MORGAN PARK — A new Home Buyer Assistance Program is designed to give low- and middle-income families an opportunity to buy a home without having to come up with a full down payment, Ald. Matt O'Shea (19th) said.
"I'm hopeful this information will be beneficial for you and put more families in more homes in our community," O'Shea said Tuesday to a group of real estate agents, lenders and more gathered at the Beverly Arts Center.
About 50 people were on hand to hear about the program sponsored by the Chicago Infrastructure Trust. O'Shea sits on the board of the trust, which seeks to provide non-traditional solutions to many city issues.
Howard Ludwig details help available for homebuyers.
Among those issues is helping to remove the barrier to homeownership for families who cannot afford a down payment, said Leslie Darling, executive director of the trust.
"We know where there is more home ownership in a community it makes for a greater community and a safer community," Darling told the audience at 2407 W. 111th St. in Morgan Park.
She then handed the floor over to Anthony Fratto and William Hofherr of George K. Baum & Co. The Chicago-based investment banking group is among the administrators of the program.
The pair explained that traditional homebuyers must make $133,000 or less to apply for the down payment assistance program. Those looking to tap loans through the Federal Housing Administration or the U.S. Department of Veterans Affairs must earn less than $87,400 to participate in the program.
The home buyer must meet other benchmarks as well in terms of having a credit score typically between 660-680. The buyer also needs to bring at least $1,000 to the table at the time of closing.
If these parameters are satisfied, the homebuyer can qualify for a grant of up to 7 percent of the property's value in down payment assistance, said Fratto, adding that individual lenders might have some of their own requirements as well.
"The program is administered for those two income households who just can't get enough together to have a down payment for a home," he said.
The home must be owner-occupied to qualify for the program, and the grant is forgiven after five years. If the owner decides to refinance or sell the property in that five years, a portion of the down payment assistance funds must be repaid.
The program works by issuing applicants slightly higher interest rates on their loans so the borrower makes up for the lack of a down payment over the five-year span, Fratto said.
The homebuyer is also responsible for closing costs and some other fees or "points" may apply. But these costs are often rolled into the 30-year, fixed-rate loans, he said.
The program is available to anyone looking to buy a home within the city limits. Several lenders are in the pipeline, and the hope is that the program will be ready in the next couple of weeks, Hofherr said.
"It's a meaningful program that is going to drive homeownership," Darling said.
Walter Krajewski, a sales manager for Wintrust Mortgage, said down payments of about 3 percent are required of most loans his company chooses to issue. He believes removing this obligation will open homeownership up to many who cannot otherwise afford it.
"I think I will write a lot of business on this," he said.
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