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Orientation
Purpose of Orientation
What Eastern Eight can and can not do for you
Determine if Eastern Eight will meet your needs
Introductions
Name
Area you hope to live
One question you hope to have answered today
Topics Covered
Financing options available
Building vs. Existing Home
Building process
Land selection process
Plan selection process
Sweat equity requirements
General program policies
How much can you borrow?
Housing Ratio– 29% of your gross monthly income– Income x .29 = maximum monthly house payment– Will include taxes and homeowners insurance
Debt Ratio– 41% of your gross monthly income– Income x .41 = maximum monthly total debt
payment– Will include house payment
Example
Gross Monthly Income = $1,500 Gross Monthly Debt = $300
Housing Ratio – $1,500 x .29% = $435
Debt Ratio– $1,500 x .41% = $615
Total Available for house payment– $615 - $300 = $315
USDA Rural Development
May be used for new construction or existing home
Home/lot must be located in a “rural” area Income limit based on family size and county
of residence Fixed Rate Loan – 4.875% Term – 33 years
THDA New Start
Available to first time homebuyers Reduced interest rate based on income Available only on new construction Covers 75% of appraised value Must provide $500 down payment Recapture
– If own home for 9+ years, no recapture– If sell before 9 year, may be subject to repay some of the
subsidy received
USDA Rural Development (con’t)
Interest Credit Assistance– Interest rate can be reduced based on income– Can be reduced as low at 1%– Income reviewed bi-annually– Income increases, interest rate may increase– Income decreases, interest rate may decrease
USDA Rural Development (con’t)
Recapture– Only applies if you have received an interest rate
credit– You will be required to re-pay a portion of the
subsidy you received Pay when you sell the home Pay immediately after you have paid off the home Allow the owed portion to remain as a lien against the
property so it will be paid when the house is sold or transferred
Other THDA Programs
Great Rate – 4.98% Interest rate– Requires 3% down payment– Can be used for new construction or existing home– Closing costs can be paid by buyer, seller or grant
Great Advantage – 5.28% Interest rate– Provides 2% grant to cover closing costs and/or down payment– Must use the entire 2%
Great Start – 5.58% Interest rate– Provides 4% grant to cover closing costs and/or down payment– Must use the entire 4%
Note: You must access these programs through a local lender. Can make up to $57,880 for family of 3 or more.
Grant Programs
Not available in all situations or locations
Often limited funds, so will be allocated on a first come, first serve basis
Sweat Equity Opportunity Program (SHOP)
Must provide at least 100 hours of work towards home
Work can be completed by self, family or friends
Could receive up to $12,000 in grant funding, depending on availability
Grant is repayable upon sale or transfer of the property
American Dream Down payment Initiative (ADDI)
Available to first time homebuyers
Up to $5,000 in grant funds
Must contribute 1% of purchase price
Can not be used with THDA New Start loans
Available in Carter, Hancock, Hawkins, Greene, Johnson and Unicoi counties
Grant is forgiven after 5 years
Only available at certain times
Northeast Tennessee/Virginia HOME Consortium
Available to first time homebuyers
$5000, $7500, or $10,000 depending on income
Must contribute $500 towards purchases
Can be used with almost any loan
Available in Sullivan and Washington counties only
Grant is repayable upon sale or transfer of the property
Principle Buy Down Assistance
Extremely limited pool of funds
Only available in certain counties/locations
Up to $14,999 in grant assistance
Income limit based on family size and county of residence
Grant is repayable upon sale or transfer
Building vs. Existing Home
Not all financing products work for both
At this time, more resources for new construction than existing
New construction is not right for everyone
Consider the pros and cons of each
Building vs. Existing Home
Building– Pros
Brand new Choices Less maintenance More affordable
financing
– Cons Length of time Cost of new
construction
Existing Home– Pros
Quicker More house for dollar House easier to find
than lots
– Cons Less affordable
financing options Home maintenance
Why Eastern Eight?
Eastern Eight– 1st Mortgage
$97,500 $391.00/month
– 2nd Mortgage $20,000 $113.00/month
– Grant $12,000 $0.00/month $500 cash required
Total Monthly Payment– $504.00/month + taxes/insurance
Market– 1st Mortgage
$130,000 $790.00/month
– Grant $5,000 $0.00/month $1,300 cash required
Total Monthly Payment– $790.00/month + taxes/insurance
Purchase price = $130,000
Building Process
Homebuyer information sheet
Orientation
Commitment form signed
Lot selection
Building Process (con’t)
Plan selection
Pre-construction meeting
Homebuyer Education
Finance One-on-One Meeting
Building Process (con’t)
Contract signing
Construction Inspections
Sweat Equity
Pre-closing finance meeting
Building Process (con’t)
Secure homeowner’s insurance
Walk-through of property
Loan closing
Post-homeownership workshops/counseling
Lot Selection
Provided a minimum of four Eastern Eight approved lots
Must select one of four lots shown
Lot not selected within 90 day time period, file will be inactivated
Plan Selection
Plans viewed after lot has been selected
Eastern Eight staff will select plans based on your lot and budget
Provided 2-3 plans that can be scaled based on budget
House plan not selected within 90 day time period, file will be inactivated
House Plans
To keep home affordable, no changes allowed to plans Items that are included
– Refrigerator– Dishwasher– Range– Microwave
Items that are not included– Washer and dryer– Jacuzzi tubs– Tray or vaulted ceilings– Hardwood floors– Fireplaces
Pre-Construction Meeting
Meet with Housing Counselor, Project Coordinator and Construction Manager– Finalize specifications of house– Develop site plan– Develop sweat equity plan– Identify donated labor or materials
Sweat Equity
Most clients find rewarding
Helps reduce cost of home
Everyone required to complete– General site clean-up– Landscaping
Homeowner’s Insurance
Client responsible for selecting provider
Must show proof of insurance at least 2 week prior to closing
Client responsible for paying 1st year’s premium up front
Remaining premiums will be paid from escrow account
Time Clock
90-days available after attendance at orientation – Complete initial loan documents– Select lot– Select plan– Attend homebuyer education– Provide $500.00 down payment– Sign contract
Two 30-day extensions available– Must request in writing– Request subject to Executive Director approval
Donated Labor and Materials
Must be identified at pre-construction meeting
Provide specs of all products Must have access to products at contract
signing If not provided in timely manner, Eastern
Eight will pay to have items purchased or services provided at your cost.