Detroit mayor unveils new mortgage program
DETROIT – Detroit announcing what's called a historic new lending program that will break down most barriers to financing for aspiring home buyers.
Last year, 90 percent of homebuyers could not get financing and had to pay cash. This program is designed to help them.
"We believe Detroit will be the model for the nation in stabilizing neighborhoods," said Bruce Marks, of the National Assistance Corporation of America (NACA).
The key word for would-be home buyers is "no": No down payment, no closing costs, no credit check, no fees or points. If you promise to live in the house, NACA will say yes.
"If you want to be a homeowner, we'll guarantee if you stick with this program it will happen," said Marks. "We don't look at your credit score, we look at your individual circumstances."
Thirty-year fixed rates today are 3.5 percent on a 30-year mortgage -- about a quarter of a point lower than market.
To assist remodeling and rehab they will lend an amount 110 percent of the home's assessed value -- 150 percent if purchased from the Detroit Land Bank. On a $5,000 purchase price they get a $60,000 loan for rehab.
Technically it means the borrower is underwater or upside down from the get-go -- owing more than the home is worth. However, Mayor Mike Duggan says the loan is not irresponsible and that assessments are inaccurate, values are low and likely to rebound, and financially because of low rates buyers come out ahead.
"That individual in most neighborhoods is paying $800 a month for rent, now they will pay $400 on a mortgage and own the house," said Duggan.
Those homeowners will build equity over time. Now, not everyone will quality initially. Some may need debt counseling.
To pre-qualify you can attend a workshop next Saturday, April 25 at Pure Word Missionary Baptist Church from 9:30 a.m. to 1 p.m. To register, go to the NACA website.
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