The details are below. This is the first program I've seen that really, really helps do two things:
- Get foreclosures out of circulation and off the market.
- Stimulate buyers to buy now.
HUD's Neighborhood Stabilization Program provides for 22% of the purchase price to be subsidized with a ZERO interest second loan. The best part? That 22% can be forgiven over a period of time. (Details below.)
Grant money has been allocated for every state in the Union. What does that mean to REALTORS and homebuyers?
What program can give you 22% of the purchase price, and what's the catch?
In Arizona, the grant program is called YOUR WAY HOME AZ. Your Way Home AZ will provide second loans to eligible purchasers for up to 22% of the purchase price of the property. Second loans will have a term of from five to fifteen years, depending on the amount of assistance, and will be forgiven at the end of the term if all program requirements have been met, and the borrower continues to live in the house.
NOTE: AZ program is funded through HUD's Neighborhood Stabilization Program. Every state has a similar grant program.
Click this link to check out your state: HUD_NPS1
- The property you purchase must be your primary residence.
- You must use a lender from the ADOH participating lender list. (That would include Mike in Tucson at Sunstreet Mortgage, LLC)
- You must have maximum Debt to Income ratios of 31/43. No exceptions.
- You must have two months' reserves PITI (mortgage payment--Principle, Interest, Taxes, Insurance)
- You must be AUS (Automated Underwriting) "Approve / Eligible." That means pre-approved, with fully documentable application.
- You must attend and complete an eight-hour Homebuyer Education class provided by an ADOH approved non-profit counseling agency (list provided by lender once you begin the process)
- 3% downpayment required, of which 1% must come from the borrower's own funds, sourced and seasoned. (That means we have to document where it came from, and how long you have had the money.) 2% can come from any other approved source.
- Standard lending practices apply. (Credit, income, documentation, etc.)
Eligible purchasers must have household gross incomes not greater than 120% of the median household income for the county in which the home is being purchased. The table below will help you determine if your household qualifies to buy a foreclosed home under the program. (Talk with your lender before concluding that you don't qualify, as some types of income do not have to be included.
- Foreclosed properties only. Tax or mortgage foreclosure process must be complete.
- Vacant properties only. Federal guidelines do not allow occupants to be displaced. The property must be vacant at the time of listing.
- 1-unit single family homes, condos and townhomes are eligible.
- Homes must meet minimum property standards.
HOME PURCHASE PRICE LIMITS
The maximum purchase price varies by county, minus 1% for program-required discount.
ADOH 2nd LOAN TERMS
- 22% of purchase price
- All loans are forgivable after a period of time, based on the amount of the loan
- 5 years for assistance of $15,000 or less
- 10 years for assistance of $15,001 to $40,000
- 15 years for assistance of more than $40,000
- All loans are zero percent interest with no monthly payment
- The loan is forgiven at the completion of the term (called an "affordability period")
How can you get started, now that you've decided you would like to buy a foreclosed home as your primary residence?
Check out your eligibility on YourWayHomeAZ.com.
Call me to get prequalified for a 75% first mortgage, and Arizona Department Of Housing's "Your Way Home AZ" forgivable second mortgage.
PLEASE NOTE: Once escrow is opened, the loan MUST CLOSE within 45 days.
Notify your favorite REALTOR that you're jumping in with both feet, but don't go home shopping until you've been approved and entered into the system, and you're signed up for the required counseling. This is important!
Tomorrow, I'll blog about the step-by-step process in Part 2!