State of New York Mortgage Agency (SONYMA)
How First Time Home Buyers can get closer to acquiring a property in New York
They say that if you want to live a life of excitement, diversity, and creativity then look no further than New York City. This city boasts of a vibrant 24-hour life. Apart from that, it is also a very convenient place to live in. Almost anything you need – from groceries, restaurants, shops, banks to drug stores, pet stores, and salons – you name it and it’ll just be a few blocks away from your place. Although, all these advantages come at a price. That is why the State of New York Mortgage Agency (SONYMA) is here to help.
As most people know, New York is a very expensive city to live in. This is especially true when it comes to real estate. Next to San Francisco, New York is noted to be the second most expensive place to rent in the USA. According to Zillow, the median price of rent in New York is $2,895. Moreover, for those wanting to get a piece of the Empire State, the median price of properties or homes presently listed in New York is $799,000. However, the farther you get from New York City, the more rural it becomes. In these areas, prices of homes get less expensive.
Time to buy a home in New York
So, when you are at this life stage where you feel it’s time to buy a home in the lovely state of New York, then by all means, invest in that property! But just to keep it real, buying a home requires a lot of money up front. Most lenders would want buyers to place 20% down payment on a house. However, buyers would often place down payments that are lower than that. Apart from this, you also have the closing cost. Then, there are also other additional costs that come with your home purchase, such as cost of utilities, property taxes, and monthly maintenance cost.
In line with this, there are programs that can help first time home buyers like you when it comes to making that down payment and getting closer to acquiring your new home. These mortgage programs are provided by the State of New York Mortgage Agency (SONYMA).
1. All about the State of New York Mortgage Agency (SONYMA)
The State of New York Mortgage Agency (SONYMA) is a corporation formed by the New York State government. The group helps the low to moderate-income residents purchase a new home. They also want to make homeownership easy on the pocket for first time home buyers by providing:
- Options for minimal down payment (as low as 3% down payment)
- More attractive interest rates (provides fixed-rate mortgage)
SONYMA offers what they call a “vanilla wafer” mortgage loan. This is a fixed-rate mortgage (FRM) where the interest rate remains the same throughout the loan term. Other loans have floating interest rates that adjust from time to time. But with this fixed-rate mortgage, first time home buyers have the advantage of planning their budget based on a fixed cost.
SONYMA programs are there to help borrowers from all walks of life. Apart from competitive interest rates and low down payment, their programs also offer the following features:
- No Prepayment Penalty – A prepayment penalty or prepay is an agreement between borrower and lender wherein the lender regulates the amount the borrower is allowed to pay off plus the schedule of payment. So no prepay means you have more freedom to pay more of your loan and at an earlier time if you want to.
- Down payment assistance – SONYMA offers this feature with all of its mortgage programs
2. So how does SONYMA work?
The State of New York Mortgage Agency (SONYMA) partners and contracts with a network of lenders in New York State. SONYMA purchases mortgage loans from these lenders and in turn, the lenders offer SONYMA’s programs to the borrowers.
SONYMA mortgage programs are intended for primary residence only and not for commercial purposes. Similar to other loans, there are certain requirements that need to be submitted to SONYMA, such as:
- History of employment
- List of assets
- Proof of rental
- Good credit history
There are certain limitations though when it comes to availment of the mortgage programs. So, who can benefit from SONYMA?
- First-time home buyer in New York
- Those with low to moderate income
- In search of a primary residence
- In need of down payment assistance
3. State of New York Mortgage Agency (SONYMA) Programs
There are 4 mortgage programs offered by SONYMA.
- Achieving the Dream
- Low Interest Rate
- Conventional Plus
- FHA Plus Program
These programs help qualified buyers acquire a primary home at a price that is affordable. All these mortgage programs have an optional down payment assistance offer and can also be used together with other grants and subsidies.
