Eastern Eight Orientation

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Eastern Eight Orientation

  1. 1. Orientation
  2. 2. Purpose of Orientation <ul><li>What Eastern Eight can and can not do for you </li></ul><ul><li>Determine if Eastern Eight will meet your needs </li></ul>
  3. 3. Introductions <ul><li>Name </li></ul><ul><li>Area you hope to live </li></ul><ul><li>One question you hope to have answered today </li></ul>
  4. 4. Topics Covered <ul><li>Financing options available </li></ul><ul><li>Building vs. Existing Home </li></ul><ul><li>Building process </li></ul><ul><li>Land selection process </li></ul><ul><li>Plan selection process </li></ul><ul><li>Sweat equity requirements </li></ul><ul><li>General program policies </li></ul>
  5. 5. How much can you borrow? <ul><li>Housing Ratio </li></ul><ul><ul><li>29% of your gross monthly income </li></ul></ul><ul><ul><li>Income x .29 = maximum monthly house payment </li></ul></ul><ul><ul><li>Will include taxes and homeowners insurance </li></ul></ul><ul><li>Debt Ratio </li></ul><ul><ul><li>41% of your gross monthly income </li></ul></ul><ul><ul><li>Income x .41 = maximum monthly total debt payment </li></ul></ul><ul><ul><li>Will include house payment </li></ul></ul>
  6. 6. Example <ul><li>Gross Monthly Income = $1,500 </li></ul><ul><li>Gross Monthly Debt = $300 </li></ul><ul><li>Housing Ratio </li></ul><ul><ul><li>$1,500 x .29% = $435 </li></ul></ul><ul><li>Debt Ratio </li></ul><ul><ul><li>$1,500 x .41% = $615 </li></ul></ul><ul><li>Total Available for house payment </li></ul><ul><ul><li>$615 - $300 = $315 </li></ul></ul>
  7. 7. USDA Rural Development <ul><li>May be used for new construction or existing home </li></ul><ul><li>Home/lot must be located in a “rural” area </li></ul><ul><li>Income limit based on family size and county of residence </li></ul><ul><li>Fixed Rate Loan – 4.875% </li></ul><ul><li>Term – 33 years </li></ul>
  8. 8. THDA New Start <ul><li>Available to first time homebuyers </li></ul><ul><li>Reduced interest rate based on income </li></ul><ul><li>Available only on new construction </li></ul><ul><li>Covers 75% of appraised value </li></ul><ul><li>Must provide $500 down payment </li></ul><ul><li>Recapture </li></ul><ul><ul><li>If own home for 9+ years, no recapture </li></ul></ul><ul><ul><li>If sell before 9 year, may be subject to repay some of the subsidy received </li></ul></ul>
  9. 9. USDA Rural Development (con’t) <ul><li>Interest Credit Assistance </li></ul><ul><ul><li>Interest rate can be reduced based on income </li></ul></ul><ul><ul><li>Can be reduced as low at 1% </li></ul></ul><ul><ul><li>Income reviewed bi-annually </li></ul></ul><ul><ul><li>Income increases, interest rate may increase </li></ul></ul><ul><ul><li>Income decreases, interest rate may decrease </li></ul></ul>
  10. 10. USDA Rural Development (con’t) <ul><li>Recapture </li></ul><ul><ul><li>Only applies if you have received an interest rate credit </li></ul></ul><ul><ul><li>You will be required to re-pay a portion of the subsidy you received </li></ul></ul><ul><ul><ul><li>Pay when you sell the home </li></ul></ul></ul><ul><ul><ul><li>Pay immediately after you have paid off the home </li></ul></ul></ul><ul><ul><ul><li>Allow the owed portion to remain as a lien against the property so it will be paid when the house is sold or transferred </li></ul></ul></ul>
  11. 11. Other THDA Programs <ul><li>Great Rate – 4.98% Interest rate </li></ul><ul><ul><li>Requires 3% down payment </li></ul></ul><ul><ul><li>Can be used for new construction or existing home </li></ul></ul><ul><ul><li>Closing costs can be paid by buyer, seller or grant </li></ul></ul><ul><li>Great Advantage – 5.28% Interest rate </li></ul><ul><ul><li>Provides 2% grant to cover closing costs and/or down payment </li></ul></ul><ul><ul><li>Must use the entire 2% </li></ul></ul><ul><li>Great Start – 5.58% Interest rate </li></ul><ul><ul><li>Provides 4% grant to cover closing costs and/or down payment </li></ul></ul><ul><ul><li>Must use the entire 4% </li></ul></ul><ul><li>Note: You must access these programs through a local lender. Can make up to $57,880 for family of 3 or more. </li></ul>
