When Do You Repay Georgia Dream Down Payment Assistance?
Georgia Dream assistance is deferred, not forgiven, so one day you repay it. That day is when you sell, refinance, or pay off your first mortgage. Here is exactly how repayment works and how to plan for it.
The three repayment triggers
Because Georgia Dream assistance is a deferred loan, it has a defined payoff, just not on a monthly schedule. Three events trigger it. Sell the home and the balance is paid from your closing proceeds. Refinance the first mortgage and the second generally has to be paid off or re-subordinated to the new loan. Pay the first mortgage off entirely and the second is due then too. Until one of those happens, it sits behind your first mortgage at zero interest, costing nothing month to month.
What repayment looks like at sale
Say you took the $10,000 Standard assistance and sell years later. At closing, your first mortgage is paid off from the sale proceeds, then the $10,000 Georgia Dream second is paid, then you keep what is left as your equity. Because there was never any interest, you repay exactly what you borrowed, no more. As long as your home has appreciated or you have paid down principal, there is normally equity to cover it. Planning for that $10,000 (or $12,500) line on your future settlement statement is the whole point of understanding it now.
A note on refinancing
Refinancing is where the deferred second surprises people. When you refinance your first mortgage, the Georgia Dream second does not just disappear, it usually must be paid off from the refinance or formally re-subordinated behind the new loan. That is normal and manageable, but it is worth knowing before you chase a refinance, because it affects your numbers. If you are weighing a Georgia Dream purchase against a state with a forgivable program, this is the trade-off, see grant or loan?
Common questions
When do you repay Georgia Dream down payment assistance?
You repay it when you sell the home, refinance the first mortgage, or pay the first mortgage off. Until then the deferred second sits at 0% interest with no monthly payment. It is non-forgivable, so the full balance is repaid, not forgiven over time.
Does Georgia Dream assistance charge interest?
No. The Georgia Dream second is 0% interest and deferred, so it accrues no interest and has no monthly payment. You repay exactly the amount you borrowed ($10,000, or $12,500 under PEN/CHOICE) at sale, refinance, or payoff.
What happens to Georgia Dream assistance if I refinance?
When you refinance the first mortgage, the Georgia Dream second generally must be paid off from the refinance or re-subordinated behind the new loan. It does not disappear, so factor it into your refinance numbers.
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