homeWelcome, sign in or click here to subscribe.login
     


 

 

Real Estate


print  email to a friend  reprints add to mydjc  
Tom Kelly
Tom Kelly
The Real Estate Adviser

October 25, 1996

FIRST TIME BUYER HELP BENEFITS EVERYONE

BY TOM KELLY
The Real Estate Advisor

In the push to get the public to understand that low downpayment loan programs are available to just about everyone who would like to own instead of rent, a back-to-school, $30 million sale has gone virtually unnoticed.

The Washington State Housing Finance Commission has plenty of cash left to fund discount mortgages for first-time homebuyers and has also taken an extra step to bolster homeownership classes.

Currently, the commission's loans financed through revenue bonds, known as the House Key Program, are available through more than 50 state lenders. Interest rates are 7.2 percent and maximum loan fees are 2 percent.

The House Key interest rate is nearly three quarters of one percent lower than the average rate for a 30-year, fixed-rate loan available in western Washington.

According to Paula Benson, director of single-family programs for the Washington State Housing Finance Commission, the enhanced bundle now available was a result of a partnership between the State Investment Board and Freddie Mac, one of the nation's largest providers of mortgage money.

"Lower interest rates permit more families to qualify for loans," Benson said. "As the amount of the monthly payment comes down, the chances of homeownership goes up."

Potential borrowers must meet various income and purchase-price guidelines and also demonstrate that they have not owned a principal residence for the past three years. In King and Snohomish counties, a family of three or more people must not earn more than $55,000 and must purchase a new or existing home for less than $145,000 to qualify.

Income and purchase limits are greater in special "targeted" areas in all counties. For further information, contact your local lender or telephone the Washington State Housing Finance Commission at 1-800-767-HOME or (206) 464-7139.

The commission provides below-market financing to buy, build or preserve affordable housing and nonprofit cultural and social service facilities. The commission builds partnerships with the private sector to raise capital needed to further social and economic objectives at no cost to taxpayers. The commission has financed more than 25,126 loans since 1983 for first-time homebuyers in Washington.

A reservation system allows borrowers immediate access to program funds based on availability. A borrower must first attend one of the commission-sponsored homebuyer education seminars and apply for a loan through a participating lender. When loans are fully reserved, a waiting list will be taken.

According to Mason, typical first-time programs do experience a 20 percent drop-out rate on reservations. Borrowers remaining on the waiting list will have the opportunity to be confirmed for funds frm the next available bond issue.

The path to first-time homeownership wasn't always paved like it is today. Five years ago, Congress had the states' authority to issue these tax-free revenue bonds on the chopping block. Given the poor environment surrounding housing in general, and lack of any clear and formal housing policy, the bond program was expected to be given the heave-ho. Coupled with the loss of another great first-time buyers' program -- the Mortgage Credit Certificate Program -- another setback would have done serious damage to the recovery of the housing market.

At the 11th hour, just before Congress recently adjourned, a six-month reprieve was enacted and eventually the states received an indefinite extension for bond programs.

The first-timers are the first domino, displacing potential move-up buyers on the critical first rung of the housing ladder. Move-up buyers have to sell their starter homes before they can buy a larger family home. And aging empty nesters who want to sell that large home to move-up buyers are stuck if the traffic on the housing ladder stalls. These older folks can't relocate to a retirement community or a more practical smaller space until the move-ups get the cash.

What needs to be hammered home is the idea that everybody wins when there is continued congressional, lender and builder support for first-time buyer programs. We have a tendency to turn our heads once we have gotten in the door.

We cannot expect any fire to remain under the housing market without giving first-time homebuyers the wherewithal to fan the flame. The bottom line is still the bottom rung.



Previous columns:



Email or user name:
Password:
 
Forgot password? Click here.