A welcome home buying program

November 16, 1992

Closing costs in Maryland are among the highest in the nation. Because home buyers are required to advance one full year's property taxes at settlement, a family acquiring an $80,000 home in Baltimore City will need a whopping $10,400 for down payment and closing costs. For many prospective home buyers, who would have no trouble making the monthly mortgage payments, such a hurdle is simply too high.

Baltimore City is now trying to make home buying easier for middle-income residents. Under a program that will start in January, the city will lend up to $5,000 for settlement costs to individuals or families buying a $60,000-$100,000 house for their primary residence.

"We are giving people a little break on cash requirements," says Thomas Jaudon of the city's Homeownership Institute. "We think that is a good way to increase middle-income homeownership. Those are people we need in our tax base."

What is good about this new program is that it does not attach too many ties to getting that settlement subsidy. There are no income limits. The owner is not required to live in the property for a set period of time. Indeed, about the only criteria are the price range of the house and a requirement that the applicant obtain mortgage financing from one of five participating institutions: Maryland National Bank, First National Bank, Signet Bank, Loyola Federal or Municipal Employees Credit Union.

Ever since Mayor Kurt L. Schmoke disclosed the plans for this program, some advocacy groups for the poor have criticized the initiative's $60,000-$100,000 home acquisition price limits as too high. Yet the average home in Baltimore City sells in the $60,000 range. Also, the city already offers a number of home ownership programs for residents with limited incomes.

The settlement expense loan program will be financed with a $2.5 million bond issue city voters approved for this purpose in the 1980s. It could provide a stimulus to promote homeownership throughout the city, particularly in such neighborhoods as Irvington, West Arlington, Gardenville, Howard Park and Ednor Gardens-Lakeside.

If Baltimore is to remain fiscally sound, it will need to increase the number of middle-income homeowners, a group which has been shrinking in recent years. The new settlement loan program may not be the whole solution, but it definitely is part of the answer. We welcome it.

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