Low-rate Loans Could Open Door For Homebuyers

March 24, 1992|By Lorraine Mirabella | Lorraine Mirabella,Staff writer

Some 20 to 40 Anne Arundel County families with low to moderate incomes will be able to buy their first homes with the help of reduced-rate financing through a public/private partnership.

County and Maryland National Bank officials announced two new homebuyer-assistance programs yesterday, which can be used as part of a single package or separately.

The county's Settlement Expense Loan Program will make loans of up to $5,000 to help with closing costs. And the bank's Home OwnershipMade Easy offers mortgage financing with 8 percent interest rates, no down payments and only one point in loan fees.

County and bank officials unveiled the plans outside the newly built Jacob's Meadow inSevern, a development of three-bedroom town houses with 2 1/2 baths and full, unfinished basements that qualify as affordable under the finance plans.

"Affordable housing gives a boost to the local economy, to banks, industry, not to mention the people who occupy the homes," said County Executive Robert R. Neall. "Anne Arundel has very high land costs. We want to try to make some effort . . . for the peoplejust on the borderline."

While stressing that the assistance -- the bank's $2 million for mortgages and the county's $90,000 for loans-- is far from a "cure-all," the executive said it would help families who otherwise could not afford to buy a home.

To be eligible for closing cost assistance on a home $85,000 or less, a single first-time homebuyer must have an income of no more than $28,000, while a couple must earn no more than $40,000 annually. Kathleen Koch, assistant planning and zoning officer, estimated that 65,000 county individuals and families fall into thosecategories.

Down payment requirements and interest rates on the five- or 10-year loans vary according toa buyer's income. For instance, a buyer with an income between $10,001 and $22,000 would be required to put down at least $500 and 5 percent of income over $10,000. A buyer with an income between $29,001 and $40,000 would need at least $2,150 down and 25 percent of income over $29,000.

Besides Jacob's Meadow, other homes that sell for $85,000 or less can be found in Cromwell Fountain, in Glen Burnie, as well as areas of Crofton and Shady Side, Koch said.

The bank's HOME program will finance mortgages on existing homes that sell for up to $111,000 and on new homes of up to $124,875. A buyer's income can't exceed $43,500.

As part of the package, homebuyers would get free pre-purchase counseling from Community Action, part of the Anne ArundelEconomic Opportunity Committee Inc., and from Maryland Housing Resource Corp. Once a purchaser signs a contract on a home, he would applyfor a HOME mortgage.

Clarence J. Snuggs, the bank's vice president for Community Development Lending, said a buyer would need $9,700 cash out-of-pocket to settle on an $80,000 home with a conventional loan. He would need only $6,000 for the same house using HOME financing. Monthly payments would be $771 with a conventional loan and $745 with a HOME loan.

The bank, which has 19 branches in the county, started a similar program in 1989 in Baltimore, then expanded it to Prince George's County. It will be available in Arundel starting April 6.

The state's Community Development Administration is administeringthe county loan. Homebuyers should apply to a lending institution using the Maryland Mortgage Program.

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