The Right Home the Right Way

Local Realtors and lenders recently learned how three state programs can help qualifying buyers achieve the dream of homeownership.

In two information-packed sessions presented by the Greater Northwest Indiana Association of REALTORS® (GNIAR) in partnership with the Indiana Housing & Community Development Authority (IHCDA) nearly 100 attendees gained a better understanding of the individual programs including qualifying guidelines such as sales price, income and household size limitations.

"Our goal today is for you to learn the programs enough to show people how they can use them to get into the right home the right way," speaker Kim Harris, IHCDA Homeownership Director, said during the opening remarks of the presentation: It Makes Cents: State Programs to Make the Dream of Homeownership a Reality.

Typically available to first-time homebuyers (defined as someone who has not owned or had an ownership interest in his/her principal residence in the last three years), each program offers unique benefits including below-market interest rates, down payment assistance and tax credits.

"While these programs have been around forever, organizations like GNIAR are realizing the need for some re-education," Harris, a lender who had been using all three tools for many years before joining IHCDA, explained. "Let's face it, since they were first introduced about 30 years ago, the industry has kind of turned over. As a result, we're finding a gap exists when it comes to knowing about the advantages these programs offer."

Offered in all 92 Indiana counties for first-time homebuyers (30 counties have been targeted with the first-time buyer criteria removed, including Jasper here in northwest Indiana), the following programs are solely administered by participating lenders. Your Realtor can put you in touch with one or you can search the IHCDA database online at www.ihcda.in.gov.

"To be honest, participating lenders are not as prevalent up here as I'd like them to be," Harris said. "I encourage lenders to sign up for these programs which give them access to sources others may not have."

Following a brief but animated discussion on the state of the housing market today, Harris defined who qualifies for the best interest rates today (those with an admirable credit score of 730-740) and explained why so many people are not able to qualify for today's lowest rates - the lower the credit score, the higher the risk, the higher the rate.

"Many people think they can't buy a home today," he said. "That's why I'm taking this message to Realtors and lenders across the state. Realtors are the front line for information on these programs. Lenders determine qualification and handle the mortgage which is registered with the IHCDA. The important thing to understand is that we underwrite to income (total household income) instead of credit scores (debt to income ratios) which are necessary for loans being sold to the secondary market.

Harris then provided an overview of the following programs:

First Home offers qualified buyers below-market interest rate mortgages. This program can be used with other plans, including FHA/VA, Fannie Mae or USDA Rural Development financing. Current interest rate information is available by calling (888) 227-4452 24 hours a day, 7 days a week.

First Home Plus offers the special First Home mortgage rate along with 6% down payment assistance capped at $7,500 with zero interest, which is why it is also commonly referred to as DPA. This program is ideal for people who plan to stay put since DPA funds must be repaid in full once the borrower sells or refinances the home.

The Mortgage Credit Certificate program (MCC) offers a Federal tax credit that ranges from 20% - 35% of the interest paid on a mortgage each year, with a maximum annual credit of $2,000. Funding for this program is available on a limited basis as announced by IHCDA.

Completion of an online First-Time Homebuyer Education Course, IHCDA University, is necessary for all homebuyers who qualify for an IHCDA Single Family purchasing program. This free educational course is designed to inform Indiana consumers about the basics of purchasing a home so that they are prepared for the process, according to Harris.

"The course walks potential buyers through several lessons, including getting ready to buy a home, managing money, understanding credit and selecting the right mortgage product," he said. "Our loan programs help many people purchase a home. But, it's our ultimate goal for them to stay in that home."

Ideally, IHCDA programs such as First Home, First Home Plus (DPA) and Mortgage Credit Certificate (MCC) help families accumulate assets and climb the economic ladder.