your monthly budget. This also includes things like internet service, cable or streaming services, and other monthly home expenses, including monthly rental insurance.

One-time expenses to consider

When you are looking to make the move into a rental home or apartment, there are some one-time expenses you must also consider. Saving for these expenses will need to be included in your temporary budget as you consider your rental affordability, as you don’t want to drain your savings to make your move to a new place.

Moving costs

When moving to a new location, there are many different moving costs to consider. If you are currently living in a home with your own furniture and household goods, you will have to think about hiring a mover company, a self-storage moving container, or renting a moving truck and doing it yourself. There is also the cost of packing supplies to consider, especially if it is a long-distance move. If you are hiring movers, you can expect to pay a few hundred to a few thousand depending on how far away you are moving. Even if you recruit some friends to help and do it yourself, you are still looking at snacks and beverages to thank them for their help.

In addition to physical moving expenses, moving can cause other expenses as well. If you are moving out of another rental, you will have cleaning supplies and costs to leave your previous residence in tip-top shape. In addition, moving to a new area or state means a new driver's license and vehicle registration.

Deposits

When moving into a new home or apartment, you have multiple deposit costs to consider. While you are likely to have a deposit on your new rental, there are additional deposits that are also very common. These can include:

• Last month’s rent – In addition to an initial deposit, many rental properties also require a deposit of the last month’s rent.
• Pet deposit – If you have a dog or a cat that is allowed, you are likely to be charged an initial pet deposit. In addition, some places will also charge monthly pet rent.
• Utility deposits – Many utility companies require a deposit for new customers.
• Connection or transfer fees – Many companies, such as internet or cable providers, charge initial set-up fees or transfer fees to move your service to your new home.

Furniture and household goods

Are you moving into your first new place? Chances are you don’t have your own furniture or household goods. In addition to a new bed or couch, you will also have to consider things like sheets, towels, dishes, silverware, televisions, tables, etc. Shopping second-hand can save you money, especially if you are looking to furnish an entire home.

Is renting your only option?

While we have talked about renting and determining how much you can afford, the truth is you may be able to get more for your money if you purchase a home instead of renting. In fact, there is a chance your mortgage can be less than your rental budget.

Don’t think you can qualify to purchase a home? The team at Hero Home Programs is committed to helping renters get the home financing they deserve. Over time, purchasing a home saves you money and provides a solid investment. To learn more about how our team can help, contact Hero Home Program today.

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