Some Arkansas residents can qualify for mortgage programs designed to help put them into a home of their own with very little down payment required and competitively low interest rates.
People who attended Credit Counseling of Arkansas’ Homebuyer Education Class on Dec. 12 learned they might qualify for some Arkansas programs with generous income level qualifications.
The eight-hour class is designed to introduce people to the process of shopping for a house, obtaining a mortgage, acquiring the house and the duties of a homeowner and a debtor after the transaction is completed.
Some people think they don’t need an eight-hour class to learn how to buy a house, Credit Counseling of Arkansas instructor and counselor Rene Webb said. Others recognize that information is a tool they can use to keep a house in a market full of foreclosures, she said.
Credit Counseling of Arkansas is a nonprofit community service organization that, along with nearly 30 other organizations across the state, provides the counseling class required to qualify for some of the down payment assistance programs available, according to Murray Harding, Single Family manager for the Arkansas Development Finance Authority.
The first-time home buyers’ federal tax credit of 10 percent up to $8,000 and the bump-up tax creditof $6,500 have increased the number of hopeful homebuyers, Webb said.
The lure of a federal tax credit helped propel Arkansas home sales to a double digit percentage increase for the second straight month in October.
Sales of previously owned and new homes rose 24 percent across the state in October compared with a year earlier, the Arkansas Realtors Association said on Dec. 2. September saw a 10 percent increase.
The average price of Arkansas homes sold in October fell 3 percent compared with a year earlier, to $139,139 from $143,476.
Benton County reported a 36 percent rise in the number of sales - 334 total - in October. Washington County saw a 25 percent jump with 195 units sold.
Helping to fuel sales were falling home prices. Washington County’s average sales price fell 17.3 percent, to $142,629, in October compared with a year earlier, while Benton County fell 14.7 percent, to $152,060, according to the Realtors Association.
CCOA hosted a total of 195 people during the one-session classes offered monthly in 2009, Webb said, an increase of 48.85 percent over last year’s 131.
The finance authority’s single-family housing division supplements private sector lenders to provide as many low- and moderate income state households as possible with safe housing, according to the authority’s Web site, arkansas.gov/ adfa.
Three of the authority’s programs provide mortgage and down payment assistance that many more Arkansans could be using to get into a house, Harding said.
The three programs are bond program loans basedon the issuing of bonds to secure the funds at a low interest rate, he said.
“It’s a good rate. It’s not a great rate, but it is a good rate,” Harding said. The latest bond program rate is 5 percent, while conventional mortgage rates range from about 4.75 percent to 5 percent right now, he added.
One, the Home to Own program, provides a 30-year, fixed-rate first mortgage for a homebuyer who meets certain income limits determined by where the property is located. The loans are government loans, either Federal Housing Administration, Veterans Affairs or Rural Development loans, and can be used to buy a house priced up to $225,000 if the buyer will use the house as a primary residence, according to the Web site.
The income limits are generous, Harding said.
For example, residents of Benton and Washington counties with up to two people living in a household can make up to $64,471 to qualify. Households with three or more people can make up to $74,142 a year. In Pulaski County, households of one to two people can make up to $63,531 and households with three or more canmake up to $73,061 per year to qualify.
“The income limits are based on complicated mathematical formulas that result in a range between 100 percent and 140 percent of median household income for that county,” Harding said.
The other two programs are assistance loans for down payments, each with its own set of qualifications and income limits, Harding said. Both sets of qualifications are listed on the Web site.
Amber Campbell, home mortgage consultant for Wells Fargo Home Mortgage in Springdale, told the December counseling class that, despite a tighter credit market and some increased approval standards for some loans, most people do not need perfect credit or large down payments to qualify for home loans, especially through some assistance programs.
One of those programs, The America Dream Down Payment Assistance Program, often shortened to ADDI (pronounced as addie), forgives the full amount of the loan if the buyer stays in the house for more than five years.
To qualify for either of the down payment assistance programs, the home buyer must attend the counseling classes, Harding said.
The classes cover the buying process in detail, including what items are listed on a real estate contract, who pays what fees at the closing table and how to shop for homeowners’ insurance. Experts in real estate, mortgage banking and insurance meet with the classes to answer questions, Webb said.
The class also focuses not only on how to get a mortgage but on how much mortgage a buyer can qualify for and - more importantly - how much they can actually afford.
“The two may not be the same number,” Webb said.
Individual debt-to-income ratios may indicate a home buyer could afford to buy a house priced at $120,000. But the buyer might not be able to make the approximate payment of $1,046 per month that the principal, interest, taxes and insurance would require, Webb said.
“We have worksheets for that and help you figure out what you are comfortable with and can afford,” Webb said.
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Single-family home buyer programs The Arkansas Development Finance Authority provides funding for mortgages and down payment assistance for qualifying home buyers within income limits determined by location and household size.
Business, Pages 51 on 12/20/2009