2-2-07
City Mortgage
Well, it’s a good time to be a first-time home buyer in the city of Chicago.
There are some terrific FTHB programs here in Chicago. City Mortgage and TaxSmart sit at the top of my list. We’ll discuss City Mortgage today and TaxSmart next month. Let’s get to it!
Initiated in March of 1996, the City Mortgage Program helps provide first-time home buyers with the money needed to cover down payments and closing costs, in the form of a grant of up to 4 percent of the loan amount. Yes, you receive a grant – which means you don’t have to pay it back. For example, if you’re buying a place for $200,000, you receive a grant for $8,000, courtesy of the City of Chicago. Seriously.
City Mortgage also helps qualified home buyers obtain 30-year fixed rate loans at a competitive mortgage rate. In fact, City Mortgage’s rate is currently 0.25 point under the market rate, which is better than competitive, it’s fantastic. So not only are you receiving money for your down payment, you’re getting a better rate than you would if you were going with a standard mortgage! The Department of Housing’s Molly Sullivan puts it best, “Our mission here is to create home ownership opportunities and enhance affordability by providing a wide array of housing options, not just with the house itself but also the mortgage. We’ve had so many grateful buyers that never would have been able to own a home if not for City Mortgage.”
Since 1996, City Mortgage has provided $409 million to help to over 3,800 families and individuals become homeowners. According to Sullivan, the Chicago City Council just approved another $100 million in single-family mortgage revenue bonds to keep City Mortgage going strong.
Well, at this point in the article, you’re probably pretty excited and your mind is probably racing with questions. I’ll try and answer them here…
Can anyone participate in the City Mortgage program?
The program is open to people who are buying for the first time, or who have not owned a home in the past three years or who purchase homes in target neighborhoods. So, you might qualify even if you are not a first-time homebuyer.
Like all city housing programs, City Mortgage has specific eligibility guidelines for income and purchase prices. Income limits in many areas of the city range from $60,000 per year for a single person to $80,000 for a family of three or more. In target areas, the limits are higher, ranging from $72,000 to $105,000 per year. “Target areas” are those defined by the U.S. Census bureau as revitalizing, low- and moderate-income neighborhoods. You can find a map of target areas at www.cityofchicago.org/housing; scroll down the right hand side, click on the square “City Mortgage” banner to arrive at the City Mortgage information page. You’ll find a PDF of the target area map at the bottom of that page. Target areas in Chicago include many neighborhoods you’re probably already familiar with, if not living in right now, such as Logan Square, Uptown and even parts of Lincoln Park.
Does City Mortgage work for any home purchase?
For our purposes, yes, City Mortgage works for any home purchase. There is a price limit for the program but it should be well within the price range any of us would be considering. To qualify for City Mortgage, the property must have a purchase price of less than $325,000 for a new or rehabbed home or $514,000 for a four flat. In target areas, purchase price limits are $398,000 and $628,000, respectively.
So how do I get started with City Mortgage?
Meet with a participating mortgage lender. It’s important to note that City Mortgage is only available through participating mortgage lenders; you can find a list of participating lenders on the City Mortgage info page at www.cityofchicago.org/housing. Also, I have a couple of participating lenders I recommend that are very, very good and are well-versed in City Mortgage and Chicago’s other first-time homebuyer programs; feel free to call or e-mail me anytime for their info.
Receive pre-purchase counseling. All city programs require pre-purchase counseling. This educational requirement will generally consist of a meeting with a home ownership counselor followed by a two-hour seminar provided by any of several Homeownership Housing Counseling Centers throughout the city. Pre-purchase counseling will provide valuable information on all aspects of buying and owning a home. The Department of Housing’s Sullivan adds, “There are a lot of responsibilities people need to think about before they sign on any dotted line and this counseling helps them prepare for that.”
Find a home. Once you have been pre-qualified by a participating mortgage lender and have completed the pre-purchase counseling component, it’s business as usual. Meet with a realtor, find a property that will make you happy, settle on a price with the seller and close on the property. You can find much more information about these aspects of the home buying process in some of my past articles, which are available online at www.performink.com.
City Mortgage offers a fantastic opportunity for first-time home buyers, especially those without much money saved up for a down payment. If you have any questions or comments, feel free to drop me a line. Next month, we’ll take a look at another terrific FTHB program… TaxSmart!
Mike McNamara has been an actor in Chicago for the past nine years in theatre, commercials, television and film. Mike is also a Mortgage Consultant with West America Mortgage Company. He can be reached anytime at 773/398-0021 or McNamara310@aol.com.