I love looking around and seeing my people making strides to be better and do better for themselves, their families and communities. This is why I love to share resources and information that I know will be of assistance to others. A little over a year ago I was able to purchase a home through a Fair & Affordable Homeownership program with the financial assistance of a First Time Homebuyer program. In this post I will share the steps I took and programs I used to become a first time homeowner. I will share my opinion on these programs and their requirements. I will also include information on how some of these things have changed in this current pandemic. This is going to be a long one so grab a snack while you read and take notes.
I am a young black single mom who works in the nonprofit sector. I was able to buy a house and you are too. There is a lot of government money and assistance out there that’s made exclusively for first time homebuyers like us. Initially I thought a first time Homeowner is anyone who is purchasing a home for the first time ever, but it is actually an individual who has had no ownership in a principal residence during the 3-year period ending on the date they purchased their new property. For couples, if one is a First Time Homebuyer than according to the Federal Housing Administration (FHA) both are considered first-time homebuyers. So if in two years (3 years total) I want to buy another house using a first time homebuyer program, I can. And if another three years past and I want to do it again, I can. Just keep in mind every program has its own requirement as to how long you must stay in the residence before selling or else the grant’s received will have to be paid back (prorated). We will talk about that in depth a little later.
It’s a no brainer that some type of homeownership, whether that be condo, coop, townhouse or single family house, is always better than renting, especially in New York where the rent is basically a mortgage payment. Considering the rent we pay in New York, there is no doubt you would be able to pay mortgage. In some cases rent is even more than a monthly mortgage payment. Our major problem is the lack of capital for the initial down payment and closing cost. That’s exactly why affordable homeownership and first time homebuyer programs were designed. They all assist with the initial costs of purchasing a home.
As I mentioned in one of my previous post, Homeless to Homeowner (https://alynascorner.com/?p=1318 ), buying a home is a goal you have to set along with an action plan or else you will be all over the place. When planning out your homeownership goal you have to think of the following: credit, savings, first time homebuyer programs, finding the right home in the right area and mortgage approval. I never knew anyone close to me that had been through the experience to tell me what to expect or how to prepare. I basically learned along the way through massive research on the internet and tons of books. I hope the telling of my journey gives you enough insight so that you don’t feel like you are going at this alone, especially if you plan to purchase by yourself.
Gain knowledge
The first thing I did was to research the whole home buying process, which differs when you are using a first time homebuyers program. You have to consider the programs, applications and requirements such as workshops, household size and salary requirements etc. My first move was researching the Housing Action Council (HAC), which is the organization who is a hub for most of Westchester based affordable housing programs. Westchester Residential Opportunities (WRO) is another organization that provides affordable housing as well. To participate in any of the Housing Action Council’s programs you have to take three of their home buying workshops. They provide them periodically and the schedule is usually posted for the whole year. The workshops focus on the financial aspect of homeownership, the buying process and the process of obtaining & keeping a house. The workshops can be taken in any order as long as you attend all three. It’s good information so show up on time and make sure you sign in because attendance is tracked. In addition to these workshops, I attended the Westchester’s Fair and Affordable Housing Expo, which was amazing. They have presentations on topics like building credit, mortgage applications and the buying process. You get to connect with housing organizations, inspectors, banks and much more. If you network and ask the right questions you will learn a lot.
Credit
The very next thing you want to do is tackle your credit. You do this before you even start any home buying process because it can take time. Timing is essential when buying a home and you don’t want anything holding you back when you are ready to purchase. You don’t have to pay hundreds of dollars to have a random guy clear your credit. Building your credit is something you can work on independently. You can do online research to learn tricks and hacks that will help you build your own credit. I never had an issue with my credit, but I do have friends and family who I’ve seen go through the process. If you do what you’re supposed to do you can turn your credit around in a few months to a year. Start by ordering your free yearly credit report from each bureau (Equifax, Experian, and TransUnion), so you can know what’s on them; the information may vary bureau to bureau. Take your time and dispute everything that’s inaccurate, can’t be proven or older than 7 years. You will be surprised at what you can get taken off of your report. In addition to your credit report, monitor your credit score which is totally different from your report. Sometimes you can get your credit score through banks or credit card companies as an added feature. You can also look into signing up with companies like credit karma, just know they only give you scores from two bureaus and the scores slightly vary from your actual score. In my personal experience my credit karma score has been roughly 20 points lower than my actual score. Credit is very important in the home buying process so make sure you monitor your credit, pay down your debt and use tricks to make your score increase.
