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HFA Mortgage Preferred: Down Payment Assistance Program For Buyers

Many people and places were devastated by the housing crisis. As individuals recover and look to re-enter the housing market, programs have been implemented to encourage buying in the areas that were hardest-hit.

Subsequent to the financial and housing crises, Phoenix, and many other cities, saw a rapid increase in the number of foreclosures resulting in a landscape abundant in vacant homes and empty neighborhoods. As the economy has recovered, so have the financial situations of many people. Those people are now in a position to re-enter the housing market. In order to bolster recovery and encourage buying in these areas, the Federal National Mortgage Association (Fannie Mae) has created the HFA Mortgage Preferred program to bring buyers and homes together and revitalize hard-hit communities.


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WHAT IS IT?

What Phoenix buyers should be aware of first and foremost is that the HFA Preferred Mortgage Program is a grant, rather than a loan. Buyers who purchase a home with the assistance of the program need not worry about repaying the amount of the grant, which provides up to 5% of the purchasing loan amount toward the down payment on the property. Any qualified buyer can use the HFA Preferred Mortgage Program toward the down payment on a new or existing home, condo, or town home up to a value of $356,352. Manufactured and co-op housing is excluded, but properties comprised of up to 4 units are eligible, providing the owner occupies one of the units (or any property) within 60 days of closing, opening a nice window of opportunity for would-be investors.

WHO QUALIFIES?

The HFA Preferred Mortgage program is available to first-time and boomerang buyers alike. The only pre-condition pertaining to ownership is that the buyer does not currently own a home. In order to qualify, individuals still must meet many of the standard loan requirements modified to open the way for low-moderate income buyers. The max income allowable under the guidelines is $89,088 which must be accompanied by a FICO score of 640 or above and a debt-to-income ratio of 45%. Once all of these parameters are met, the buyer can apply for the grant to assist with the down payment on the eligible property.

GETTING STARTED:

Buyers looking to purchase a home in the Phoenix area can get started by visiting the federal or state department of housing websites and clicking through to the down-payment assistance programs. Applications can be made through either site and there you can also register for the required home buyer education courses as well as find a list of reputable home inspectors and other resources to help you on your way to Phoenix home ownership.


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A “Pathway to Purchase” for Phoenix Home Buyers

The Arizona Department of Housing released the “Pathway to Purchase” program promoting the purchase of homes in 17 areas surrounding Phoenix, Arizona which have been hard-hit by mass foreclosures.

In the spring of 2016, the Arizona Department of Housing (ADOH) released its Pathway to Purchase (P2P) program, which encourages the purchasing of properties in areas burdened by foreclosures in the wake of the U.S. Housing crisis. This program offers down-payment and refinancing assistance to first-time and existing home owners in 17 cities surrounding Phoenix, Arizona. The goal of the program is to decrease the number of vacant properties and encourage residency in these areas by offering incentivizing financing for potential home owners in the Phoenix area.


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The “Pathway to Purchase” Program is a government program funded by the U.S. Department of the Treasury with a budgeted commitment of $48 million. Allotments will be made on a first come, first serve basis, to qualified homeowners in the designated cities outside of Phoenix who intend to use the property as a primary residence. 17 cities, most within an hour’s drive of Phoenix, are listed under the program guidelines.

Qualifications for the “Pathway to Purchase” buyer are geared toward enabling those who qualify for traditional loans through ADOH sanctioned lenders, but require assistance with the down payment and closing costs of a home purchase. The primary restriction on the purchaser is an income that does not exceed $92,984.

In order to alleviate the vacant housing problem, qualifying properties under the “Pathway to Purchase” program must be existing, previously occupied properties, meaning no new construction or spec homes. The sale price of P2P properties is also stipulated as being below a $371,936 limit.

Once a “Pathway to Purchase” buyer has qualified and the property selected, homebuyers are required to take a home ownership education course after which a P2P loan can be issued which will provide up to $20,000 toward the down payment. This loan can also be applied toward closing costs, furthering alleviating an initial financial hurdle for the buyer. In addition, the program provides a 30-year fixed-rate mortgage, which can be borrowed against as a second mortgage. Second mortgages on “Pathway to Purchase” homes are equal to 10% of the purchase price and are issued in the form of a forgivable lien against the property at 0% interest with no required monthly payments.

For a list of cities in the Phoenix, Arizona area included in the program, or for more information on “Pathway to Purchase” visit The Justin Haines Team website.


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