A year ago, Judy Turcan wouldn’t have believed it if she had been shown her three-bedroom Lombard home, and been told she would soon be its owner. As the single mother of five, “I just never would have gotten into a home like this,” says Turcan. But today, she is indeed the owner, thanks to help secured through the DuPage Homeownership Center in Wheaton.
A friend told Turcan about the home-buying counseling and special grant and loan programs that the center provides. Turcan, a particularly determined home seeker, quickly completed all the necessary paperwork and home-buying courses, and was able to secure a low-interest second mortgage, and a 0 percent interest third mortgage, allowing her to put down just 3 percent of the purchase price, and buy. Now, because of the special financing, Turcan says she actually pays less in mortgage each month than she would for rent.
All of those who long for a home of their own, but fear that facing credit checks, scraping together a down payment, and meeting income requirements for a mortgage represent a financial gauntlet that’s impossible to pass through, can take a lesson from Turcan: Help abounds, but you have to seek it out and make the most of it.
Indeed, one of the reasons that Turcan hurried to complete the required paperwork and counseling sessions was that she wanted to qualify for the special no-interest loan while there were still funds available. What’s more, Turcan didn’t have any serious credit problems.
These days, one of the chief obstacles to homeownership is a flawed credit record, says Dru Bergman, executive director of the DuPage Homeownership Center. Many home seekers spend a year, or even two, with a financial counselor, learning budgeting techniques and catching up on credit card and car payments. Mortgage lenders’ rules prohibiting those with bad credit from obtaining a loan are quite sensible, says Bergman. “If you have trouble managing your money, and already have lots of credit problems, then you are not doing yourself a favor by taking on a mortgage. The last thing you need is a foreclosure.”
In addition to specialized home-buying seminars, the DuPage center runs seminars four times a year on clearing up credit problems. The center is one of dozens in the Chicago area offering such help, says Bergman.
Because credit and home-buying counseling is so widely available, it’s almost impossible to gather a comprehensive list of the offerings. But one of the best listings of counseling organizations is provided by Fannie Mae, a governmental agency that buys mortgages from lenders. Simply call 1-800-732-6643 for a counseling organization near you.
Fannie Mae wants to spur lenders to do more for low-income and moderate-income buyers. It has created a special “Community Home Buyer’s Program,” which allows borrowers to make a down payment of just 5 percent of a home’s purchase price-and up to 2 percentage points of that 5 percent can be borrowed or received as a gift. But to qualify for such a loan, you must have a certificate showing that you have completed home-buying counseling. Each of the agencies in the Fannie Mae listing will provide such a certificate.
Many of the counseling agencies also help arrange special grants or financing packages to eligible applicants, as the DuPage Homeownership Center does.
Some special financing programs are also sponsored by banks and other types of mortgage lenders. In order to comply with federal regulations, lenders are doing more to help low- and moderate-income home seekers. For instance, the Illinois League of Financial Institutions is providing, through banks and savings institutions around the state this year, 189 grants of up to $2,900 toward down payment or closing costs.
Mortgage lenders should be willing to give any first-time buyer time and attention, says Steven Olson, vice president and community reinvestment officer of Uptown National Bank of Chicago. During a “pre-qualification” session, a lender can review your credit and finances, and help you determine how much you can afford to spend on a house. A lender may also be able to point out special programs, if he knows of any that may help you.
Here is a listing of some programs that can help first-time home buyers:
City programs
ACORN Housing Corp., 117 W. Harrison St. For $15, this organization will pull your credit record from the three major credit bureaus, provide one-on-one counseling, and offer two workshops. Home seekers who complete the counseling and workshops and are ready to buy are referred to one of five lenders affiliated with the ACORN program. These lenders can sometimes offer special financing terms. Call 312-939-7488 for more information.
The Spanish Coalition for Housing, 3439 W. North Ave. One-on-one counseling in Spanish or English is available upon appointment, and workshops are scheduled periodically. Special loan and grant program information is disseminated when available. Call 312-342-7575.
