Pennsylvania Program description Keystone Home Loan Program To be eligible, you and any other adults who will live in your home must be first-time home buyers, meaning you cannot have owned a home within the last three years. These requirements can be waived if you buy a home in a targeted area or you're a discharged U.S. military veteran. Purchase price and income limits apply. You must have an acceptable credit history, ability to repay your loan and sufficient funds for an application fee, closing costs and down payment based on the purchase price of your home.
Whether you'll have to pay mortgage insurance will depend on your choice of conventional, USDA, VA or FHA-backed financing. Keystone Advantage Assistance Loan Program This down-payment-assistance loan, which can be paired with Pennsylvania’s purchase programs, can help cover down payment and closing costs of up to 4 percent of the of the purchase price (maximum $6,000) in the form of a second mortgage at a 0 percent interest rates.
This loan is repaid over a 10 year term. Borrowers must have a credit score of at least 660, and cannot have liquid assets of more than $50,000. HFA Preferred Risk Sharing (No MI) The No MI program offers a conventional mortgage with a 30-year fixed-rate term, structured so you won't have to pay mortgage insurance (MI) even if your down payment is less than 20 percent of your home's purchase price.
Instead, your loan might have a slightly higher interest rate. To be eligible, you must have an acceptable credit history and ability to make mortgage payments, which will be not more than 30 percent of of your income, and there are income limits based upon household size and location. You'll have to pay an application fee and closing costs and contribute at least $1,000 of your own money toward your down payment.
The remaining funds can be a gift or from a down payment assistance program. HFA Preferred (Lo MI) The Lo MI program also offers a conventional mortgage with a 30-year fixed-rate term, but you will need to pay for mortgage insurance if your down payment is less than 20 percent. To be eligible, borrowers must meet the same requirements listed for the Preferred Risk Sharing Program. ACCESS Home Modification Program Made in conjunction with a Keystone Home Loan or Keystone Government Loan, this program offers an interest-free deferred-payment loan to those who have a permanent disability or live with a family member who has a one and need funds to make accessibility modifications to a home they wish to buy.
This program provides a deferred payment loan, with no interest, and no monthly payment; the loan becomes due and payable upon sale, transfer, or non-owner occupancy of the property. There are no fees associated with the loan; the minimum loan amount is $1,000 and the maximum is $10,000. Home modifications must meet the needs of the person who has a physical disability and will live in the home. Examples include bathroom modifications, installation of grab bars and handrails, lifting devices, adding a main-level bathroom or bedroom, widening doorways or hallways and other such changes.
Access Downpayment and Closing Cost Assistance Program This program can only be coupled with the ACCESS Home Modification program and and whose gross, annual household income does not exceed 80 percent of statewide family median income. The program offers an interest-free deferred-payment second loan to people who have a permanent disability or live with a family member who has a permanent disability.
The minimum loan amount is $1,000. The maximum is $15,000. This loan will become due and payable if you move out of your home or sell or transfer it to another owner. The amount of assistance is based on the borrower’s need. For any first mortgage with a loan-to-value greater than 80% (except RD and VA), the borrower is required to contribute the lesser of $1,000 or 1% of the loan amount from their own verifiable funds, and the borrower can have and have liquid assets of no more than $5,000.
HOMEstead Downpayment and Closing Cost Assistance Loan Program Homebuyers eligible for the HOMEstead program may qualify for up to $10,000 in downpayment and closing cost assistance in the form of a no-interest, second mortgage loan. HOMEstead funds are forgiven at 20 percent per year over five years for all loans closed on or after January 1, 2007. The minimum loan amount is $1,000; the maximum is $10,000.
For all loans with loan-to-values greater than 80% (except RD and VA), the borrower is required to contribute the lesser of $1,000 or 1% of the loan amount from their own verifiable funds. Renovate and Repair Loan Program Homeowners can borrow up to a maximum of $35,000 or 120 percent of the home's value for approved home repairs or renovations of their primary residence (minimum of $2,500) in the form of a 10, 15, or 20-year fixed rate loan.
