Imagine you're 26, a newlywed with a few thousand dollars tucked away in a savings account. You're looking to buy a rowhouse in one of Baltimore's historic neighborhoods, but you can't afford to pay more than $2,500 up front.
An impossible dream?
Not for Thomas and Kelly Rudis.
Obtaining some financial help from the seller and using two settlement-assistance programs, by the time they got to the settlement table all they needed was a mere 39 cents.
Hundreds of couples like the Rudises have bought homes in Baltimore's aging neighborhoods during the past few years, drawn to the city by the promise of settlement- and closing-cost assistance -- the kind of help that is seldom offered in the counties. The programs are run by government agencies, lending institutions and nonprofit groups in an effort to erase the blight that threatens community stability.
The 39 cents wasn't the Rudises' only out-of-pocket cost -- they did have to come up with approximately $2,300 to cover items that the programs didn't -- but overall, they were able to substantially lower their expenses when they bought a 2 1/2 -story rowhouse in Butchers Hill for $73,900. The couple's experience shows how homebuyers can use assistance programs to help them purchase property in the city.
The state, the city and Mrs. Rudis' employer each contributed $1,000 toward the couple's down payment and closing costs, which totaled $7,118. The Rudises were also given $837.61 from the seller and a $3,280 closing-cost loan from Neighborhood Housing Services of Baltimore Inc., further reducing the amount they had to pay up front.
As a nurse at nearby Johns Hopkins Hospital, Mrs. Rudis, 26, was able to take advantage of the "Live Near Your Work" program, a statewide initiative intended to coax workers into living in targeted "revitalization" areas by giving them $3,000 toward the purchase of a home that they pledge to live in for at least three years.
"It's as if this program was designed with us in mind," said Mrs. Rudis, standing in the master bedroom of the couple's new three-bedroom home on East Fairmount Avenue. "Without it, we would not have been able to buy this house."
The down payment and closing costs, typically estimated to be 8 percent or more of the purchase price, are often the biggest barriers for first-time homebuyers.
For many, a program such as Live Near Your Work means the difference between buying and not buying, said David K. Elam, director of the Fannie Mae Baltimore Partnership Office. Fannie Mae is a congressionally chartered, shareholder-owned company that buys mortgages on the secondary market and repackages them as securities to sell to investors.
"Programs like this give people who may not have enough cash, but have good credit and job stability, the ability to buy a home," Elam said.
To qualify for assistance under the Live Near Your Work program, an employee of a participating company need only buy a residence in the targeted area -- as defined by both government and the employer.
Twenty-one employers have been enlisted in the program. About half are government agencies and two-thirds are in Baltimore, although businesses in Salisbury, Hagerstown and Silver Spring have also joined. So far, 20 people have used the program to purchase a home in Baltimore.
According to Will Backstrom, homeownership coordinator for NHS' Patterson Park office, "the intent of programs like Live Near Your Work is to lure homebuyers to older communities" that are having difficulty attracting buyers.
"Will's really good," said Mr. Rudis, 31, who turned to Backstrom for financing assistance. "He was constantly calling to make sure everything was going along as it should. But, more importantly, he found resources that we would not have been able to find on our own."
(After receiving assistance from Hopkins and NHS, the Rudises were required to pay about $1,300 before settlement for a credit report, home inspection and appraisal. The couple had put a $1,000 deposit on the home).
A private, nonprofit loan and counseling group, NHS was established 23 years ago to help working families acquire housing and revitalize neighborhoods on the brink -- those it can keep from teetering over the edge, said Michael Braswell, NHS executive director.
NHS also has offices in Irvington, Coppin Heights, Patterson Park and, recently, Greater Hillendale -- its first venture in Baltimore County. In the past 4 1/2 years, the group has helped 513 families and individuals buy homes. The average house costs $57,369.
According to Braswell, NHS becomes involved only in communities where it has been invited. The organization offers low-interest loans, assistance with rehabilitation projects, plus homeowner counseling, to help stabilize neighborhoods. The typical buyer buying a property through NHS pays as little as $1,000 out of pocket.