Monday, February 02, 2015

How to clear a lien for a first time home buyer grant

I once had a nice little house in West Valley City but the neighborhood was in decline, so my wife and I decided to move. I bought that house with help from the city in the form of a first time home buyer grant of $5,000. The deal is this: if you get the grant, you promise to live in the house for 5 years. After 5 years, the lien is lifted and we're both OK.

About 4 months after that 5 years were up, we decided to move to another part of the same city. We had everything lined up for financing, but every time the title company looked at our house, they saw the lien. It showed up as a second mortgage for $5,000. Without the lien, we have the down payment, with the lien, we needed more money. So, while I'm working on closing the deal for both houses, I had to wait until the city released the lien. Or so it would seem.

I looked through the contract and found that a clause in the contract prohibited refinancing. I needed that $5k to clear the down payment and I began to worry that I should have reviewed the contract again before refinancing the loan on the house. In talking with the city by phone, I learned that refinancing wasn't any concern for the city, they were more concerned with me living in the city and staying in the same house for the term of the agreement.

So if you did take a first time home buyer grant, be sure to check the terms of the contract just in case refinancing violates the agreement. You might actually be able to get a waiver like I did with the city, I happened to get a verbal waiver. You may want your waiver in writing.

I thought for sure that I would have to wait another month or however long it took to get the lien released. But it turned out that with good communication skills, and knowing how to describe the problem, I was able to close the deals and get moved.

First, I worked with the city to get them to verify that I had met the terms of the grant. I affirmed to them in writing that I had been in the house for 5 years and that I had satisfied the terms of the grant. I called them and talked to them by phone to see if I could get a letter from the city affirming that they would eventually release the lien and that it would just be a matter of time while they worked through that with their legal department. I talked to the title company to see if that would be acceptable and they agreed. So I proceeded to work with the city on this point.

In a few days I got the letter. Then I sent that to the title company clearing the title for the house I wanted to sell and the house I wanted to buy. Within a few more days, I got a settlement statement showing the balance that I needed from the sale of my house to put a down payment on the purchase of my new home.

The bottom line is this: no matter what city you're living in, if you have taken a grant for first time homebuying assistance, and you've satisfied the terms of the grant agreement, you should make sure that the lien on the house is lifted as soon as possible after the terms of the agreement are met. This way, when you're ready to move, that work is done, making the sale of the home easier.
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