Borrowers must have credit score of at least 620, but households can have a combined income no greater than 150 percent of the state’s median income. R&R loans can be a source of payment for emergency repairs to critical life–safety systems in the homes, as long as the loan application is made to the Local Program Administrator within 30 days of the repair. Purchase Improvement Loan Program Coupled with the Keystone Home Loan Program, this program allows buyers to combine a Keystone Home Loan with additional funds for home repairs or improvements.
The minimum additional loan amount is $1,000. The maximum is $15,000. The home's purchase price is subject to limits and the appraised value after completion must support the cost of the repairs. The repairs might include plumbing or electric systems, improved heating or air-conditioning systems, addition of living space, kitchen or bathroom renovation, roof replacement or energy conservation or solar energy improvements.
Up to of three inspection fees of up to $75 each may be included in the repair costs. Employer Assisted Housing (EAH) Initiative This program offers homebuyers working for a “Participating EAH Employer” (there are 49) with a 30-year fixed-rate loan and down-payment assistance. The down-payment assistance comes in the form of an interest-free 10-year loan of up to $8,000. This program targets “community employees, medical personnel, school employees, police and fire personnel, county workers, laborers, service industry staff, etc.
” Borrowers must meet the qualifications of the Keystone Advantage Program. Mortgage Credit Certificate The Mortgage Credit Certificate allows homebuyers to claim a tax credit of 20-50 percent (20%-50%) of the mortgage interest paid per year, capped at $2,000 annually. It is a dollar-for-dollar reduction against your federal tax liability; the percentage amount you can deduct depends on your annual income.
The MCC can be used in conjunction with HFA Preferred and Keystone Government programs.See Also: First Evangelical Lutheran Church
An equipment is one of the largest investments you are going to ever make. Appliances are always significant purchases, and therefore are one particular of your most vital parts of your house. You rely on appliances for almost everything from cooking to cleaning, and especially contemplating the level of money you may be placing forth for it, it only is sensible that you would wish to be sure to take advantage of sensible purchase.
House appliances is usually a term that's applied pretty popularly nowadays but what does it stand for? Household appliances stand to the mechanical and electrical solutions which can be utilized in the home for the operating of the regular domestic.
What should first-time home-buyers consider when choosing a neighborhood?Conventional wisdom (and most lenders and insurers) will encourage buyers to choose a neighborhood where prices of homes are likely to appreciate over the time they own their own home. In the past, this has meant steering people to suburban, majority white, single-family places. For the past several decades, this advice was probably correct from a strictly financial point of view.
But there are several other factors to consider.First, think about where you want to be in relation to the other places you will regularly travel to -- your work, grocery stores you like, your kids’ school, your church, the park you enjoy most. If each of those trips will require car use rather than walking, biking or public transit, you are adding a lot to your annual expenditures. Your lender is not likely to help you think about those costs.
Second, think about what you like in a neighborhood. Do you like busy sidewalks, interesting nearby retail spots and a quick place to grab a cup of coffee? Or do you like quiet suburban areas with large green lawns and no sidewalks? Do you like areas with diverse populations and ethnic restaurants? Or do you prefer places where most residents look pretty much like your family, and where economic situations are similar?If you have children, or plan to have children, think carefully about what you want for them.
What activities would you like them to be able to participate in easily -- without your having to drive them somewhere? What sort of people would you like them to encounter on the street? What sort of school would you like for them? Would you like a neighborhood where there are other kids nearby?Each of these types of considerations will interact with your lender’s concern that you purchase a property that will increase in value.
That increase -- the “commodity value” of your new home is, of course, good for you. But the bank is mostly thinking of themselves, not you. They want the value to increase, so their loan is protected. If you default, and they have to take the property back, they want to make sure its eventual sale will cover their loan and all their costs to foreclose, maintain, insure and sell the property.I encourage all first-time buyers to think about the “home value” of their purchase, as well as the commodity value.
And, increasingly, lenders’ ideas of a good neighborhood and the market’s ideas are different. More and more older homeowners are leaving the suburbs to return to more urban settings, and younger households are staying in the city longer. The result is that demand is higher in the city, and supply is much slower to keep up with it.In most American cities, the highest priced real estate is in the most dense and oldest urban neighborhoods.
