Lynnette Khalfani-Cox, The
Money Coach™ Newsletter
9-24-2007
Financial Tips for Couples, Student Loan Help & Free Money for a Home Down Payment
WATCH THE MONEY COACH ON THE TYRA BANKS SHOW, CNN, WCBS, ETC.
The past few weeks have been pretty busy, so I wanted to update you on some places you can see me on television, hear me on the radio, or read articles I’ve written and stories where I’m quoted as a financial expert. Whether you’re single, dating someone, or already married, please don’t miss me on the Tyra Banks Show on Tuesday September 25th. It was one wild show … called “Doomed for Divorce.” Watch it to get financial tips for couples, and to find out if you and your partner are compatible – financially, emotionally, and spiritually. Click here for more info on the Tyra show and other media featuring The Money Coach.
FREE STATE MONEY FOR A HOME DOWN PAYMENT AND CLOSING COSTS
Last week, I told you about some great federal/national mortgage loan programs available to those of you looking to buy a home. Today, I want to share with you a lot of information about free state aid that is out there – all across the country – to be used by first-time homeowners in need of money for a down payment or closing costs. For more information on this financial assistance, click here. This information is adapted from my forthcoming book, Your First Home: The Smart Way to Move From Renter to Owner.
WATCH THE MONEY COACH ON THE TYRA BANKS SHOW, CNN, WCBS, ETC.
The New York Post – September 24, 2007 – Read Lynnette’s article in the Sunday Business Section called “Home Buyers Have Options”
The Tyra Banks Show – September 25, 2007 – Watch this show called “Doomed for Divorce”
WCBS (NY) – September 25, 2007 – Watch Lynnette on the 4 p.m. newscast discussing student loan debt and financial strategies for students, graduates and their families
The Russ Parr Show – September 27, 2007 – Call in to this nationally syndicated program and ask The Money coach your most pressing financial question
CNN – September 28, 2007 – Lynnette tapes CNN’s “Your Money” program; Topic: Tips for First-Time Homebuyers. Check my website this week (http://www.themoneycoach.net) for specific air date
FREE STATE MONEY TO HELP RENTERS BECOME OWNERS
When housing prices are affordable, more people will buy their own homes. The opposite principle also holds true: the more expensive houses are, the less likely it is that renters will become homeowners. That’s why states with high-cost housing, such as California and New York, have the lowest rates of homeownership in the nation. In California, only 58.4% of people are homeowners, compared with the national homeownership rate of 69%. Also, in the Golden State, 19.4% of residents spend 50% or more of their income on housing. Meanwhile, New York has the lowest homeownership rate in the country, at just 52.8%. And residents of New York also face a steep housing burden, with 19.3% of people in the Empire state spending 50% or more of their income on housing.
State officials everywhere are aware of the need for affordable housing. As a result, you can find state-sponsored housing programs not just on the coasts, but all across the country. Most of these first-time homebuyer programs actually serve two purposes: transitioning more renters into property owners, and also promoting the worthwhile goal of affordable home-ownership.
One such program comes from the State of New York Mortgage Association. If you are a first-time homebuyer getting a home in a targeted area, you can obtain a mortgage at an interest rate as low as 4.625% via the state’s “Achieving the Dream Program.” With this program, you also receive a minimum of $5000, or 5% of your mortgage amount, whichever is higher, in order to pay your down payment and closings costs.
When you get state grants designed for first-time home buyers, you normally must meet income guidelines that vary based upon the median household income in your area. Some forms of government aid – from states, counties and cities – are outright grants that you never have to repay. But most of them are actually loans that are known as “silent seconds.” A “silent second” is a no-interest loan, and you make no monthly payments on the loan either. Many times, the loan is completely forgiven, as long as you live in the home for a set period of time (often five to 10 years). With other programs that do require you to repay a “silent second,” you typically are not required to repay the mortgage loan until you sell the house.
Receiving government aid often boils down to three steps. First, you must prove that you are eligible for the money, based on your earnings and the number of people in your household. Second, you must get approved for a mortgage with a lender that allows you to use down payment assistance as part of your loan qualifications. Third, you must meet the definition of a first-time homebuyer: someone who hasn’t owned a home within the past three years. If you meet these three general criteria, you’re practically guaranteed to receive available government funding to buy a home.
Realize, however, that you may not qualify to receive assistance from your state or local government if any of the following circumstances apply to you.
