Question

Some down payment assistance programs offer low- or no-interest deferred loans, known as silent seconds. Which of the following statements is true about these programs?

a) The deferred loan doesn't need to be repaid until the first mortgage is paid off or refinanced, or the home is sold.
b) The lender providing the first mortgage isn't informed of the borrower's use of a down payment assistance program.
c) The programs rarely have qualifying requirements, and are first-come-first-served.
d) They may only be used with FHA loans.

Answer 1

The statement that a deferred loan from a down payment assistance program doesn't need to be repaid until the first mortgage is paid off, refinanced, or the home is sold is true. This assistance can help homebuyers with less upfront capital, and these programs have eligibility requirements and are not exclusive to FHA loans.

Step-by-step explanation:

The correct statement about down payment assistance programs that offer low- or no-interest deferred loans, known as silent seconds, is that the deferred loan doesn’t need to be repaid until the first mortgage is paid off, refinanced, or the home is sold. This means that the homebuyer can benefit from the down payment assistance without the immediate financial burden of additional monthly payments, which can be a significant help to those with less upfront capital when purchasing a home.

Lenders involved in the first mortgage are generally informed of a borrower's use of such assistance programs as they are part of the financial arrangement concerning the property. Down payment assistance programs often have eligibility criteria to qualify, and they are not necessarily first-come-first-served. Also, these programs are not exclusively used with FHA loans; they may be available for other types of home loans as well.