Home News The hot housing market and rising interest rates have forced homebuyer assistance programs to adapt – Chicago Tribune

The hot housing market and rising interest rates have forced homebuyer assistance programs to adapt – Chicago Tribune

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Maryia Bahdanovich thought that owning a home was good for her financial future and her little son. But she wondered if her one mother could land her real estate unicorn — a well-shaped affordable home in the expensive western suburbs.

She decided to at least give it a try. Fifteen years after she arrived in the Chicago area from her hometown of Belarus, Thirty-Nine-year-old Badanovic is good to marry, have a family, divorce, get a college degree, and be a federal contract manager. I settled down at work.

She started saving. By mid-2020 she was ready to buy, so she thought.

The condo, which is an obvious starter property, has been knocked out of competition by COVID-19 precautions. “Sharing the space in the corridor was not safe,” said Bahdanovich.

Townhouses and single-family homes were fascinating, but out of reach. “I wasn’t lucky because many offered $ 10,000 to $ 40,000 higher than the listing price, and I couldn’t do that,” she said.

Last fall, her fate changed.Her friend told her about a program run by Kane Elgin HOME Commission It buys and sells several homes a year and revives declining real estate for the benefit of middle-income buyers.She took a home purchase class together HOME DuPage, Inc., It helped her gather complementary resources to consolidate home offers through the county program.

Bahdanovich’s $ 340,000 offer was accepted in January. She and her son have moved by late March.

The Buyer Assistance Program is designed in the long run, not to respond to rapidly changing market conditions. However, as interest rates rise and competition for several homes on the market intensifies, counseling program staff are adopting strategies recommended to buyers. Counselors are increasingly helping first-time buyers build a “stack” of complementary resources to help address rising home prices, rising interest rates, and other barriers.

In the past, home purchase assistance programs have provided patchwork of services that are rarely coordinated among nonprofits, lenders, developers, and homebuyer education programs. Players are now coordinating more closely with lenders, counseling agencies, and government programs working together in custom packages for each buyer.

The focus is also on ensuring that middle-income buyers can maintain home ownership after moving in. If your mortgage is overdue on the first repair of your home, that’s not your goal. Katie Naftsger, Head of Community Investment at Chicago’s Federal Mortgage Bank, said:

Resource-poor and aspiring homebuyers need all the help they can get. The lowest ever mortgage rates are rising. In the third week of April, the average interest rate on fixed-rate mortgages for 30 years is 5.063% According to Bankrate, it increased from 3.13% in the spring of 2021.

House prices are showing no signs of leveling off. Nationally, home prices have risen 32% over the last two years. Contrary to the law of supply and demand, rising prices do not encourage more homes to sell. The exact opposite.How many homes are on the market in the last year? 22.5% decrease, According to the latest information from Zillow, it’s a home data and listing platform.

All these factors can fill the hopes of middle-income buyers. Homebuyers support programs are built for stable market conditions in that they work with governments and lenders to establish the amount and conditions of support. The amount the program can offer or lend, as well as the buyer’s qualified income and financial history, are key conditions established each year and are not intended to change with market trends. Their standby program, which focuses primarily on helping buyers organize their credit history, master budget basics, and save down payments, remains relevant. However, to help buyers land at home, program staff have become creative by mixing and matching long-standing programs.

Habitat for Humanity, a Georgia-based non-profit developer, is well known for its “sweat equity” program, which allows low- and middle-income buyers to help build and earn a home. Habitat for Humanity’s Chicago branch operates in two districts on the South Side and is expanding on the West Side, said executive director Jennifer Parks. Habitat often acquires low-cost vacant lots from Cook County and the City of Chicago. This paves the way for reasonable construction costs. In some cases, Habitat lends her own money to buyers, she said.

Lisa Harris, 42, a Chicago healthcare professional, took two years to complete a homebuyer education program, repair credits and save down payments, but in December last year Habitat for Humanity. I was rewarded when I moved to my house.

“I was surprised,” Harris said. The cumulative effect of the program on the ability to earn a home, the current market value is $ 179,000. Her support stack included a federal down payment grant and another $ 6,000 grant to cover closing costs. Harris also benefited from additional income after honing her professional skills through one of the home purchase preparation classes.

Habitat is a home ownership preparation class that is currently open to everyone and is expanding its reach and relevance. According to Parks, this class will help aspiring homeowners organize financial homes, understand the ups and downs of buying, owning and maintaining homes, and learn how to navigate obstacle courses in homebuying. It will help.

It is imperative that hopeful buyers work with a federal-approved counseling program Ministry of Housing and Urban Development, Says a person involved in the lending program. Such counselors are good at using the programs that are most relevant to each purchaser. We also know which programs are being phased out.

A rapidly changing market means counseling Jesus Cruz, vice president of community lending for online lender LoanDepot, said programs that may have been relevant over the last three years work in different ways for today’s buyers. Some programs have increased grants, low-cost bridge loans, and income eligibility caps, so today’s buyers are informed directly by qualified home counseling agencies and lenders’ own first-time buyer staff. He warned that he needed to get.

First-time homebuyers are paying more and more attention to Federal Housing Corporation’s lending products, which allow the cost of rehabilitating fixer uppers to be folded into the first loan to buy a home, Cruz said.

Maria Luengas, housing counselor at HOME DuPage, Inc, says that even enthusiastic potential buyers are playing endless games to catch up with the market. Of the first buyer support program. But even if the families worked hard and saved, rising interest rates pushed them back. A year ago, families were eligible to buy a $ 165,000 home, but now they can only buy a $ 145,000 home.

She said the family’s mother is currently working in the hope that extra income will overcome the rise in interest rates.

Additional assistance may be provided for potential buyers such as families with whom Luengas is cooperating.

The Federal Home Loan Banks need to secure 10% of their annual net income to support affordable homes. Banks in Chicago have generated $ 43 million in funding for buyer support and similar programs.

Last year, 3,300 buyers received an average of $ 6,000 in grants to add to their personal savings, primarily through a program backed by the Federal Mortgage Bank called Down Payment Plus. Almost all recipients of the down payment plus grant were the first purchasers to be qualified according to the program guidelines. Household income is less than 80% of the median income in the region, which is equivalent to about $ 74,000 per household in Cook County last year. Of 4 people.

The Illinois Housing Development Authority, a state agency that packages government resources into support for middle-income buyers, also provides lenders and coordinates local nonprofits to combine resources for hopeful buyers. We’ve redesigned some programs to give you more flexibility. ..

One IHDA program allows buyers to increase their down payment from $ 1,000 to $ 10,000. The additional funds will have to be repaid, but the interest rate is zero.

“It helps if you are competing for a home,” Public said. “It helps to fill that gap.”

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