Have you been noticing a LOT of people who were perfectly content with renting homes are now entering in to the real estate market to BUY instead? Maybe they thought because they didn't have thousands of dollars saved or would have to live in the boondocks, they HAD to rent? Not if they use the Neighborhood Stabilization Program!

In October 2008 - February 2009, there were stimulus packages being approved right and left. One of the elements contained within one of these packages was designed to help stem the tide of foreclosure homes that have flooded our real estate markets. Up until July 2009, here in Jackson County, Oregon more than 50% of the sales taking place have been bank owned foreclosure homes. In July, that percentage dropped below the 50% mark, and this is before the official release of the Oregon Neighborhood Stabilization Program. Per Krista Bolf, 2010 President of the Rogue Valley Association of Realtors, the homes priced at under $200,000 have not only been selling quickly, they are often receiving multiple offers, which really represents a "seller's market" vs. a "buyer's market" in this price range.

So, what IS the Oregon Neighborhood Stabilization Program? This program is a silent second bearing zero interest and no monthly payments. It will be used in conjunction with your primary financing - i.e. a 30 year fixed rate FHA home loan, or a USDA Guaranteed Rural Housing loan, or a VA loan. This silent second may be used to match a buyer's contribution toward any down payment requirements (up to 20% of the purchase price), cover closing costs, cover any required repairs on the foreclosure home, or reduce the balance of the first mortgage - up to a combined total of $50,000. 

For example, say you plan to buy a bank owned home within the City Limits of Medford Oregon for $170,000 using the FHA 30 year fixed rate loan. This program has a minimum down payment requirement of 3.5% ($5,950), so you will need to have 1.75% ($2,975) of your own funds to bring in at closing. Neighborhood Stabilization Program funding can match the other 1.75% plus cover all closing costs, prepaid expenses and home repairs required on your whole house inspection AND REDUCE YOUR PRIMARY MORTGAGE AMOUNT BY THE REST...up to a total of $50,000. That means, the amount you will have to pay on each month is the principal and interest on your FHA mortgage only, monthly mortgage insurance premium, property taxes, and homeowner's insurance. This could save you hundreds of dollars each month, allowing you to qualify for a home that may otherwise be out of your budget. Call to be fully qualified, and to know what the cash/payment amounts will be based on your individual circumstances.

The main eligibility requirements are:

• Your household income may not exceed 120% of the HUD Median Income for the area you are purchasing in
• You must buy a foreclosure that is valued at least 1% below current market value as established by an appraisal dated within 60 days of your contract
• The property must be in an eligible area
• You must occupy the home as your primary residence for the entire term of the loan
• You must attend an approved Homebuyer Education program (next available class to Jackson and Josephine County will be held in Medford at Rogue Community College August 22, 2009 - register today!!!!)

There are a myriad of other guidelines, many of them coinciding with today's standard underwriting guidelines for real estate home loans, so it is important you get preapproved for this Neighborhood Stabilization Program funding along with your primary mortgage -before you head out to find a home. Your real estate broker and loan officer/mortgage consultant will need to work together with you very closely to make sure you are looking at homes that will qualify and your contract terms are structured as they will need to be in order for you to receive both loans. If your offer to purchase the bank owned/ foreclosure home is accepted by the bank but makes you ineligible for your financing, not only could you lose the opportunity to purchase that home, you could lose your earnest money deposit, so be careful!

The latest update from Oregon Housing & Community Services said this program should be available for reservations by the last week of August. Time is of the essence if you want to take advantage of the $8,000 first time home buyer tax credit you may be eligible for, too, before it sunsets November 30, 2009 so don't wait - get preapproved right away. Also, Oregon received the minimum allowable amount of funding from HUD in order to participate in the Neighborhood Stabilization Program, so funding could run out quickly.

What an opportunity for everyone this program is! The banks that foreclosed get inventory off their books; the people who live near these homes get to have neighbors moving in who will want to care for these vacant homes often in a state of disrepair; eligible home buyers needing a hand up are able to buy homes they otherwise may not be able to afford. Is that win/win/win or what?!?!?! I am working with several sets of buyers on this Neighborhood Stabilization Program who would not be able to buy a home that meets their requirements without this funding. For example, one of them is a disabled veteran who would qualify for a USDA Guaranteed Rural Housing home loan and a purchase price of $90-95,000 without using the Neighborhood Stabilization Program funding. If you are familiar with pricing today in Southern Oregon, even in the outlying areas he is looking in like White City, Eagle Point, Shady Cove and Gold Hill, he's finding it impossible to find a home that will meet the minimum standards for this loan program. Now, with the Neighborhood Stabilization Program, he will look at homes for $130,000-135,000 - for the same monthly principal and interest payment he would have on the $90,000-95,000 priced home - which makes several homes come up for his broker to show him that he'll be able to afford.

So, how do YOU find out if you qualify for the Oregon Neighborhood Stabilization Program funding to assist you with YOUR home purchase? Choose a lender that is familiar with this program and get preapproved for your financing through them. We will help you with not only the application and processing of your first mortgage, but will also help you with the necessary paperwork and processing of the Neighborhood Stabilization Program silent second loan at the same time. This means we will be working to preapprove you for two programs at the same time, but the Neighborhood Stabilization Program does not allow us to charge you any costs for this, so you won't pay extra for the service. But, this also means many lenders will not be working with the Oregon Neighborhood Stabilization program, so be sure you find out if the lender you have chosen for your FHA, USDA, VA or Conventional loan can/will help you with this second one, too. Here in the Rogue Valley, there were hardly any other lenders in the conference in April dealing with affordable housing programs such as the Oregon Neighborhood Stabilization, but a few of us are ready, willing and able!

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans.com

For additional tips on How To Buy A Home In The Rogue Valley, Oregon, follow these links:

How To Buy A Home in the Rogue Valley, Oregon | Using USDA Guaranteed Rural Housing Loan No Money Down Program

How to Buy A Home In The Rogue Valley, Oregon | If You Are A Self-Employed Borrower

How To Buy a Home In The Rogue Valley, Oregon | Using The FHA Home Loan

How To Buy A Home In The Rogue Valley, Oregon | Using City Of Medford First Time Buyer Program