Saving
Another thing you should do is rack up your savings. There are so many fees and cost you have to cover out of pocket. The first time homebuyer programs don’t pay everything for you, they only “assist.” I would say save your tax money for a year or two. Set aside monthly savings that you do not touch. Last but not least definitely join a first time homebuyer savings club that match your money. They match 4 dollars to every 1 dollar you save up to a certain amount. In the savings club I used, I was required to save 200 dollars a month for 10 months and I got $7,500; so basically I saved $2,000 and got $5,500 free. The Housing Action Council has a lot of banking partners who offer savings clubs. If you are using their fair and affordable housing you have to use one of their banking partners. Whichever bank you get the savings club with, you have to use them for your mortgage in order to get the free match payout. What blows my mind about the savings club is that a lot of banks offer them but it’s just not advertised and you can only open the accounts at certain locations. I ended up going with HSBC because they offer SONYMA mortgages. Be strategic with the bank you choose. Make sure they offer federal mortgages and check their rates. I remember as I was sitting with the HSBC financial representative, he was surprised and asked me how I found out about the program. He said it’s a good program but no one takes advantage of it. In my head I’m like because you do not openly advertise for it. He also told me about a special savings program for veterans. This goes to show you there are a lot of resources out there, you just have to know about it, that’s why doing research is super important!
Programs
If you qualify and timing aligns you can use program on top of program on top of program. I tried to use four different programs, but because of timing I was only able to use three. You win some you lose some. The first was the first time homebuyer’s savings club through HSBC. The second and what I deem the most important was the fair and affordable housing through the housing action. Few years back Westchester County was granted money to purchase homes around Westchester to classify as “fair and affordable.” These homes are offered to median income individuals below market price, so if a house is worth $600,000 through this program you may purchase it for $400,000. The balance of the mortgage is a grant that obligates you to have the house as your primary residence for a certain amount of years. In addition your property tax maybe slightly lower than what’s required in the area. They offer single family homes, multiple family homes, townhouses, coops and condos. This is important because purchasing in New York is expensive. Right now the median price of homes in New York is $652,307 (Zillow). Westchester and Rockland county has the highest property tax in the nation (ludlow.com), so the lower property tax rate really comes in handy. The next assistance I used was a private grant that the Housing Action Council helped me obtain for miniature home improvements I had to fix before being approved for my SONYMA mortgage loan. That brings me to my next point. In the fair and affordable housing program you have to purchase the property as is. They have the houses livable but it maybe minor things the inspector points out being super thorough. The bank sees them in the inspection report and may want them handled before approving you. For example there was a little crack in the molding of my living room window. When I say molding I mean the putty around the window on the outside from weather wear and tear. It didn’t affect the window or anything getting in or out but I had to get that fixed. When using a federal mortgage like SONYMA they can get very picky and particular, which is annoying. Those low rates aren’t annoying though, so sometimes you have to do what you have to do. Now the last program that I couldn’t use was Community Housing Innovation (CHI) which provides grant’s for first time homebuyers in Westchester county and long island. This was a grant of $20,000. You get $10,000 to help with closing cost and $10,000 after for home improvements. I was so upset I didn’t get to use this. The approval process is lengthy and you have to be approved before you find your house. I was working on a time crunch because my application with the HSBC first time homebuyers savings club and my affordable housing application was about to expire (you have two years from your last installment to purchase) and I needed to find a place or I would have had to do the whole process all over again. I made it close to the end of the CHI approval process when I had to make a decision to move forward with the house I found, thus I had to let the CHI grant go. I knew I was cutting it close with timing when I applied but I figured I’ll try anyway and put it in God’s hands. If it’s for me it would have been for me. It just wasn’t. I ease my mind about not getting by saying someone needed it way more than I did. All in all there are several programs that will assist you with purchasing a home, just be ready to complete long applications, provide every document under the sun and be patient. Be patient! Nothing is ever really free, you may have to jump through hoops to get it but at the end of the day it is worth it.
