By Terence L. TaylorAll too often I have either heard of or spoken with individuals that say they would like to own their own home but for one reason or another disqualify themselves from the mortgage process. Some reasons given are that they perceive the process to be too complicated or feel that their current credit standing will not afford them the opportunity to purchase their first home; many are paying rent in access of $1100.00 a month. These same individuals could be purchasing their own home and building equity. There are mortgage programs that can assist future homeowners that focus on history and not credit score. Credit score drives a lot of today’s mortgage programs. If individuals fall within a certain credit score range their chances for qualifying for a conventional mortgage may be reduced. They then seek out alternative financing options resulting in a loan that could demand a higher interest rate and fees that could cause more financial hardship. It is always best to shop around prior to making a final purchase decision. Information could be as close as your local bank. One program that does help individuals afford a home when they may not have qualified for conventional rates is an ACORN Housing home loan. ACORN loans are negotiated by ACORN Housing Corporation, the largest housing counseling non-profit organization in the US, with a number of national lenders. The goal of this program is to keep moderate and low income individuals in the housing markets of cities around the country where a significant run-up in housing prices has occurred.This is accomplished by several features favorable to borrowers: a)those who may have had credit challenges in the past, who will qualify for more house by reducing their interest rates; b)removing mortgage insurance (in favor of individual, life-of-the-loan counseling); and c) most dramatically, including undocumented income, borrowers may have earned! Finally, it features noticeably reduced closing costs, a clear commitment to moderate and low-income borrowers from lenders. Often times I have refinanced loans for clients with market rates above the mortgage average from when they did their initial purchase. When asked why, they would exclaim that was the best they felt they could do given the advice from the lender whom they were working with at that time. ACORN Housing Corporation has 40 offices nationwide, two of which are in the Northwest: Seattle and Portland. These two offices serve 14 counties. Seattle just closed its 500th loan in January, 2005 and has served well over 1,000 clients since opening in 2002.Many individuals have shied away from their local bank, noting that they did not feel comfortable talking to their local bank’s Mortgage Account Executive about their mortgage prospects. Normally these individuals that could have qualified for mortgage financing options go elsewhere and often times end up with a loan that could make their financial situation worse. Generally they end up with a short-term adjustable rate mortgage that will adjust upward and prevent them from refinancing with a penalty clause built in that requires the homeowner to pay a prepayment penalty should they pay the loan off within a two to three year time frame. Future homeowners can contact their local bank’s Mortgage Department. An Account Executive will conduct an initial review of the client’s situation and make a referral to ACORN which in turn guides prospective homeowners through education and counseling to help insure their success as homeowners. I have been involved in teaching homebuyers classes over the last 10 years and have seen phenomenal changes in housing affordability. Home Buyer’s classes are available on a weekly basis at the Promenade 23 community center located at 2301 S. Jackson. Call 206 358 3500 to register for an upcoming class.Terence L. Taylor is a guest writer for the Pacific Northwest Banker’s Association, and Vice President & Sales Manager, Bank of America Mortgage, Seattle Office. The views and opinions expressed in this article are not endorsements of, nor an attempt to promote products or policies. His phone number is (206) 686-6888 and he can be reached via email at terence.l.taylor@bankofamerica.com .
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