  12. 12. Grant Programs <ul><li>Not available in all situations or locations </li></ul><ul><li>Often limited funds, so will be allocated on a first come, first serve basis </li></ul>
  13. 13. Sweat Equity Opportunity Program (SHOP) <ul><li>Must provide at least 100 hours of work towards home </li></ul><ul><li>Work can be completed by self, family or friends </li></ul><ul><li>Could receive up to $12,000 in grant funding, depending on availability </li></ul><ul><li>Grant is repayable upon sale or transfer of the property </li></ul>
  14. 14. American Dream Down payment Initiative (ADDI) <ul><li>Available to first time homebuyers </li></ul><ul><li>Up to $5,000 in grant funds </li></ul><ul><li>Must contribute 1% of purchase price </li></ul><ul><li>Can not be used with THDA New Start loans </li></ul><ul><li>Available in Carter, Hancock, Hawkins, Greene, Johnson and Unicoi counties </li></ul><ul><li>Grant is forgiven after 5 years </li></ul><ul><li>Only available at certain times </li></ul>
  15. 15. Northeast Tennessee/Virginia HOME Consortium <ul><li>Available to first time homebuyers </li></ul><ul><li>$5000, $7500, or $10,000 depending on income </li></ul><ul><li>Must contribute $500 towards purchases </li></ul><ul><li>Can be used with almost any loan </li></ul><ul><li>Available in Sullivan and Washington counties only </li></ul><ul><li>Grant is repayable upon sale or transfer of the property </li></ul>
  16. 16. Principle Buy Down Assistance <ul><li>Extremely limited pool of funds </li></ul><ul><li>Only available in certain counties/locations </li></ul><ul><li>Up to $14,999 in grant assistance </li></ul><ul><li>Income limit based on family size and county of residence </li></ul><ul><li>Grant is repayable upon sale or transfer </li></ul>
  17. 17. Building vs. Existing Home <ul><li>Not all financing products work for both </li></ul><ul><li>At this time, more resources for new construction than existing </li></ul><ul><li>New construction is not right for everyone </li></ul><ul><li>Consider the pros and cons of each </li></ul>
  18. 18. Building vs. Existing Home <ul><li>Building </li></ul><ul><ul><li>Pros </li></ul></ul><ul><ul><ul><li>Brand new </li></ul></ul></ul><ul><ul><ul><li>Choices </li></ul></ul></ul><ul><ul><ul><li>Less maintenance </li></ul></ul></ul><ul><ul><ul><li>More affordable financing </li></ul></ul></ul><ul><ul><li>Cons </li></ul></ul><ul><ul><ul><li>Length of time </li></ul></ul></ul><ul><ul><ul><li>Cost of new construction </li></ul></ul></ul><ul><li>Existing Home </li></ul><ul><ul><li>Pros </li></ul></ul><ul><ul><ul><li>Quicker </li></ul></ul></ul><ul><ul><ul><li>More house for dollar </li></ul></ul></ul><ul><ul><ul><li>House easier to find than lots </li></ul></ul></ul><ul><ul><li>Cons </li></ul></ul><ul><ul><ul><li>Less affordable financing options </li></ul></ul></ul><ul><ul><ul><li>Home maintenance </li></ul></ul></ul>
  19. 19. Why Eastern Eight? <ul><li>Eastern Eight </li></ul><ul><ul><li>1 st Mortgage </li></ul></ul><ul><ul><ul><li>$97,500 </li></ul></ul></ul><ul><ul><ul><li>$391.00/month </li></ul></ul></ul><ul><ul><li>2 nd Mortgage </li></ul></ul><ul><ul><ul><li>$20,000 </li></ul></ul></ul><ul><ul><ul><li>$113.00/month </li></ul></ul></ul><ul><ul><li>Grant </li></ul></ul><ul><ul><ul><li>$12,000 </li></ul></ul></ul><ul><ul><ul><li>$0.00/month </li></ul></ul></ul><ul><ul><ul><li>$500 cash required </li></ul></ul></ul><ul><li>Total Monthly Payment </li></ul><ul><ul><li>$504.00/month + taxes/insurance </li></ul></ul><ul><li>Market </li></ul><ul><ul><li>1 st Mortgage </li></ul></ul><ul><ul><ul><li>$130,000 </li></ul></ul></ul><ul><ul><ul><li>$790.00/month </li></ul></ul></ul><ul><ul><li>Grant </li></ul></ul><ul><ul><ul><li>$5,000 </li></ul></ul></ul><ul><ul><ul><li>$0.00/month </li></ul></ul></ul><ul><ul><ul><li>$1,300 cash required </li></ul></ul></ul><ul><li>Total Monthly Payment </li></ul><ul><ul><li>$790.00/month + taxes/insurance </li></ul></ul>Purchase price = $130,000
