Homebuyers who have trouble saving for a downpayment now have another option – homebuyer layaway plans. With the demise of seller-funded downpayment assistance programs, residential builders are considering other options, and many are rolling out downpayment layaway plans.
With Hovnanian Enterprises Inc.’s PASSBOOK to the American Dream program, buyers participate in a “savings feasibility plan” to generate enough savings by the time they reach the closing table. Meanwhile, the Buy & Save plan offered by Beazer Homes USA Inc. offers a “steady savings track” for prospective buyers.
Buyers begin making payments to the savings plans as soon as the contract is signed; and at Hovnanian, some units do not break ground until a savings threshold is reached. K. Hovnanian American Mortgage President Dan Klinger says it will take buyers anywhere from three months to nine months to accumulate the necessary cash, which is held in an escrow account. Many experts are skeptical, however, that such plans will jumpstart sales.