Monroe County First Time Homebuyer Program
For Information: Contact: The Redevelopment Authority of The County of Monroe Phone: 570-421-4300.
The Monroe County First-Time Homebuyer Program is operated through a partnership with the Monroe County Commissioners, the Monroe County Affordable Housing Board and participating first mortgage lenders. Funds for the Program are supplied through the County’s Affordable Housing Trust Fund in coordination with the Recorder of Deeds Office. It is intended to provide increased opportunities for eligible income households to purchase a principal (primary) residence in Monroe County.
The Monroe County First-time Homebuyer Program provides a no-interest, second lien purchase money mortgage loan in amounts up to 10% of the purchase price or $10,000.00, whichever is less, for qualified applicant(s). The loan proceeds may be used toward the purchase of the house and/or closing costs. Promissory Note and Mortgage documents will be executed by and recorded in the name of the Redevelopment Authority of the County of Monroe on behalf of the County of Monroe in the amount awarded.
In all instances, the Applicant(s) will need to contribute monies toward closing. At a minimum, the Program requires that the Applicant(s) contribute an amount equal to 3% of the purchase price.
SECOND MORTGAGE REPAYMENT TERMS
No monthly or periodic amortization is required; however, the borrower may voluntarily choose to make such payments. The second mortgage is due and payable upon the earliest of the following conditions:
- Transfer of the property
- Refinance for more than the original purchase price.
- The property is no longer the primary residence of the borrower
- First mortgage has been paid in full. SUBORDINATION The County is not obliged to subordinate its lien to any future first mortgage loan but may choose to do so when it is in the program’s best interest. Generally, we would expect borrowers to consolidate our second mortgage loan into their new first mortgage loan should they refinance. Subordinating our lien position would be an exception and therefore will be favorably entertained only when there are unique circumstances that warrant an exception. NON-ASSUMABLE This mortgage loan is not assumable. Any change in title will require a review by the Monroe County Affordable Housing Board. MAXIMUM HOME PURCHASE PRICE The maximum home purchase price plus costs of repairs and improvements shall be the current FHA Mortgage price limit for Monroe County. The maximum house and lot cost for new construction financing also limited to the FHA Mortgage price limit. RESIDENCY REQUIREMENT Applicants must be either a citizen of the United States or a Permanent Resident Alien and proof of residency and citizenship is required (i.e.: birth certificate; government issued photo- I.D. – a valid passport; a certificate of naturalization or a green card). There is no minimum residency requirement within the County. FAMILY SIZE There are no restrictions as to the household size.
INCOME LIMITS REQUIREMENTS
The total gross annual income of all members of the Applicant’s household (including non-applicant(s) of majority age) shall not exceed the current Monroe County Income Limits established by the US Department of Housing and Development (HUD). A copy of the current income limits for Monroe County is attached.
Note: If a borrower is married, but separated, the spouse’s income may be excluded if the separation can be clearly documented by a filing for divorce, a legal spousal order, or other convincing evidence that the borrower has maintained a separate residence for at least three (3) months.
LIQUID ASSET RESERVES
Total liquid asset reserves are limited to the ten (10) months plus the money required to close. Liquid Assets are defined as assets that can easily be converted to cash and includes: all bank accounts, (checking and savings etc.), Certificates of Deposits (CD’s), Money Market Accounts, stocks and bonds. Qualified retirement accounts are not considered liquid assets.
For purposes of this program, the Applicant(s) must be a first-time homebuyer. A first-time homebuyer is defined as:
- An Applicant(s) who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers).
- A single person who has only owned with a former spouse while married.
The applicant must have an acceptable credit history and the financial ability to make the monthly mortgage payments for which they have applied. The participating first mortgage lender or Government Sponsored Enterprise (GSE) will generally determine an applicant’s creditworthiness.
HOUSING & DEBT RATIOS
The monthly housing –to –gross-income ratio should not exceed 33%, exceptions allowable up to 38% as GSE approves a higher total debt-to-income ratio. The housing expense is to include the first mortgage loan’s principal and interest payment, plus 1/12th of the annual real estate taxes, hazard insurance premiums, private mortgage insurance premiums and property owner association dues, if applicable. It need not include any assumed payment amount for the program’s second mortgage loan.
The monthly total debt-to-gross-income ratio should not exceed 41%, exceptions allowable up to 46% as GSE approves a higher total debt-to-income ratio. When calculating this ratio, the debt service figure shall include the aforementioned housing expense plus all payments to creditors for debts having more than nine (9) payments remaining, plus alimony or child care expenses. Automobile lease payments will also be included in the calculation, regardless of how many months remain, as we will assume that another vehicle loan or lease payment will take its place.
Gifts are an acceptable source for down payment, closing costs and prepaid expenses. There is no cap on the amounts of gifts of cash or equity. A “Gift” letter should be provided from the person or persons who have provided the gift.
MANDATORY FIRST-TIME HOMEBUYER TRAINING
Applicant(s) will be required to attend and to complete pre-purchase counseling from a certified counseling agency and program approved by the Monroe County Affordable Housing Board. Typically, such counseling informs prospective Applicant(s) of the responsibilities of home ownership, budgeting, the importance of good credit and the home buying process. Fees for this training, if applicable, are to be paid by the Applicant(s) or the first mortgage lender.
It is strongly recommended that the applicant obtain counseling prior to entering into an Agreement of Sale. In every instance, the applicant must complete the counseling program before we will grant approval of the second mortgage loan
RESTRICTIONS ON THE FIRST MORTGAGE LOAN
The first mortgage loan must be a fully amortizing loan with a maximum of 30 years. For the hybrid adjustable rate mortgage loans, the initial rate and payment must be fixed for a minimum of (5) five years. Negative amortization loans are unacceptable, as are interest-only and balloon loans.
1. Title Insurance Commitment
Verification of a Title Insurance Commitment is required. A copy of the Title Insurance Commitment must be provided prior to closing. The County of Monroe, c/o the Redevelopment Authority of the County of Monroe, must be listed as insured for the amount of the 0% Interest Loan in which Applicant(s) has been determined eligible for.
2. Homeowners Insurance
Verification of Borrower’s Homeowner’s Insurance is required. A copy of this policy must be provided prior to closing and the County of Monroe, c/o the Redevelopment Authority of the County of Monroe must be listed as an additional insured on the Borrower’s Homeowner’s Insurance Policy for the length of the Loan.
The Monroe County Affordable Housing Board reserves the right to either decline an application or to approve a loan in a different manner. The Monroe County Affordable Housing Board may take such action if it determines that the applicant has selected a first mortgage with terms and conditions that present undue risk to the borrower or to likelihood of the county’s loan being repaid.
This program is conducted in a manner which will not cause discrimination on the basis of race, color, national origin, religion, ancestry, sex, age, handicap (disability) or familial status (families with children) or any other protected classification under federal or state law.
The Monroe County First-time Homebuyer Program Guidelines will be reviewed on a bi-annual basis to determine if any changes are needed in order to better serve future participant’s and in keeping with the intent of the program.