|
|||||
|
|||||
|
Plants the Seeds of Home Ownership by Michael Licamele |
Mortgage Almanac Resources for Mortgage Borrowers: For expert help with your upcoming mortgage needs, Mortgage Almanac has experts in your area ready to assist you now. Just fill out our short purchase or refinance help request form to get a free pre-approval and rate quote today. For the most complete list of foreclosed properties nationwide, click here For more helpful mortgage articles, click here |
|
ACORN is a non-profit housing agency that works with lenders nationwide to help low-income families become home owners (see www.acornhousing.org). To find out more about their programs, we interviewed James Morton, an affordable lending officer formerly with Fleet Mortgage in Connecticut. What sets ACORN apart from other counseling agencies? ACORN is more than just an organization that provides counseling and educational programs. ACORN negotiates with various banks to obtain operating funds as well as to create its own loan programs. How can it help low-income families? ACORN helps renters become home owners. All that a renter needs to do is contact an ACORN office and express an interest in purchasing a home. From there, ACORN is responsible for the training and preparation of participants so they will be ready for home ownership. This assistance includes help in preparing for a mortgage approval, and includes help with credit problems, saving for a down payment, and preparing for home ownership. What happens after a home buyer completes the program? After completing a counseling program, an ACORN staff member will help determine when the home buyer is ready to purchase a home. A referral is issued to one of the lenders who participates in the program. Because the borrower has participated in the ACORN program, chances of approval are higher. Less than 2-3% of our ACORN applicants are rejected, on average. What makes an ACORN loan easier to obtain than a conventional mortgage? ACORN develops different programs with each lender, so I can only speak for Fleet's ACORN program. For starters, ACORN does not require mortgage insurance, which saves the hassle of a second approval and the cost of a mortgage insurance payment. Borrowers only need a 5% down payment, but only 1% must come from their own funds; the remaining 4% can be gift or grant money. Norwalk and New Haven in Connecticut, for example, offer 4% grant programs to ACORN borrowers buying in their cities. In addition to needing only a 1% down payment, borrowers can have the seller pay all closing costs, including pre-paid items such as tax and insurance escrows. Maximum debt-to-income ratios are 40% and 45%, as opposed to the normal ratios below 40%. If a borrower wants to buy a multi-family, Fleet's ACORN program is much more liberal than most, allowing rental income to count more towards qualifying. Two areas that give many first-time buyers problems are credit histories and down payment source documentation. Under the ACORN loan, borrowers can use alternative credit sources, such as rent and utilities, to document good credit histories. Also, borrowers can have cash down payments under certain circumstances. Do ACORN loans offer a lower rate? At Fleet, we offer the ACORN program at a rate approximately 1% below current fixed rates with no points. Most other lenders offer some type of rate or point reduction for their programs. Are there income limits for the program? Yes, but the income limits generally follow the HUD median income ranges. These maximum limits are often higher than what many people think. For example, the maximum income limit in Norwalk, Connecticut is $95,000, which covers many home buyers. What should someone interested in the ACORN program do to get started? For information about ACORN
programs in a particular area, visit www.acorn.org. Michael Licamele is the Editor of MortgageAlmanac.com and President of Residential Finance Network at rfnc.com. |