  20. 20. Building Process <ul><li>Homebuyer information sheet </li></ul><ul><li>Orientation </li></ul><ul><li>Commitment form signed </li></ul><ul><li>Lot selection </li></ul>
  21. 21. Building Process (con’t) <ul><li>Plan selection </li></ul><ul><li>Pre-construction meeting </li></ul><ul><li>Homebuyer Education </li></ul><ul><li>Finance One-on-One Meeting </li></ul>
  22. 22. Building Process (con’t) <ul><li>Contract signing </li></ul><ul><li>Construction Inspections </li></ul><ul><li>Sweat Equity </li></ul><ul><li>Pre-closing finance meeting </li></ul>
  23. 23. Building Process (con’t) <ul><li>Secure homeowner’s insurance </li></ul><ul><li>Walk-through of property </li></ul><ul><li>Loan closing </li></ul><ul><li>Post-homeownership workshops/counseling </li></ul>
  24. 24. Lot Selection <ul><li>Provided a minimum of four Eastern Eight approved lots </li></ul><ul><li>Must select one of four lots shown </li></ul><ul><li>Lot not selected within 90 day time period, file will be inactivated </li></ul>
  25. 25. Plan Selection <ul><li>Plans viewed after lot has been selected </li></ul><ul><li>Eastern Eight staff will select plans based on your lot and budget </li></ul><ul><li>Provided 2-3 plans that can be scaled based on budget </li></ul><ul><li>House plan not selected within 90 day time period, file will be inactivated </li></ul>
  26. 26. House Plans <ul><li>To keep home affordable, no changes allowed to plans </li></ul><ul><li>Items that are included </li></ul><ul><ul><li>Refrigerator </li></ul></ul><ul><ul><li>Dishwasher </li></ul></ul><ul><ul><li>Range </li></ul></ul><ul><ul><li>Microwave </li></ul></ul><ul><li>Items that are not included </li></ul><ul><ul><li>Washer and dryer </li></ul></ul><ul><ul><li>Jacuzzi tubs </li></ul></ul><ul><ul><li>Tray or vaulted ceilings </li></ul></ul><ul><ul><li>Hardwood floors </li></ul></ul><ul><ul><li>Fireplaces </li></ul></ul>
  27. 27. Pre-Construction Meeting <ul><li>Meet with Housing Counselor, Project Coordinator and Construction Manager </li></ul><ul><ul><li>Finalize specifications of house </li></ul></ul><ul><ul><li>Develop site plan </li></ul></ul><ul><ul><li>Develop sweat equity plan </li></ul></ul><ul><ul><li>Identify donated labor or materials </li></ul></ul>
  28. 28. Sweat Equity <ul><li>Most clients find rewarding </li></ul><ul><li>Helps reduce cost of home </li></ul><ul><li>Everyone required to complete </li></ul><ul><ul><li>General site clean-up </li></ul></ul><ul><ul><li>Landscaping </li></ul></ul>
  29. 29. Homeowner’s Insurance <ul><li>Client responsible for selecting provider </li></ul><ul><li>Must show proof of insurance at least 2 week prior to closing </li></ul><ul><li>Client responsible for paying 1 st year’s premium up front </li></ul><ul><li>Remaining premiums will be paid from escrow account </li></ul>
  30. 30. Time Clock <ul><li>90-days available after attendance at orientation </li></ul><ul><ul><li>Complete initial loan documents </li></ul></ul><ul><ul><li>Select lot </li></ul></ul><ul><ul><li>Select plan </li></ul></ul><ul><ul><li>Attend homebuyer education </li></ul></ul><ul><ul><li>Provide $500.00 down payment </li></ul></ul><ul><ul><li>Sign contract </li></ul></ul><ul><li>Two 30-day extensions available </li></ul><ul><ul><li>Must request in writing </li></ul></ul><ul><ul><li>Request subject to Executive Director approval </li></ul></ul>
  31. 31. Donated Labor and Materials <ul><li>Must be identified at pre-construction meeting </li></ul><ul><li>Provide specs of all products </li></ul><ul><li>Must have access to products at contract signing </li></ul><ul><li>If not provided in timely manner, Eastern Eight will pay to have items purchased or services provided at your cost. </li></ul>

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