First-time home buyers get help with financing

April 11, 1994|By Mark Guidera | Mark Guidera,Sun Staff Writer

An Ellicott City family has become the first beneficiary of a new program that helps moderate-income families buy their first homes.

"We are so pleased to have this first settlement behind us," said Emily Lincoln, an associate broker with RE/MAX in Columbia and founder of the Howard County Master's Club, a group of Realtors who established a trust fund to help first-time buyers.

The club raised $30,000 last year to launch the program, which will help pay down payment and closing costs.

In its first effort, the club lent the family $7,700 for the home purchase, said Ms. Lincoln. Without the assistance, she said, the family would have had difficulty qualifying to buy the home that they had been renting.

The family, who asked not to be named, will have to repay the club's loan, set up as a 4 percent 30-year second mortgage, in monthly installments of about $36, Ms. Lincoln said.

The purchase price was about $120,000, said Ms. Lincoln, and club members expect future beneficiaries to buy homes in the $110,000 to $120,000 range, Ms. Lincoln said.

In applying for the loan to buy the house, the mother in the family of five wrote a letter to Columbia Bank, explaining their need.

In the letter, the woman said that, while her husband had been steadily employed at a job in the county for four years, it was "impossible to save any money for the house purchase while we make ends meet with our three small children. . . . We really do want to begin building the nest egg for our family."

The family put up about $1,000 for down payment and closing costs.

The ability to contribute some savings to a home purchase was one of the elements program organizers said they would look for in candidates for the assistance.

Columbia Bank, which had agreed to assist the program, made the 30-year, fixed 7 percent-interest rate loan. Meanwhile, Marathon Title Company, Inc. in Columbia conducted the title work on the property at below their normal rate, said Ms. Lincoln.

"There are just so many people who put in a lot of their own time and effort at no cost to make this happen," said Ms. Lincoln.

She said the club expects to make its second loan next month; two other candidates also may receive assistance this year.

For now, the program has no firm income limitations or other requirements for those seeking help with a home purchase other than that the applicants qualify for the loan, be first-time buyers and live in Howard County.

"The main thing we look for are people with a history of responsibility," said Ms. Lincoln. "We don't expect them to have perfect credit histories.

"The beauty of this program is that we can help people buy a home who would normally feel locked out or frustrated by all of the loan requirements."

She said program organizers hope to help future candidates with some financial counseling so they can improve their chances of landing a mortgage. The club has recently garnered the volunteer help of a Michael Evans, branch manager of Norwest Mortgage in Columbia. He has agreed to meet with program candidates to go over their personal finances and make suggestions on adjustments they might consider to improve their ability to purchase a home.

"The great thing about this program is it can break the rent cycle. You have a lot of hard-working people in Howard County who it would take years of saving before they could afford their first home."

The state's Community Development Administration, or CDA, (514-7515) also has a program to aid first-time homebuyers. It offers several below-market loan and settlement cost loan programs. The first-time homebuyer program has income and house price limitations.

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