WHEDA Introduces HOME Plus Loan Option and Incorporates Home Improvement Loan Program into the HOME Program

MADISON — HOME Plus, a new supplemental home-mortgage package, will help more low- and middle-income homebuyers cover their down payments, closing costs and future repairs, according to the Wisconsin Housing and Economic Development Authority (WHEDA). Home mortgage borrowers who qualify for an existing WHEDA HOME (Home Ownership Made Easy) mortgage loan now also may qualify for an accompanying HOME Plus loan, an immediate second mortgage. HOME Plus provides borrowers with a line of credit at purchase. “This expanded assistance means that WHEDA will be able to help more homebuyers realize the American dream,” said Gov. Scott McCallum. HOME Plus is designed to add financial security and peace of mind to the home buying process, said Fritz Ruf, WHEDA Executive Director. “Our goal is to create affordable down payment assistance and otherwise increase opportunities for people to own their own homes,” Ruf said. “HOME Plus offers more options for buyers to get started, and then options to better protect their investments.” Part of the HOME Plus loan may be drawn at closing for down payment and closing costs. The credit line’s remaining balance is available for future repairs or improvements during the first two years of ownership. The HOME Plus loans are executed at mortgage closing to minimize paperwork and costs. HOME Plus requires no additional application fee and a low recording fee. HOME Plus loans are based on affordability and no home equity is required. The loans will be offered at a low, fixed-interest rate (currently 8%) in amounts up to $10,000 for a 15-year term (13-year amortization). Properties must be at least 10 years old. Initial draw requests on the credit line for meeting down payment and closing costs cannot exceed 5% of the home’s purchase price. Homebuyers who do not need additional money for down payments or other costs related to mortgage closing may still benefit by taking advantage of the other HOME Plus feature, using the credit line for minor home repairs or improvements. Borrowers will make interest-only payments for two years after closing once the credit line is tapped. Interest paid under HOME Plus may be tax deductible. Borrowers who wish to draw on the line of credit need only fax or mail a letter to WHEDA stating the purpose of the draw. Projects less than $1,000 will not require bids. HOME Plus replaces and expands upon WHEDA’s Easy Close Option loan, which provided homebuyers an opportunity to borrow up to $1,000 for closing costs. Loan Program Integrated Into Home Mortgages In a separate move to simplify its financial products, WHEDA is incorporating the stand-alone Home Improvement Loan Program into the HOME mortgage loan program. The move means that all HOME lenders in Wisconsin are now eligible to originate improvement loans to homebuyers. The Home Improvement Loan Program requires no equity, minimal payments based on 15-year amortization, fixed interest rate options, minimal documentation, and maximum loan amounts of $17,500. Income limits still apply. The Wisconsin Legislature authorized the HOME loan program in 1982. HOME offers 15- to 30-year mortgage loans at below-market, fixed-interest rates to low- and moderate-income individuals and families. The program is available primarily for residents who have not had an ownership interest in a principal residence within the preceding three years. However, if the property being purchased is located within a federally designated area of chronic economic distress or if the residence will be the subject of major rehabilitation, the three-year requirement is waived. WHEDA is Wisconsin’s state housing authority. WHEDA serves Wisconsin residents and communities by working with other organizations to provide creative financing resources and information. Its goal is to stimulate and preserve affordable housing, small business, and agribusiness. WHEDA’s housing programs receive no state tax revenue assistance. Riverwest Currents – Volume – Issue 4 – May 2002