Do you apply for the Community Seconds Program before or after you apply for your mortgage?

By Michael Jensen, Mortgage and Finance Guru

Edited by Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience

Updated October 20, 2020

The answer to your question is that you apply for the community seconds program at the same time that you apply for your first mortgage but it is usually best to contact the housing commission or agency that is providing the community seconds loan as a first step.

Housing commissions usually have limited funds for homebuyer assistance programs so you want to make sure the community seconds program is available and that you qualify. Additionally, the housing commission may have preferred lenders that they recommend that you work with for your first mortgage, although it is important that you find a lender that offers the loan program you are looking for, especially if you want to use a low down payment program.

Review How the Community Seconds Mortgage Program Works

While it is important to determine the availability of the community seconds program and confirm that you meet the eligibility requirements, you should also contact your mortgage lender at the same time. The lender needs to know the terms of the community seconds loan to assess your ability to qualify for the loan. A community seconds program does not do you much good if you cannot qualify for the first mortgage, which represents the majority of your financing to buy a home.

Additionally, not all lenders or mortgage programs permit the use of community seconds loans so it is important to communicate to your lender up-front if you are using one.

A community seconds loan or other down payment assistance program also involves additional documentation which affects how long it takes to process and close your mortgage. In an ideal scenario your lender has experience processing mortgages that also include down payment assistance program, which can make the process go more smoothly.

Alternatively, the housing commission or organization that is providing the community seconds loan wants to review the terms of your mortgage to make sure that your interest rate and closing costs are fair and that the mortgage satisfies the program’s requirements. Most community seconds programs only allow borrowers to choose a fixed or adjustable rate mortgage and some programs limit the interest rate or extra fees your are charged. If your first mortgage does not meet the program provider’s guidelines then you may need to work with a different lender.

Please note that you cannot apply for community seconds program until you select the property that you want to purchase but you can contact your housing commission or agency to learn more about program availability and eligibility guidelines.  Because program funding may be in short supply, the sooner you establish a relationship with the program provider, the better. 

You can also not officially apply for a mortgage until you choose a home but we recommend that you contact multiple lenders in the table below to review qualification requirements, understand the loan you can afford and to confirm that they have experience with community seconds programs. Plus, shopping lenders enables you to find the best mortgage terms.

You can also use our free get pre-approved form to get approved for your loan before you shop for homes. The form is easy to use, no obligation and getting pre-approved does not affect your credit. Getting pre-approved enables you to determine the loan you qualify for, proactively address potential issues in your loan application and move with greater certainty and speed when your offer is accepted.  Plus, you are a more attractive home buyer to property sellers, which gives you an extra advantage.

I have also provided a link to a HUD web site below where you can select your state and be directed to more information about home buyer assistance programs, including community seconds loans. The housing agency may also offer additional programs that may be helpful to you.

Visit the HUD State Resources Website

Sources

"Community Seconds."  Fact Sheet for Mortgage Lenders.  Fannie Mae, July 2018.  Web.