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Down-payment assistance available for home buyers

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Posted: Friday, August 29, 2014 7:29 am

An analysis of home-buyer assistance programs available through state and local housing finance agencies and nonprofit groups around the nation found that 90 percent are funded, and that 70 percent of homes for sale could be eligible for one or more programs.

The analysis of 1,654 home-buyer assistance programs, by Down Payment Resource, found that Southern states had the greatest number of programs (598). But the 228 programs offered in the Northeast were the most likely to be funded — 96.5 percent had money to provide help to eligible buyers such as down payment and closing cost assistance, grants, tax credits, and affordable first mortgages with competitive or below-market interest rates.

A state-by-state breakdown shows California had the most programs — 283 — but that only 81.6 percent were funded. Hawaii had 13 programs, but only six were funded.

Funding for home-buyer assistance programs comes from sources that include mortgage revenue bonds and mortgage-backed securities. During the depths of the housing downturn, the lack of liquidity in bond markets made it difficult or impossible for HFAs to issue bonds, and many scaled back their programs and raised rates. The federal government helped revive the programs by buying securities issued by Fannie Mae and Freddie Mac backed by new mortgage revenue bonds issued by the HFAs.

Down Payment Resource is a tool developed by Atlanta-based Workforce Resource that helps home buyers and real estate agents providing services to them determine whether they, and homes they are interested in buying, qualify for down payment assistance and other home-buyer assistance programs. The tool is available through the Down Payment Resource website, downpaymentresource.com, and about two dozen partner organizations, including 19 multiple listings services.

Rob Chrane, president and CEO of Down Payment Resource, said buyers taking advantage of down payment assistance and other programs are able to apply savings to moving expenses, emergencies and retirement. Most assistance programs also require homeownership counseling, which has been shown to decrease the risk of default and foreclosure. Although many programs are reserved for first-time homebuyers, anyone who has not owned a home in the last three years will typically qualify as a first-time homebuyer.

Eileen Schamber is the president of the Lodi Association of Realtors and can be reached at president@yourlocalaor.com.

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