It's official. The tax credit is totally off the table. The senate decided in a vote last week not to even extend it for those who had homes under contract and can't get them closed by the 30th of this month, the final deadline. That to me officially says the tax credit is not coming back. End of story.
However.....if you're an owner occupant buying a home in certain parts of Des Moines, you may be eligible for up to a $10,000 grant, plus a $2,500 closing cost allowance from the Neighborhood Finance Corporation, or the NFC, as it is popularly known. The NFC is a non-profit organization that is funded by the state and only operates in the Des Moinesarea. NFC acts as the lender and holds the loans, so applicants apply directly to, and work directly with the NFC. That's up to $12,500 free money eligible to owner occupants for homes that qualify.
The program is not available for all areas of Des Moines, more affluent areas are generally excluded, but lending zones cover a pretty good swath of the city. SEE MAP
The way the program works is that NFC loans on homes that might need repairs in the form of roofs, gutters, plumbing, electrical, siding, windows, mechanicals, foundations, paving, garages, energy efficiency and other structural repairs. NFC will only loan on homes that are eligible for repairs. A grant of up to $10,000 is allowed to cover qualified repairs. Buyers get estimated from licensed contractors and submit a repair plan to the NFC for approval. If the repairs are approved, the property goes to closing and the grant is awarded as a 3rd mortgage. As work is performed and confirmed completed, NFC goes ahead and disperses fund directly to the service providers. NFC closes the loans at its office and covers buyer closing fees up to $2,500. The closing credit is a straight credit that does not need to be repaid. Closing fees are low because NFC is not in the business of making money of loans, they are in the business of promoting home ownership and proctoring the refurbishing of dilapidated properties in Des Moines.
NFC can be a good option for owner occupant buyers interested in foreclosures because it has far fewer stipulations than an FHA or VA underwritten loan which many REO managers and lenders will not allow.
The grant is forgivable over five years at 20% per year. NFC will mail out an affidavit that the home owner will need to sign that verifies they are living in the property. When the affidavit is returned, NFC will take 20% off of the grant total. After five years of occupying the home the grant is completely forgiven. If the homeowner vacates or sells thr property before the end of the five years, they would need to repay the remaining portion of the grant, not the whole grant mind you, just the prorated portion.
Some major points of the program:
- Only available for owner occupants
- Cosigners must occupy the property
- There is no PMI, loans are 80/15
- Five percent down payment is required
- Grants do not need to be repaid if the purchaser lives in the home 5 years
- The current interest rate is 4.875%
- NFC lends the money and holds the loan
- Duplex or multi-family conversions back to single family may be eligible for $20,000 grants
- Cannot be used on homes that have been awarded grants in years prior
- Generally requires a 600 minimum credit score
This is a fantastic program this has been available for many years and that is not going away anytime soon. If you are purchasing a home in the Des Moines area and you qualify, you owe it to yourself to determine if the property you're planning to purchase is NFC eligible. You can find NFC on the web at http://www.neighborhoodfinance.org, or you may reach them by phone at 515- 288-5626.