More details are available on how Modesto will spend federal Neighborhood Stabilization Program funds.
More than $1.27 million will be loaned at very low interest rates to help families buy and renovate foreclosed homes.
All the details about the program will be shared at Homeownership Modesto, from noon to 5 p.m. next Sunday at Modesto Centre Plaza.
Distribution of Neighborhood Stabilization Program funds will start next month.
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Here are details about the home loan program:
Who is eligible to get low-interest home loans from Modesto's Neighborhood Stabilization funds?
Must have lived or worked in Modesto for at least the past six months consecutively. That includes living at or working at a location that has a Modesto mailing address. Empire and Salida addresses are not eligible.
Must be a legal U.S. resident
Must have a FICO credit score of at least 600
Must have a steady, reliable source of income that can be documented
Must be a low-income or middle-income resident. That includes individuals earning up to $50,050 per year, couples earning up to $57,200 and families of four earning up to $71,500.
Must be approved to receive a first mortgage, like an FHA-insured loan. That mortgage must have monthly payments that do not exceed 31 percent of the borrower's gross income.
Must contribute 1 percent of the home's sales price toward the down payment using personal funds
Must not currently own any other property
Must plan to live in the home
Must complete eight hours of housing counseling approved by the U.S. Department of Housing and Urban Development
Here are the restrictions on which Modesto homes can be purchased:
Must be within Modesto city limits
Must have been foreclosed and be owned by a financial institution
Must be vacant
Must have a purchase price, or value after rehabilitation, that is under $228,000
Must be purchased at a price that is at least 15 percent below the home's current market-appraised value
Must meet HUD's housing quality standards or be rehabilitated to meet those standards
Once purchased, the home must be occupied as the owner's primary residence.
Here are some specifics about the Neighborhood Stabilization Program loans being offered in Modesto:
Maximum loan is $125,000, including money for down payment assistance, reasonable closing costs and rehabilitation to meet HUD's housing quality standards and energy conservation improvements
Loan must be less than the first mortgage received from a private lender
Interest rate will be zero for the first five years of the loan, as long as the home is owner-occupied. No interest will be accrued during those five years.
Interest rate will be 2 percent from the sixth through 15th year of the loan, as long as the home is owner-occupied. Payments toward principal will be required during those years, based on a 30-year amortization schedule.
After 15 years, the remainder of any down payment loan will be forgiven as long as the home remained owner-occupied. Loans for rehabilitation, however, must be repaid.
During the first 15 years, all loans and interest must be fully repaid if the home is sold, ownership is transferred, it no longer is owner-occupied or if the first mortgage is refinanced.
All loans must be approved by the city's Housing Rehabilitation Loan Committee.
Here's how to apply for the program:
The city of Modesto will start accepting applications in mid-June.
Before applying, applicants should have completed their HUD-certified housing counseling, been approved for first mortgage and have negotiated a contract to buy a foreclosed home priced at 15 percent below its market value.
For more information, call 577-5311 or e-mail firstname.lastname@example.org.
Bee staff writer J.N. Sbranti can be reached at email@example.com or 578-2196.