THDA reduces mortgage interest rates
Posted: Friday, April 16, 2010 8:02 pm
Homeownership became more affordable in Tennessee April 8.
The mortgage interest rates through Tennessee Housing Development Agency were reduced on applications submitted April 8 and afterwards.
The interest rate is not the only factor making homeownership possible, but it is an important one. THDA’s mission is to create safe, sound, affordable housing opportunities for households of very low to moderate income. The Homeownership Choices program presents 30-year fixed rate mortgages through local lenders for first-time homebuyers.
The lowest interest rate is 4.75 percent for the Great Rate. The Great Rate program is for households that have downpayment and closing costs available from a different source. If a household prefers to accept assistance from THDA for downpayment and closing costs, they can choose to receive 2 percent of the acquisition cost in assistance through the Great Advantage (GA) mortgage or 4 percent in assistance through the Great Rate (GR). The assistance dollars are paid back to THDA with the higher interest rates of 5.05 percent (GA) or 5.35 percent for Great Start.
“Choosing a mortgage includes several considerations,” said Senior Director of Single Family Programs Laura Sinclair. “We have buyers who prefer to keep a solid balance in savings and pay a little more for our downpayment assistance. Others see a lower interest rate as a better long term decision for them.”
THDA’s goals for the buyers include long-term, successful homeownership. Pre-purchase homebuyer education is required for mortgage loans with downpayment assistance, and suggested for all mortgage loans. THDA has coordinated training for non-profit organizations across Tennessee and those classes are open for everyone, those about to buy a home, or those who have homeownership in their long-range plans.
THDA also created the Stimulus Loan in response to the $8,000 federal tax credit for first-time buyers. A buyer can get the use of the tax credit as downpayment through a 0 percent second mortgage from THDA. If the homeowner uses the tax credit to pay off the second mortgage, they are left with their 30-year fixed affordable THDA mortgage without any out of pocket costs for the downpayment.
The federal tax credit is available for persons who have contracts in place on or before April 30 with a closed mortgage loan by June 30, 2010.
Buyers can choose to keep the Stimulus Loan as a 10-year second mortgage at one percentage point above their first mortgage.
“Maintaining a mortgage is a big responsibility,” said Sinclair. “It’s never too soon to learn about how to have a successful household budget. I invite everyone to check our site (www.thda.org) and attend a homebuyer class. It’s important to us to have prepared and successful homebuyers, with a mortgage that fits their budget and plans.”
THDA mortgages are secured through local lenders. Lenders and REALTORS® have access to training from THDA on the eligibility requirements. The mortgages are insured through FHA, or guaranteed through VA, or USDA/RD programs. Income and acquisition (sales price) limits for each county are posted on www.thda.org, under the First-Time Homebuyer tab.
A first-time homebuyer includes eligible persons who have not owned a principal residence in the last three years.
Industry groups that want to schedule a presentation should contact Debbie Reeves, business development director, at email@example.com or (615) 815-2152. The full presentation offers four hours in continuing education hours for REALTORS® through the Tennessee Real Estate Commission. Shorter introductory sessions are available, too.
THDA’s most recent rates before this drop were 4.98, 5.28 and 5.58 percent.
Published in The Messenger 4.16.10