• Gary Sandler
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    Published 13 September 2018

    The New Mexico Mortgage Finance Authority (MFA) has announced the release of HomeNow, which is a down-payment assistance loan available to lower-income, first-time homebuyers.

    HomeNow is a zero-percent interest rate loan that is non-amortizing, which means that there are no monthly payments required.

    According to Teri Baca, MFA homeownership representative, the program provides homebuyers who earn no more than 80 percent of the area median income (AMI) with a loan equal to 8.0 percent of the sales price of the home, or $8,000, whichever is less. Dona Ana County’s area median income is currently around $38,700 for a family of four, according to the Mesilla Valley Public Housing Authority’s website (www.mvpha.org).

    The funds may be used to finance the minimum down payment requirement plus the closing costs needed to purchase a home. Here’s how the program works.

    Program explained

    Let’s say that a first-time buyer contracts to purchase a home for $150,000 and opts to finance it with an FHA loan. The down payment required for an FHA loan is 3.5 percent of the sales price, which in the case of our $150,000 purchase would be $5,250. Add to that amount roughly $3,000 in closing costs and the cash required to complete the purchase rises to around $8,250.

    MFA then loans the buyer all but $500 of the $8,250, or $7,750. The buyer is then required to add just $500 of their own funds to complete the down payment and closing cost requirements. The zero-percent HomeNow second-mortgage then sits dormant for the buyer’s entire term of ownership, with no monthly payments or interest required. The loan is then paid off when the home is sold or refinanced.

    According to MFA’s website, HomeNow will be forgiven after the 10th anniversary date of the purchase. Borrowers who occupy the home and don’t refinance, transfer title, sell, rent or otherwise vacate during the first ten years of ownership will be eligible to have their HomeNow second mortgage forgiven in its entirety.

    Buyers who have a credit score of at least 620 and invest a minimum of $500 of their own funds into the purchase of the home are eligible for the program. Baca goes on to say that, “MFA will finance most single-family property types including detached site-built, condominiums, townhomes, homes in planned unit developments and multi-wide manufactured homes that are on a permanent foundation and assessed as real property.” To be eligible, a property must be located in New Mexico.

    FirstHome program

    The HomeNow program works hand-in-hand with MFA’s FirstHome program, which is a 30-year, fixed-interest rate first mortgage for first-time buyers. First-time buyers with incomes above 80 percent AMI have other down payment assistance options, such as FirstDown or NextHome.]

    FirstDown is a second mortgage of up to $8,000 that helps buyers cover down payment and closing costs that is fixed at 6.0 percent for 30-years, with payments of just $6.00 per month for each thousand dollars borrowed.

    “FirstDown has more generous income limits than HomeNow,” explained Baca.

    MFA’s NextHome program is available to first-time and non-first time homebuyers with annual incomes of up to $91,000 per year. NextHome is a 30-year, fixed-rate mortgage at competitive rates and comes with a grant that is equal to 3 percent of the total loan amount. The grant never has to be repaid.

    So how would someone find out if they qualify for one of these MFA programs?

    “The good news for any potential homebuyer,” said Baca, “is that our eligible lenders will make the process as convenient and easy as possible for an applicant.”

    “MFA-approved lenders will sort through the program options and help determine which program or programs will best serve each individual borrower.”

    Finding a lender

    To find an MFA-eligible lender simply log on to http://www.housingnm.org/homebuyers/find-a-participating-lender.

    “Some MFA borrowers may also qualify for a special conventional loan, which requires a down payment of only 3 percent and allows for reduced mortgage insurance,” added Baca.

    So there you have it. If you’ve been waiting on the sidelines wondering when you should become a homeowner, now may be the time to act.

    See you at closing!

    Gary Sandler is a full-time Realtor and owner of Gary Sandler Inc., Realtors in Las Cruces. He can be reached at 575-642-2292 or Gary@GarySandler.com.

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      Gary Sandler