Those neighborhoods are difficult to buy into for a first-time homebuyer. But the areas where prices are generally affordable and likely to increase in the future are growing more dramatically in urban areas. There is no simple or automatic formula for determining this calculus, but putting “home value” ahead of “commodity value” may, for many young buyers, result in just as good a long range financial plan as the dated lender’s advice about a good suburban purchase.
How do you know that you are financially ready to buy your first home?The single biggest mistake that first-time homebuyers make is to forget about the maintenance and management costs of owning a home. Any responsible lender (responsible is the key word here) will help a potential buyer calculate the costs of their mortgage, insurance and taxes. If those costs exceed a certain percentage of their income (usually around 30%), the lender will advise against the purchase (in their own self-interest), or they will refuse to grant a loan.
The new homeowner should also think carefully about how secure their income is. Does it rely on lots of overtime that might become unavailable? Is a spouse or partner’s income included, who may stop working when a child comes into the household? Is the company stable? Again, a responsible lender should ask those questions, but the buyer should ask them first.The big issue that is overlooked results from the fact that most new homeowners are former renters.
When anything goes wrong in their apartment, they simply call the owner or property manager, and they come and fix the problem. When you own the home, you have to arrange for, supervise, and pay for the repair. This takes time (to research possible contractors, be home to let the workers into the house and describe the problem, supervise the work, approve the finished product and issue a payment), knowledge (what is the real cause of the problem, what is the best solution, is the cost reasonable, what are alternative solutions that might be less expensive, what sort of contract should you sign, is the finished product acceptable, what are your guarantees if something goes wrong), and, of course, money.
New homeowners need to be prepared to set aside some funding to cover home repairs, and to find ways to undertake the research and time commitment that are surely going to occur on an annual basis. Some years, particularly if the home is new, the costs will be low, but the next year they may be double the average.In addition to ongoing maintenance, there is the issue of capital improvements. All roofs wear out.
All boilers fail at some point. All windows need to be replaced eventually. The house will need to be painted. These requirements are as certain as the fact that the sun will come up tomorrow. But lenders don’t typically remind new buyers about this, so they are not prepared. These larger and more costly elements of homeownership are typically paid for either through large savings accounts, or through additional loans or re-financing.
New homeowners need to secure a “Capital Needs Survey” before agreeing to a purchase. Properly done, this will inform the buyers of the likely remaining life of the critical elements of their home, and the cost to replace or repair them. That will allow them to make a plan for how that work will be paid for.They might decide to create a “Capital Reserve Fund” -- a savings account of some kind into which they put some money each month, so that when the first big repair comes along, the money will be in the bank.
Or, they may be able to determine that the first big task is far enough away that the combination of increased value of their home, plus the amount of mortgage they have paid off will create enough increased equity that a re-financing of their home will pay for the work. Whatever their solution, it is critical that they plan for this eventuality, because it will happen. The only question is when.In addition to the need to take care of maintenance and capital improvements for the sake of the comfort and functioning of the new home, a critical element in maintaining the financial value of what is probably the first-time homebuyer’s largest asset is its condition.
While the vast majority of homes increase in value over time (with the notable exception of larger events, such as the 2008 financial collapse), a home with a failing roof, leaking windows or chipped and peeling paint is likely to cost the owners even more in reduced re-sale value than it would cost to make the repairs.In short, new homeowners need to consider the entire costs of not just buying the home, but also of owning the home.
What do you recommend as the minimum down payment for a first-time home buyer?In my experience, most new homebuyers are more interested in low monthly payments than they are in the long-term cost of their home over their 30-year mortgage. This would argue for the largest down payment possible. 20% is not uncommon for standard mortgages. It is also true that a large down payment assures there is lots of equity in the house immediately, and it guards against being “underwater,” in the case of a need to sell the house soon after purchase.