Achieving the Dream
This program is open to first time home buyers with lower income. It aims to help maximize the value of their money by requiring just minimal down payment. This program provides a 30-year fixed rate mortgage, with down payment as low as 3%. Interest rates for this program is also lower than other SONYMA programs.
Low Interest Rate
This is a standard SONYMA mortgage program designed for first time home buyers who plan on purchasing a newly constructed home or an existing one. It provides qualified buyers with low down payment options (as low as 3%) and attractive interest rates. The program also allows for the purchase of 1-4 family homes, among other properties.
This mortgage program combines Fannie Mae’s HomeReady Mortgage with SONYMA’s Down Payment Assistance Loan (DPAL). It is primarily intended for borrowers with incomes that are below the program limits. The combined features of this program offer lower monthly payments compared to other mortgages.
FHA Plus Program
This is a mortgage program involving the combination of the 30-year fixed rate mortgages with the SONYMA Down Payment Assistance Loan (DPAL). The program is open not just to first time home buyers, but to previous homeowners as well. The fund can be used to purchase a primary home or to refinance a primary home’s existing mortgage. This program meets the needs of a broader range of borrowers.
For more detailed information on the different features, benefits, eligibility requirements, and other considerations, you can check out the page on the SONYMA programs.
4. Other Add-on Features from SONYMA
Here are other SONYMA features that can help with your home loan. These programs or type of loans can be the answer to whatever home-related needs you have on a particular life stage that you are in.
- Down Payment Assistance Loan – As we all know, the biggest chunk of home payments are with the down payment and closing costs. This can help home buyers, who avail of a SONYMA mortgage program, with their budgets. This can also be used by those who are required to have mortgage insurance. The fund can help you cover the entire premium amount or a portion of it.
- Remodel NY – This program can help you purchase a property and pay for minor or major house repairs so you can turn that house into your dream home.
- Homes for Veterans – SONYMA also has a low-interest mortgage product that is designed to make homeownership easier and more affordable for veterans and active service members.
- Graduate to Homeownership – The program offers homebuyer education, assistance for down payments, as well as low-interest mortgages for recent college graduates. This can help them start a new life, with new opportunities ahead.
- Neighborhood Revitalization – This helps qualified buyers get the funding to purchase and restore vacant properties affected by the foreclosure crisis.
- ENERGY STAR – SONYMA, in partnership with the New York State Builders Association (NYSBA), the New York State Energy Research and Development Authority (NYSERDA), and the Long Island Power Authority (LIPA), helps give incentives to home buyers who will purchase an ENERGY STAR certified home.
5. How to Apply for a SONYMA Mortgage Program
Most of the time, applying for a mortgage can be overwhelming. There are a lot of paperwork with dozens of mortgage requirements and information to sift through. SONYMA partnered with a host of participating lenders all over the State of New York. The network of lenders know all about the SONYMA mortgage programs, as well as the requirements for application, the varied options, and the benefits.
The lenders can help guide home buyers through the process, from start to finish. Essentially, these are the steps you should follow in applying for a SONYMA mortgage program:
- Secure a pre-qualification with a Mortgage Lender within the SONYMA network. When you’re pre-qualified, this puts you in a much better position to negotiate with potential sellers.
- Look for a home and once you’re absolutely decided, then sign a contract. When negotiations are done and you agreed on a price, go ahead and seal the deal. Moreover, place that good faith deposit to secure the home.
- Don’t forget to update your application and lock in the rates. Once contract is signed, you need to work closely with your lender to streamline your SONYMA mortgage application and pin down your interest rates.
- Keep an open line of communication with your lender and your attorney. The success in buying a home stems from good collaboration from all sides. You might also need some information or advice from time to time.
New York state of mind
They say that anything is possible in New York. So keep that dream of owning your own home and worry less about the challenges that come with it. It is true that property investments may be heavy on the pocket, especially in New York. But as we just outlined for you, there are various opportunities and programs that can help ease that financial challenge. You’ve got to keep moving and striving (with a little help along the way) so that one day, you’ll make it in New York with a place to call you own.