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 Thursday, January 27 2022 @ 11:05 pm UTC

First Time Home Buyers, has Low-Income Loans as an Option

Alabama Real EstateJane Fairchild couldn't imagine how she'd ever own a home, A high school social worker and single mom earning $46,000 a year. Fairchild had no idea about the numerous programs available to help potential home buyers in her salary range, like many lower- to middle-income earners.

Fairchild, who learned last year that she was eligible for thousands of dollars toward the purchase of her Seattle home, said
"It was kind of amazing to me," and added "I thought I made too much money."

"So many people that I talk to (think), 'Well, I just don't qualify. I'm not low or moderate income,' " said Emily Nolan, a program manager at the non-profit Washington Homeownership Center in Seattle. That misconception, say those working with home-buying assistance programs in Seattle and across the state, often prevents renters from making the leap to home ownership.

That currently translates to $40,600 a year for an individual and $58,000 for a family of four. Most programs offer deferred payments with low interest rates, and frequently provide up to $45,000 to help with a down payment. Some programs available here max out annually but others remain untapped, leaving thousands of dollars in assistance available to people earning as much as 80 percent of the $72,000 median household income in the Seattle metropolitan area.

Karen Carlson, second mortgage program administrator for the Washington State Housing Finance Commission, said, "We don't run out of money as long as our programs keep going," and added "We have capacity for quite a bit (of assistance)."

Analysts attribute the low numbers not only to soaring home values in the Seattle area, but also to the state's numerous military communities, which tend to have lower numbers of homeowners. Washington state ranks near the bottom -- 43rd out of 50 -- in home-ownership rates nationwide, according to the 2004 Census. Sixty-six percent of households in the state are homeowners.

"What is distressing for us as an agency is that we see that there is money left on the table every year," Caden said "These are hard-working people, sometimes even two-income families that truly could benefit from a lot of the programs that are available,"adds Caden, the center's executive director.

Adrienne Quinn, director of the city of Seattle's Office of Housing, said that, since the budgets for many assistance programs roll over at the start of each fiscal year, now is a particularly good time to start looking at what's available.

Quinn said, "The money is not all out the door," and added "People should definitely contact some of our partners."

Repayment rules vary, and the maximum home price for most of the programs is $335,800. In 2002, the city began including money in its voter-approved housing levy to help home buyers. The city's contribution of $7.8 million over the seven-year levy, which expires in 2009, is combined with federal funding to provide a variety of programs run by partner organizations.

The banks handle the loan application and send the information to the city, which verifies the applicant's eligibility and provides the assistance. The city, Quinn said, is able to help 65 to 85 buyers a year through all of its programs. Seattle home buyers making up to 80 percent of median income can also go directly to Wells Fargo or HomeStreet banks, Quinn said, and apply for city-funded and federal assistance.

A survey conducted by the Washington Homeownership Center last year found that not enough money for a down payment and closing costs was the major perceived obstacle to home ownership. Another issue for many, Caden says, is the shock of realizing that what were once considered modest starter homes are now out of reach for many. The Washington State Housing Finance Commission runs various programs statewide, including one that provides lower mortgage rates and then allows participants to apply for down- payment assistance, a stumbling block for many potential buyers.

He said, "the problem we run into with many of our clients is that their expectations are beyond what they can afford," and added "That's always a difficult bridge to cross in terms of their own perception.

The property goes into a trust, and buyers agree to a resale formula that maintains the home's affordability for future owners. The concept, which began in the 1960s to help Southern farmers, is used in cities nationwide to create a permanent supply of affordable housing in gentrifying areas. A year ago, Fairchild was living in a one-bedroom rental apartment in Renton. She learned about the Homestead Community Land Trust, which buys properties and allows first-time home buyers to buy a house and sign a 99-year lease to occupy the lot.

Fairchild ended up borrowing $128,000 to buy the house, leaving her with mortgage and tax payments of $896 a month. Fairchild was able to obtain $70,000 against the $235,000 cost of the home through the land trust. To that she added $20,000 given to her by a group of generous friends, a tax rebate from her son's adoption, a $10,000 prize from an essay-writing contest on home buying and a small amount in savings.

The Rainier Valley rambler has everything Fairchild wanted: a diverse community, proximity to the library and an elementary school, and a bedroom for Luke. Out the back door is a large, fenced yard with apple, cherry and dogwood trees and now, a sandbox. As She and her 2-year-old son Luke moved into their first purchased home in December.

Glenn Crellin, executive director of the Washington Center for Real Estate Research, said that there are many reasons beyond economics to promote home ownership, he adds, Research that has been done over the years has clearly indicated that those persons who are home buyers are much more engaged in their community."

By: Dijon Wainwright

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