Finding the Right Home
Finding a home with the fair and affordable housing program is a little different than just out right buying a house. You have a catalog of houses you can choose from and it all depends on what’s available at the time and what kind of dwelling you want. You kind of have to go with the flow as far as location and area. One thing I must say all of the houses I saw were in nice, clean and family oriented neighborhoods with good school systems. I noticed most of the houses are more so located in mid-westchester while coops and condos were mostly located in lower Westchester. As I said it all depends on what kind of dwelling you are looking to purchase and when you are looking. Prior to even seeing any properties I read lots of books on what to look for when viewing a house. Everyone’s checklist will be different, just make sure you do your homework. One thing that I experienced that wasn’t in any book or article I read about building your check list was the “feeling of home.” I saw a number of houses but when I stepped in the one I decided to buy I felt a sense of comfort, warmth and home. I can’t particularly explain it but you will know when you feel it. Let that feeling guide you to make your final decision.
Mortgage
This is the scariest part because it can make you or break you. If you do not get approved for a mortgage all of the hard work you put into building your credit, applying to programs, saving money and finding a house all goes out the window. You can get preapproved for a mortgage before shopping for a house but the actual approval comes after buying the house. This was the most daunting experience. I decided to go with a SONYMA loan because the rates are generally lower and they offer DPAL, which is a down payment assistance loan that won’t have to be paid back if you stay in the home for the said amount of years. The great thing about working with the Housing Action Council is that they precalculate your chances of getting approved as well as closing cost prior to submitting all required documentation to the bank. Their calculation was spot on with the final numbers for the bank, so if they tell you, you are good than believe them.
COVID-19 Pandemic
Now if you plan to purchase soon or in the near future your experience will be different from mine due to this pandemic. You will have to look into the new processes the organizations, banks and programs I listed are putting into place to continue operations. This maybe at a hult depending if they are deemed essential or not. One thing I do know is that the real estate industry has taken a hit during the COVID-19 pandemic, with the number of new listings dropping by 19% in early April (Zillow). New listings are dropping but so are interest rates. That is a good thing if you are looking to buy now. Although interest rates are currently low, buying a home and getting approved for a mortgage will take patience and persistence. Listings are down because people are putting off selling their homes due to the uncertainty of this pandemic. This means there are less homes to choose from and more competition because it is a buyers’ market. Another big change is the virtual home tours. Most realtors are showing homes via virtual tours and setting up a in person tour maybe difficult with social distancing requirements. Something that may create an additional hurdled is that last month banks announced changing their mortgage loan criteria. Some lenders increased their minimum credit score requirement and down payment percentages. For example Chase has increased the minimum credit score requirement to 700 and down payments percentage to 20%. In my opinion it may be tough to purchase now but if you can get past these challenges you should definitely buy because of the low interest rates. Do your research and check out FHA loans because the requirements are always lower than regular mortgage loans.
Miscellaneous
In this post I focused more on the big parts of the process. There are other little things to consider like hiring a real estate lawyer or home inspector. You will learn all about that stuff when you attend the first time homebuyer workshops, which are mandatory. You may not want to purchase in Westchester but New York City and other counties have similar resources like the HUD and NACA. The help is out there you just have to find the programs that align with your qualifications and needs. If you happen to have additional questions you can leave them in the comments below, email me through the contact me tab or you can DM me on my social media ( IG https://www.instagram.com/alynascorner/?hl=en or FB https://www.facebook.com/alynascornerny/).
Below you will find the links to the programs I listed as well as similar programs. Use and share the information with people who are looking to own. I hope this post was informative and inspire you to start your journey to homeownership.
Housing Action Council
https://www.housingactioncouncil.org/
Westchester.gov
https://homes.westchestergov.com/
Westchester Residential Opportunities
https://wroinc.org/housing-opportunities/
FHA
https://www.fha.com/fha-grants?state=NY
HUD.gov
https://www.hud.gov/coronavirus/housing_stakeholders
NYC.gov
NYS
https://hcr.ny.gov/achieving-dream-program
NACA
I appreciate your work, appreciate it for all the informative content.
Thank you