January 17, 2003
FOR IMMEDIATE RELEASE
January 17, 2003
Online Pre-Qualification Available at MSHDA Website
LANSING - In an effort to make homeownership more affordable, the Michigan State Housing Development Authority (MSHDA) has reduced the interest rates on its home mortgage loans to its lowest rate ever, Gov. Jennifer M. Granholm announced today.
Beginning January 13, MSHDA will finance loans to modest-income homebuyers at an interest rate of 5.25 percent, with no discount points charged at loan closing. The rate will be available through February 12.
Also for the first time, homebuyers can fill out a pre-qualification application on MSHDA's website, www.mshda.org.
"Michigan has been a national leader in making housing more affordable for low and moderate income families," Granholm said. "Through this program, more hard-working families in Michigan will be able to realize their dream of homeownership."
According to MSHDA Executive Director James L. Logue III, homebuyers with household incomes up to $56,650 in metropolitan counties and $44,000 in rural counties may qualify for the 30-year loans to buy new or existing homes. First-time homebuyers with incomes of 80 percent of county median or less (adjustable for family size) also may qualify for down payment assistance - up to $10,000 for families with children and up to $5,000 for families without children.
"We recognize that many homebuyers can afford mortgage payments but have limited resources for the down payment needed to buy a home," Logue said. "By offering this assistance, we can help families who otherwise might be shut out of the market."
Buyers who receive down payment assistance may purchase a home costing up to $90,000, except where lower under federal law. For other buyers in MSHDA's program, existing homes may cost up to $105,000 and new houses up to $128,000, depending on the location of the property.
Compared to conventional interest rates of 6.0 percent, MSHDA financing will save the buyer on a $70,000 loan approximately $33 per month.
Available for certain loan types, homebuyers also may choose MSHDA's optional "step" loan, which features a reduced interest rate of 4.75 percent for the first three years, and then is increased to 5.75 percent for years 4-30. Borrowers will be qualified for the payment at the initial rate; the increase in payment at the fourth year is modest, according to Logue.
The program is primarily for first-time homebuyers, but many localities in Michigan are exempt from this federal restriction. MSHDA does not refinance existing mortgages or land contracts.
Because the federal government considers bond-financed mortgages to be subsidized, borrowers may be subject to federal "recapture tax" if they sell their home within nine years and realize a gain on the sale, Logue said.
Applications for MSHDA loans are taken by approximately 115 branch offices of lending institutions participating in the MSHDA program.
MSHDA raises funds to finance home mortgages through the sale of mortgage revenue bonds to private investors; no state tax dollars are used. To date, the agency has financed nearly 51,500 home purchases in the Single Family program, for an investment of $2.2 billion.
###
For more information, homebuyers may call 1-800/327-9158.
Press inquiries: Program Policy and Market Research, 517/373-0011.
Lenders/Realtors: Single Family Office, 517/373-6840.
