HOW TO APPLY
C I T Y O F F A R G O
RESERVATION OF FUNDS
Loans will be offered through participating lenders and will be available on a first-come, first-serve basis. Lenders can request that funds be set-aside by submitting a Request of Reservation. The Reservation package must include the request and disclosure form, a copy of the Certificate of Completion from an approved Home Buyer Education Program, a copy of the purchase agreement, and a copy of the loan application. This form will only reserve Fargo Home Buyer Assistance funds.
HOME BUYER ASSISTANCE PROGRAM
LEVEL OF ASSISTANCE
Approved applicants are eligible for $5,000 in assistance for downpayment and closing costs. Eligible closing costs include a lender processing fee ($50) and document recording fees that are associated with the assistance, and the HQS Inspection fee ($40). The assistance from the Fargo Home Buyer Assistance Program is in the form of a zero interest deferred payment loan (further described in ―Repayment― section). The City of Fargo will hold a Note and Mortgage for the amount of the assistance.
APPLICATIONS
Questions, applications, reservations and all other documents for the program can be directed to Monica Graber at the address on the back of this brochure.
Department of Planning and Development Monica Graber 200 North 3rd Street Fargo, ND 58102 Phone: 701-241-1474 Fax: 701-241-1526 E-mail: mgraber@cityoffargo.com Web: www.cityoffargo.com/planning/housing
April 2009
City of Fargo Helping you make homeownership a reality Tel: 701-241-1474
C I T Y
O F
F A R G O
THINKING ABOUT BUYING A HOME IN FARGO?
The City of Fargo funds a program that provides assistance to low income households who would like to purchase a home in the City of Fargo. The assistance can be used for down payment and closing costs and is in the form of a zero interest, deferred payment loan of $5,000. Funding to promote homeownership comes from the Department of Housing and Urban Development (HUD).
WHAT PROPERTY IS ELIGIBLE?
Property must be located in the City of Fargo. Existing or newly constructed one-unit, single family residences, including condominiums and manufactured homes permanently attached to real property. Properties located within a 100-year flood plain are not eligible for this program. Property must conform and comply with all current zoning ordinances, or an agreement must be reached as to when and how conformance and compliance will be achieved. The borrower will sign a Land Use Restriction Agreement that restricts the property to residential use. The purchase price for the property cannot exceed $135,000 for existing or newly constructed homes. Due to tenant displacement costs, properties that were occupied by someone other than the seller or proposed buyer at any time during the 3 month period immediately preceding the date of the purchase agreement are not eligible for this program.
USE OF FUNDS
The funds can only be used to assist with the borrower’s down payment and closing costs, any prepaid items, and enhancement of the buyer’s equity position. Costs that are normally associated with the seller are ineligible. These funds cannot be used to curtail principal after loan origination (i.e., buyer cannot receive cash at closing but excess funds should be used to reduce loan principle prior to closing). If the borrower has prepaid certain closing cost items such as the appraisal fee, credit report fee or first year hazard insurance premium, the HUD Settlement Statement can show the borrower receiving cash reimbursement for such prepaid items, as long as it does not exceed the amount prepaid.
WHO IS ELIGIBLE?
Anyone who has not already used the program and who meets the following criteria is eligible for Fargo’s homebuyer assistance: Complete a home buyer education program and counseling session prior to making an offer to purchase a home
(visit our web site for a list of approved classes—www.cityoffargo.com/planning/ housing)
REPAYMENT
The loan must be repaid from Net Proceeds at the time of sale. Net Proceeds can be calculated on request by the City of Fargo at the time a release of mortgage and land use restriction agreement (LURA) is requested (sales price less mortgage balance at time of sale less eligible seller closing costs).
Gross annual household income below HUD limit (see below). Income is based on projected income; ―household size‖ includes all members living in the house and does not include anticipated births or adoptions. Income limits may change.
1 person – $38,200, 2 person – 3 person – $49,100, 4 person – 5 person – $58,900, 6 person – 7 person – $67,650, 8 person – $43,650 $54,550 $63,300 $72,000
HOME INSPECTION
The property must meet HUD’s Housing Quality Standards and Environmental Review Requirements (HQS/ER). If an inspection reveals that repairs are needed before a home meets HQS standards, a re-inspection of the property must be conducted to verify that the repairs were completed. Repairs that cannot be completed due to weather conditions will follow the guidelines for completion used by the FHA. The inspection must be done by a qualified appraiser or other person approved by the City of Fargo. Lead paint hazards are considered ―code violations‖ and must be appropriately addressed.
Projected cash assets, at the time of application, cannot exceed 20 percent of the purchase price of the property. Cash assets include, but are not limited to: checking and savings accounts, certificates of deposits, earnest money, gift funds, residential property assets, and cash on hand. Cash assets do not include Individual Retirement Accounts or other similar retirement investments.