State mortgage program cuts rate to 4.75%

Ehrlich aims to increase homeownership with cheaper 30-year loans

April 30, 2003|By Michael Dresser | Michael Dresser,SUN STAFF

Pledging to increase the state's homeownership rate, the Ehrlich administration cut the interest rate charged under a state-sponsored mortgage program to 4.75 percent yesterday.

The lower interest rate - charged on 30-year mortgages - is one of several changes the Department of Housing and Community Development is making to increase the use of a program that helps low- and moderate-income families become homeowners.

Borrowers previously paid rates ranging from 5 percent to 5.75 percent under the Maryland Mortgage Program. The new 4.75 percent rate is substantially below the 5.79 percent national average rate on a 30-year mortgage as determined by Freddie Mac for the week that ended April 25.

Speaking at a State House news conference, Lt. Gov. Michael S. Steele said the state also would raise the maximum price limits of homes that can be financed under the program. He said that move would expand the supply of affordable housing in the state by 48 percent.

Steele, who represented Gov. Robert L. Ehrlich Jr., added that the state is also dropping a Glendening administration rule that bars the use of the program to buy previously owned houses outside designated Smart Growth areas. The rule, which was found to exclude many rural parts of the state, will remain in effect for new construction, Steele said.

The administration also announced that borrowers who receive loans from the state to help with down payment and closing costs would also be eligible for the lowered mortgage rate.

Victor L. Hoskins, secretary of Housing and Community Development, said the department plans to market the program aggressively with the help of banks, real estate companies and nonprofit agencies.

Hoskins said the administration's goal is to raise the state's homeownership rate to 75 percent by the end of Ehrlich's term in 2006. The state's homeownership rate currently is 70.7 percent, according to the housing department.

The program's income and home price limits will vary from county to county.

In Baltimore, for instance, the program can be used by a family of three or more making up to $98,980 to purchase an existing home selling for up to $247,014. In Allegany County, the same income limit applies but the maximum price of an existing home is $112,900.

Current homeowners are ineligible for the program.

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