MSHDA programs available to many homebuyers
Organization says home ownership results in less crime, more involvement and stable neighborhoods.
Despite a perception of young professionals being averse to home buying, the Michigan State Housing Development Authority is bullish on helping the demographic realize the “Michigan dream.”
The housing inventory in West Michigan has been especially tight the past two years, but as the market loosens up, MSHDA is encouraging the younger generation to get into homeownership, said Nancy Baker, business development specialist in West Michigan for the homeownership division at MSHDA.
Baker called homeownership not just the American dream, but a Michigan dream, as the state has a high rate of homeownership and is “something people in this state strive for.”
“We like to encourage it because it encourages so many other things socially and economically,” Baker said. “With higher home ownership rates come less crime, higher community involvement, graduation rates, a better quality of life and more stable neighborhoods.
“It’s good for everyone.”
Despite Baker’s claim, U.S. Census Bureau data released last month shows home ownership is at its lowest rate (62.9 percent) in more than 50 years, and 34.1 percent of Americans under the age of 35 own a home. Peak home ownership was in 2004, when 69.2 percent of Americans owned their home, according to the Census Bureau.
In January, Forbes named Grand Rapids one of the hottest real estate markets in the nation, and the average house has been on the market one-and-a-half months in 2016, according to Grand Rapids Association of Realtor data through July. GRAR also reported last month a 16 percent decrease in new residential listings in July against July 2015 and year-to-date listings are down 6.3 percent.
Despite the Great Recession, Baker believes homeownership still is a secure way to build wealth, and the state has recovered “nicely.” With a median home value of approximately $130,000, Baker said homeownership still is attainable for young professionals, despite perceived hurdles and demographic stereotypes.
Baker said homeownership is easier than ever with the help of MSHDA. MSHDA offers down payment assistance, which offers prospective homebuyers zero interest loans to help offset down payments, closing costs and prepaid expenses and aren’t due for payment until the mortgage is paid off, refinanced or sold. Assistance can be up to $7,500.
“Down payments are the biggest barrier for homebuyers, especially the first-time buyer,” she said. “I meet people every day who look good. Good credit, great job, not a ton of debt, but they don’t have the cash to close the deal.”
Although it’s called the MI First Home program, MSHDA doesn’t limit it to just first-time homebuyers but offers the program based on income levels. Most of Michigan, including five Kent County municipalities, is designated as a targeted area that allows repeat buyers to use the program if a family of one or two people makes less than $80,160 and a family of three or more makes below $93,520.
The targeted municipalities in Kent County are Grand Rapids, Kent City, Kentwood, Spencer Township and Wyoming.
Home sale prices are limited to $224,500 statewide and a minimum credit score of 640 is required for prospective homebuyers.
A MSHDA homebuyer education class also is required to be eligible for the programs.
MSHDA also provides Mortgage Credit Certificates that provide federal tax credits for up to 20 percent of mortgage interest annually, Baker said.
Last year, Baker said MSHDA helped 196 families in Kent County, a 40 percent increase against 2014.
As the West Michigan housing market continues to be active, Baker said there are many banks, credit unions and lenders in West Michigan experienced in the MSHDA loan programs and remain a certified MSHDA partner, as long as they’ve executed a loan with the organization in the past six months.
MSHDA also provides forgivable loans for distressed homeowners, as well as foreclosure prevention counseling and resources and home improvement loans for homeowners.
“The housing market in West Michigan has had a huge rebound,” she said. “The nice thing about Kent County is there is a plethora of experienced lenders who work with us. There’s a perception our programs are just for low income, but we have very generous limits.”