On the other hand, many first-time homebuyers find it difficult to put their hands on the money required for a large down payment. If that is the case, and the numbers work at a 5% or 10% figure, I think that is fine.One thing that I strenuously advise against is borrowing the money for any part of the down payment. Banks try hard to make sure this is not the case, because they worry you will pay the down payment lender instead of them if you get in trouble.
But there are many ways to borrow this money without the bank finding out -- friends, family, unregulated internet sources. It is a terrible idea. First you are lying to your primary lender. Second, you are placing obligations on yourself that many decades of experience have shown are not a good idea. Third, if things do go south and you have to forfeit your home, you have also done extremely serious damage to your credit rating, making it all the longer before you will ever be able to buy a home again.
If you don’t have the money for a down payment that will result in a reasonable mortgage payment, don’t buy the house. Keep saving, put off the purchase for a few more years, and buy when your purchase will be affordable and provide a pleasant experience for you for many years.What effect did Trump’s Executive Order increasing the cost of FHA-backed loans have on first-time homebuyers?It just makes it all the harder to afford any purchase.
This order suspended an Obama administration decision to reduce FHA fees for the insurance they issue for mortgages. Most first-time homebuyers will need a mortgage insured by the FHA. They will now pay $400 to $800 more per year for their insurance. Because first-time buyers are likely to buy less expensive homes, their cost will be at the low end of this range, but it will certainly add expense to their purchase -- every year for 30 years.
How can federal, state and local policymakers responsibly and effectively increase home affordability, particularly for first-time homebuyers?In my opinion, decent, affordable housing should be a right in this nation, not a lottery that only about one quarter of those eligible for housing assistance can win. To really take that on (as we said we would in the Housing Act of 1949) would be costly, but not outrageous.
For example, the HUD budget is only about 2% of U.S. discretionary expenditures. It is about $40 billion, as opposed to a military budget of about $540 billion. If we were to be serious about assuring that every American has a decent home, we could do that by shifting $120 billion among line items. Or, we could simply tax ourselves a bit more. Across the world, we are about 30th in average tax burden.
We can do better. Oh, and by the way, permanent, decent, affordable housing is, by far, the cheapest way to house people of modest means -- much less expensive than shelters, hospitals, mental institutions, jails or even taking care of people on the streets. And all the costs of those “housing” accommodations are paid for by the public.As to the specific ways to do this, the first method is probably to put more money into public housing and/or the Low-Income Housing Tax Credit.
These forms of subsidy support rental housing constructed by public, non-profit and for-profit organizations. Rental housing is a simpler solution for many families whose current assets are stretched. The public sector could help speed up the time when households are ready to purchase by creating a matching grant for savings accounts maintained by those families. Many public housing authorities and some cities do this today.
The Feds could help.As to homeownership, the federal government could help by lowering the FHA fees (see above) for insurance, providing funds for states or cities to create a limited equity home-purchase program (initial price is subsidized and re-sale must be to an eligible family, at a reduction similar to the original price savings), regulating all lenders, so they do not victimize first-time homebuyers in the same ways that set off the 2008 recession, and providing tax-incentivized savings plans for maintenance and capital improvement reserve accounts.
States could help by improving their building codes with operating costs in mind, as well as health and safety -- energy efficient windows and heating systems, quality materials, and good details. They could also help through some of the same fiscal ideas as the federal government, and by overseeing zoning ordinances and assuring that cities, towns and counties allow building to proceed at a pace that will keep up with demand, so that prices stay reasonable.
Cities and towns could adopt those zoning ordinances and create consumer “labels” that would advise a first-time buyer of the likely costs of owning a particular home -- something like the “Energy Star” ratings that appear on appliances when you shop for them at a retail store.A simple way for cities to help is to establish a first-time homebuyers program that provides advice and counseling for potential new owners.
In Cambridge, Massachusetts, such a program has operated successfully for a number of years. There are over 500 homes in this program, and each potential new owner is required to attend the classes prior to seeking a home. Of these homes, there was only one foreclosure during the entire 2008 recession. This demonstrates the vital importance of first-time buyers being well educated, prior to their entrance into what can be an exciting new period in their family’s life.