Neighborhood Housing Services (NHS) holds home-buying seminars once a month at the Quality Inn at Halsted and Madison Streets. At the seminar, participants can ask for information about special financing opportunities for homes in several city neighborhoods where NHS has offices. Call 800-882-0882 to make a reservation for the seminar.
Uptown National Bank of Chicago offers a special adjustable rate mortgage for first-time buyers, where the rate adjusts every five years. The loan comes due or “balloons” in 15 years, yet payments are figured on a 30-year term, keeping payments lower than on other types of mortgage instruments. In addition, low-income families may qualify for a grant for part of the down payment. For more information, call Colleen Rothrock at 312-989-5721.
Harris Bank holds home-seeker seminars on the second Tuesday of every month from April through October from 5 to 7 p.m. at the bank, 111 W. Monroe St., 8th Floor Center Assembly Room. The bank also provides down payment assistance in the form of an interest-free loan for up to 2.5 percent of the purchase price for qualified households. Call 312-461-3363 to make a seminar reservation.
City of Chicago Department of Housing New Homes for Chicago Program allows first-time buyers who complete pre-purchase counseling and qualify for a mortgage from the financial institution of their choice to receive up to $2,000 toward closing costs if they purchase a home from one of the developments in the program, and if they fit annual-income requirements-less than $40,200 for a family of four. Chicago residents can call 312-747-9000 to set up a free pre-purchase counseling session.
Homebuyer Tax Savings Program. Also known as the Mortgage Credit Certificate Program, this plan allows home buyers with incomes under certain levels-$58,995 for a household of three people or more-to receive a direct tax credit of up to $2,000 for each year they hold their mortgage, if they buy an existing home with a purchase price of under $141,881 or a new home for $156,662 or less. Income and purchase price restrictions are looser if you buy in certain targeted neighborhoods. You must apply for this program before you close on your loan. Call the Chicago Department of Housing at 312-747-9000.
Suburban programs
DuPage Homestead Program, sponsored by the DuPage Homeownership Center, provides no-interest second and third mortgages to families that meet income requirements. A family of four, for example, can earn no more than $40,200 a year. You must buy a home in DuPage County, but you do not need to currently live there. Most of the funds for the 0 percent mortgages are depleted for 1995, says Dru Bergman, executive director, but the center is taking applications for next year. Call 708-260-2500.
DuPage Home-Stretch Program, just introduced by the DuPage Homeownership Center, is designed to help families with slightly higher incomes-a family of four can earn no more than $51,300 to qualify for a loan of up to $3,000 toward the down payment. Call 708-260-2500.
New Cities Community Development Corp. sponsors a 27-unit limited equity co-op in Harvey. People earning at least $16,000 per year may qualify for one of the units, in which part of the monthly rent is used to build equity. New Cities is also building 40 new homes in Harvey that are specially earmarked for first-time buyers with low to moderate incomes. Call 708-333-2009 for information on either program.
Village of Oak Park First-Time Home Buyers Assistance Program. If at least one member of a household works in Oak Park, or if you reside in Oak Park and your income is below certain limits ($40,200 annually for a four-person family), you may qualify for a loan for the down payment and closing costs on the purchase of a condominium or single-family home costing $150,000 or less. Call 708-383-6400, ext. 2394, for more information.
Joseph Corp. of Illinois Inc. supervises the rehab of approximately 10 homes each year in Aurora. The homes are then made available to low- and moderate-income Aurora residents who complete a home buyer education course. Down payment assistance is available through the City of Aurora. Call 708-820-7400 for more information.
The Lake County Housing Authority is launching a pilot project whereby they will acquire and rehab homes and then sell them to first-time buyers from the county who meet the income requirements (no more than $40,200 a year for a family of four). Buyers don’t need money for a down payment, just closing costs, and they must pass underwriting criteria established by the Federal Housing Authority. Call 708-223-1170, and ask for Karen Leinonen at extension 220.
