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1. How do I know if I am ready for homeownership?

Owning a home is a huge responsibility and understanding that responsibility is essential to your success as a homeowner. That is why it is mandatory that you attend an approved Homebuyer Education Class prior to purchasing a home. After completing the class you will be better equipped to decide if homeownership is for you. A list of available classes is available at: www.mainehomeworks.org.
You can get a better idea if you are ready for homeownership by answering the following questions:
• Do you have a stable source of income?
• Have you been employed full time for the last year?
• Do you pay your bills on time, every time?
• Are you able to add to your savings monthly?
• Do you have a minimum savings of $2,000?
• Do you understand the significant responsibilities of homeownership and do you believe you are ready to make the commitment?

2. What are the eligibility requirements to participate in the Voucher Homeownership Program?

There are a number of eligibility requirements, which we have compiled into a helpful guide.

3. How do I obtain financing?

The family is responsible for securing its own financing and may choose any lender willing to work with HCV Homeownership program. For the most part, lenders require a credit score of 640 or higher. Rural Development offers a subsidized mortgage with 100% financing that works well for many families. Some lenders will take your HCV assistance into consideration when determining how much a family can afford to borrow. Many financing options may not work within our payment standard restrictions if the mortgage payment is too high.

Balloon Payment Mortgages, Variable interest rates and seller financing are prohibited.The PHA has final approval as to whether the financing arrangement is affordable. The family’s portion may not exceed 40% of their adjusted family income.

The lender determines the amount of mortgage you can afford. This amount depends on several factors such as your income, your debt, the interest rate, and the PHA payment standard. Some financing options require the family to place a down payment on the home. The lender will pre-qualify your for a loan based on these factors. It is important to get pre-qualified by the lender prior to shopping for a home.

4. Do I have to have good credit?

YES, you must have good credit! If you don’t, a credit counselor can instruct you on how to clean up your credit record and improve your credit score. Money Management International (www.moneymanagement.org) or CA$H Maine (www.cashmaine.org) are good resources for credit repair advice. However you may have never established a traditional credit record and that’s okay, but the lender will need to verify that you have a good record of paying your bills on time. The lender will review your record of making timely payments for rent, utilities and other payments. This is called alternative credit. For the most part, lenders require no late payments for the last two years or credit rating of 640 or higher.
If you have filed bankruptcy, most banks require a minimum of two years from the date of bankruptcy before you would be eligible for a mortgage loan. Money Management International

5. Are there any programs to help me save for a down payment?

There are a number of programs to help you save for a down payment, which we have compiled into a helpful guide.

6. What other costs are there?

You will have to pay for an appraisal which costs approximately $300 - $400 and a professional home inspection which costs approximately $200 - $700.
There may be other incidental expenses prior to your purchase that you would be responsible for, such as, Application Fees, Credit Reports, Prepaid Insurance, Prepaid Taxes, Attorney fees and Title fee. Depending on how you finance your home these costs can accumulate. The normal range is from $1,500 to $4,500 in addition to your down payment. All or part of these closing costs can be paid by the seller. Some financing options allow these costs to be rolled into the loan.

7. Am I limited as to how much I can pay for a home?

Monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment combined with non-housing expenses, should total no more than 40 % of gross income. Your total housing expenses must also be within the allowable payment standard for your family’s bedroom size. The family must pay any amount over and above the payment standard in addition to 30% of their adjusted monthly income.

In most cases, your family can help you purchase a home by assisting with a down payment. We do not allow non-occupying co-signors or co-borrowers.

8. Do I need to get my home inspected?

Yes. There are actually two types of inspections that are required. You must hire an independent home inspector to inspect the home to identify any physical defects and evaluate the condition of major building system components. The Housing Authority will complete the Housing Quality Standards (HQS) inspection, which are the inspection standards used for rental assistance.

9. Am I responsible for other expenses incurred as a result of purchasing the home?

Yes. You are responsible for all monthly homeownership expenses and for any expenses that you incur as a homeowner. You will be responsible for all maintenance of the home. As mentioned earlier you need to save for the unexpected such as; roof damage, water heater replacement, furnace repair, increased taxes, etc. Owning a home is expensive. You need to carefully weigh the advantages and disadvantages between owning verses renting.

10. If interested in Homeownership, what should I do next?

Contact Linda Ballew, Special Programs Manager, Portland Housing Authority, at 773-4753 to request an application or more information.