· Your income is too high compared with others in your area
· You owned a home within the past three years
· You had a bankruptcy discharged less than 24 months ago
· You have defaulted on a government or student loan
· You have outstanding tax liens
· You have past due child support payments
· You previously had a house that went into foreclosure
If none of these situations apply to you, you have an extremely high probability of getting state aid. If you do fall into one of these categories, your best bet is to first clear up the problem area. Alternatively, you can pursue other down payment assistance programs that won’t disqualify you based on these conditions.
Here is a sample of the type of state aid available to first-time homebuyers available through the country:
· In Texas, you can get grant funds up to 5% of your mortgage amount, along with two type of loans with interest rates that are typically 1% below current market rates via the Texas First Time Homebuyers Program. For more information, call the Texas Department of Housing and Community Affairs at 512-475-3800 or toll-free at 800-525-0657 or visit: http://www.tdhca.state.ts.us.
· In Illinois, first-time homebuyers taking place in the Assets Illinois Homeownership Project can receive a dollar for dollar match up to $2,000 to help them save for the purchase of a first home. Funding for these matching contributions in these Individual Development Accounts are provided by the Illinois Department of Human Services. Participants also receive free homeownership counseling and advice on how to avoid predatory lending. For more information, call 312-793-3819 or visit: http://www.dhs.state.illinois.us/assets.
· In South Carolina, the Single Parent Program is open not just to first-time homebuyers, but to any one renting, as long as the person has a child under the age of 18 and the homebuyer is divorced or has been separated for six months. The program offers a forgivable loan up to $5,000, or down payment assistance up to $4,000. For more information, call 803-896-9508 or visit: http://www.schousing.com.
· In California, the High Cost Area Home Purchase Assistance Program (HiCAP) offers up to $7,500 in down payment assistance in the form of a deferred-payment second loan. For more information, call 877-922-5432 or visit: http://www.calhfa.ca.gov.
· In Georgia, the Dream Homeownership Program offers 100% financing via a low interest rates 30 or 35-year mortgage, and a second loan ranging from $5,000 to $20,000 that can be used for a down payment and closing costs. The down payment assistance loan has no interest, no monthly payments, and no payment is due until the house is sold, refinanced or no longer used as the buyer’s primary residence. For more information, call 877-359-4663 or visit: http://www.dca.state.ga.us.
· In Pennsylvania, the HOMEstead Down payment and Closing Cost Assistance Loan features up to $20,000 in down payment and closing cost assistance in the form of a no-interest second loan. Funds up to $14,999 are forgiven at 20% per year over five years. Funds between $15,000 and $20,000 are forgiven at 10% per year over a decade. For more information, call 800-822-1174 or visit: http://www.phfa.org.
· In Nevada, you can get up to $10,000 in down payment and closing cost assistance, and a below-market interest rate on 30 and 40-year loans with the Nevada Housing Division First Time Homebuyer Program. For more information, call 702-486-7220 or visit: http://www.nvhousing.state.nv.us.
As you can see, a broad range of programs exist for all potential homebuyers. So where can you find these state programs? Start by turning to State Housing Financing Agencies (HFAs). These are state-chartered authorities established to help meet the affordable housing needs of the residents of their states. Although they vary from state to state, most HFAs are independent entities that operate under the direction of a board of directors appointed by each state’s governor. Their reason for being is to help homeowners like you, so they can often point you in the direction of incredible housing and development programs you never dreamed existed. There is a National Council of State Housing Agencies (NCSHA) active in Washington D.C. to keep the issue of affordable housing high on the government’s list of national priorities. Housing Finance Agencies and NCSHA (http://www.ncsha.org) can help you tap into three federally authorized programs: Mortgage Revenue Bonds, Mortgage Credit Certificates, and the HOME Program.
· Mortgage Revenue Bonds
State and local housing agencies also offer loans to first-time buyers via mortgage revenue bond programs. Mortgages funded with these instruments often feature low down payment options and have interest rates as much as 1.5% to 2% below conventional 30-year fixed rates.
· Mortgage Credit Certificates
The Mortgage Credit Certificate (MCC) Program is another perk available through states to qualified first-time homebuyers. This benefit is in the form of federal income tax credit of between 10% and 20% of the annual interest you pay on your mortgage.
