The biggest hammer in the public policy tool belt went largely unmentioned atÂ The News-Press town hall on affordable housing recently in Cape Coral.
Panelists referred to housing assistance programs run by the city, county, and state. These programs are limited in scope and have unintended down sides. Some solutions, such as zoning changes, are still in the blueprint stage. As a loan officer with a local lender, I spoke up during the open mic portion about the federal program which has made homeownership attainable for three generations of Americans â€” FHA financing.
The Federal Housing Administration government insured loan program was enacted in 1934 after the Great Depression. Today, it accounts for about 40 percent of financed home purchases in the United States. It helps people who might not qualify for a bank loan to afford a home â€” buyers with limited cash for a down payment, such as first-time homebuyers, buyers after short sale or foreclosureÂ and senior citizens on fixed incomes. It is funded by the borrowers themselves with an upfront fee and monthly mortgage insurance (for those who may think this is a giveaway program).
At the forum, I pointed out one solution to local affordable housingâ€”already allowed by current zoningâ€”would be a for a family to purchase a duplex, live in one unit and earn the income from the other unit. Or, two families might purchase a duplex together on a FHA loan. This brings their housing expense within their budgets. It is the only owner-occupied loan allowing someone with no landlord experience to purchase a duplex and count the future rental income from the other half of the duplex to help qualify for a loan.
For buyers who are short on cash, I apply strategies to keep the cash needed to the minimum required by FHA. By working with seller credits and family gift funds, most buyers can close quickly and easily without touching additional down payment assistance programs.
It is in the interest of our citiesÂ to increase owner-occupied homes. It builds neighborhood wealth with pride of ownership and residentsâ€™ stake in the community. Our work force is improved because they live here and are invested in improving their home values.
The people who work here are shopping here. Some people who have acquired their wealth and nest egg complain that FHA brings down values and invites the â€œwrong kind of people.â€�
Do they remember how they got their first home loan? It most likely was FHA. Â Historically, 80 percent of Â firstÂ time home buyers get their first loan using FHA financing.Â
The American dream is for each person to reach their full potential and build wealth. A home is the biggest investment many people will ever make. FHA has been around for over 80 years to start families on the path to improving their living conditions and for communities to increase property values.Â
Karen Solgard is a loan officer with Marketplace Home Mortgage in Cape Coral. She moved to Cape Coral six years ago from Minneapolis.
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