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Housing agency program targets homeowners ready for bigger place

CHARLESTON, W.Va. - The West Virginia Housing Development Fund has launched a $10 million mortgage program that is not just for first-time homebuyers.

The "Movin' Up Home Loan Program" is available to first-time homebuyers and to homeowners who may have outgrown their current homes and want to move up to a larger house. The new program also may be attractive to homeowners who want to move to a home of greater value by folding down payment and closing cost assistance into the loan package.

Erica Boggess, the fund's acting executive director, said in a prepared statement, "Many qualified buyers want to take advantage of today's low interest rates and move up to a larger home, but lack equity. The Movin' Up Program is a perfect fit for these clients."

The program is intended to be self-sustaining. Housing fund spokesman George Gannon said principal and interest paid by mortgage recipients will be plowed back into the program.

The housing fund has set up a special toll-free phone number for queries about the Movin' Up program: 1-800-933-8511. Information also is posted on the housing fund's website. Go to www.wvhdf.com and click on the Movin' Up Program icon.

Of the $10 million used to start the program, Gannon said $6 million came from a construction loan West Virginia University Health Sciences paid off and $4 million came from a fund used to insure the housing agency's bonds.

The Movin' Up Program is for new purchases only. "We have other programs that can be used to refinance mortgages," Gannon said.

Since it was established in 1968, the housing fund has focused on providing financing for first-time homebuyers.

Over the years it has sold more than $3 billion in tax-exempt bonds to finance more than 113,000 housing units around the state.

Tax-free bonds have historically provided the fund with low-cost money that it turned into low-cost mortgages. But the Federal Reserve's recent policies have pushed commercial mortgage interest rates to near-record lows.

Conventional mortgages offered by commercial banks and others now have interest rates that are so low, there isn't much of an advantage to taking out a loan under the housing fund's traditional program that is financed with bonds.

On Thursday a housing fund 30-year, fixed-rate mortgage financed with bonds carried a 3.836 annual percentage rate. Thursday's Wall Street Journal published a survey that said the average 30-year fixed rate mortgage nationwide carried a 3.64 percent interest rate, not including closing costs.

The Movin' Up Program offers mortgages with percentage rates of 3.25 or 3.625 percent.

Income and house price limits for the Movin' Up Program vary by the county where the house is located. In Kanawha County, the income limit for a family of one or two persons is $65,880. The limit for a family of three or more is $76,860. The maximum house price eligible for financing is $250,200.

Asked for an example of what a mortgage might cost using the new program, Gannon said that on a home with a sales price of $100,000, a buyer with excellent credit would qualify for the program's lowest interest rate, 3.25 percent. If the buyer made a $3,000 down payment, he or she would pay $639.70 a month. That figure includes the mortgage payment, a down payment closing cost assistance loan, hazard insurance, taxes and mortgage insurance.

Boggess said that by creating a self-sustaining program, the housing development fund can better manage its finances and still offer homebuyers an affordable home loan.

"The new program has some exciting changes," she said. "By removing the first-time homebuyer requirements mandated by the bond program, we can better serve moderate income buyers."

David Rathbun, the housing fund's senior director of single-family loan origination, said in a prepared statement that the housing fund will continue working with its statewide network of lending partners. Loans made under the new program will be serviced at the housing fund's Kanawha City office.

The housing fund also uses self-sustaining programs to finance its down payment and closing cost assistance loans. Gannon said the fund also has previously made some loans to customers who were not first-time homebuyers.

Contact writer George Hohmann at business@dailymail.com or 304-348-4836.


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