· Home Investment Partnership Program (HOME)
Available from the U.S. Department of Housing and Urban Development, the HOME program is the largest federal block grant available to state and local governments. The HOME program allocates roughly $2 billion to local governments each year in an effort to create affordable housing for low-income households. One component of the HOME initiative is the American Dream Down payment Initiative. Through ADDI, you can receive down payment assistance, money for closing costs, and even funds to fix up a home you are buying. The cash comes in the form of a loan equal to 6% of the purchase price or $10,000, whichever is greater. The loan carries a 0% interest rate and a maximum loan term of 10 years. For each year you live in the house, 10% of the loan amount will be slashed. If you stay in the home 10 years, the entire amount will be forgiven. If you sell your home before 10 years – and most first-time buyers do sell their homes after an average of four or five years – the remaining amount of the loan must be repaid. This program is open to all first-time buyers who haven’t owned a home within the past three years. The money provided via ADDI can be used to purchase a one-to-four family house, condo, cooperative unit, or manufactured housing. To qualify, your income must not exceed 80% of your area median income. Get more information about this initiative through your state housing finance agency, or by visiting HUD’s website at: http://www.hud.gov. Also, if you find out about a program like this one that receives federal money, but the money hasn’t come through yet, put your name on the list to be notified about a change in status ASAP. That way you’ll be ahead of lots of other people who are also seeking housing grants or forgivable loans.
· Housing Redevelopment Offices
In addition to state housing finance agencies, contact the Housing and Redevelopment Office in your state, county or city. Members of The National Association of Housing and Redevelopment Officials (NAHRO) (http://www.nahro.org) champion the cause of adequate and affordable housing for all Americans – especially those with low and moderate incomes.
Be mindful that state housing agencies and redevelopment offices across the country can use lots of different names. One might be called a “Housing Finance Agency,” as is the case with the Vermont Housing Finance Agency, while another one is dubbed a “Housing Development Authority,” as is true of the Virginia Housing Development Authority. Any agency with the name “Home” “Housing,” “Community Development,” “Mortgage Finance” – or similar words – is a good place to find homebuyer assistance programs.
The importance of state programs can’t be emphasized enough. I think so highly of these initiatives, that I’ve provided you with a list below of housing and development agencies for every single state in the country. Here are their names and websites for more information. A few states have multiple listings. In the Appendix of this book, you can find an extended version of this list, complete with addresses and phone numbers.
· State Housing Finance & Development Agencies
Alabama Housing Finance Authority
Alaska Housing Finance Corporation
Arizona Department of Housing/Arizona Housing Finance Authority
Arkansas Development Finance Authority
California Housing Finance Agency
California Tax Credit Allocation Committee
http://www.treasurer.ca.gov/ctcac
Colorado Housing and Finance Authority
Connecticut Housing Finance Authority
Delaware State Housing Authority
District of Columbia Department of Housing and Community Development
District of Columbia Housing Finance Agency
Florida Housing Finance Corporation
Georgia Department of Community Affairs/
Georgia Housing and Finance Authority
Hawaii Housing Finance and Development Corporation
http://www.hawaii.gov/dbedt/hhfdc
Idaho Housing and Finance Association
Illinois Housing Development Authority
Indiana Housing and Community Development Authority
Iowa Finance Authority
Kansas Housing Resources Corporation
Kentucky Housing Corporation
Louisiana Housing Finance Agency
Maine Housing
Maryland Department of Housing and Community Development
Massachusetts Department of Housing & Community Development
Mass Housing
Michigan State Housing Development Authority
Minnesota Housing
Mississippi Home Corporation
Missouri Housing Development Commission
Montana Board of Housing/Housing Division
Nebraska Investment Finance Authority
Nevada Housing Division
http://www.nvhousing.state.nv.us
New Hampshire Housing Finance Authority
New Jersey Housing and Mortgage Finance Agency
New Mexico Mortgage Finance Authority
New York City Housing Development Corporation
New York State Division of Housing and Community Renewal
New York State Housing Finance Agency/
State of New York Mortgage Agency
North Carolina Housing Finance Agency
North Dakota Housing Finance Agency
Ohio Housing Finance Agency
Oklahoma Housing Finance Agency
Oregon Housing and Community Services
Pennsylvania Housing Finance Agency
Puerto Rico Housing Finance Authority
Rhode Island Housing
South Carolina State Housing Finance and Development Authority
South Dakota Housing Development Authority
Tennessee Housing Development Agency
Texas Department of Housing and Community Affairs
Utah Housing Corporation
http://www.utahhousingcorp.org
Vermont Housing Finance Agency
Virgin Islands Housing Finance Authority
Virginia Housing Development Authority
Washington State Housing Finance Commission
West Virginia Housing Development Fund
Wisconsin Housing and Economic Development Authority
Wyoming Community Development Authority
These state initiatives comprise just some of the financial assistance out there for first-time homebuyers. Stay tuned for more information, because tomorrow I’ll tell you about county and city programs for would-be homeowners throughout the country. After all, aren’t you ready to fire your landlord?
Wishing you all the prosperity you deserve!
Lynnette Khalfani-Cox,
The Money Coach