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Tennessee offering incentives for first-time home buyers

Tennessee offering incentives for first-time home buyers

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With the rental market tightening and monthly housing costs rising in the area, the Tennessee Housing Development Agency (THDA) has rolled out incentives for first-time home buyers.

In a visit to the Bristol Herald Courier on Tuesday, THDA Executive Director Ralph Perrey discussed the lack of affordable housing for first-time home buyers and rental options for those who qualify for Section 8 Housing across the state. Locally, Bristol Housing stopped taking applications for Section 8 vouchers Sept. 27, saying it had a waiting list of more than a year.

“Prices are rising, so the amount of down payment required is a little higher,” Perrey said. “Sellers aren’t willing to help cover closing costs, and so we wanted folks to know we have made some adjustments to make this a little bit easier for them if they are looking to buy a house right now.”

The new program includes two options for qualifying first-time homebuyers who need a little boost to get into a home of their own.

The first option offers $6,000 to be used toward the down payment or closing costs. The buyer does not have to repay the money until the mortgage is closed through either selling the property or refinancing at a later date.

“In the meantime, no interest accrues, and there’s no additional payment,” Perrey said. “You are basically getting what amounts to a grant, and we will settle up later.”

The second option provides 6% of the purchase price of the house. A $200,000 home would get a boost of $12,000. The money is structured into a second mortgage to be repaid over a 15-year period concurrently with the main mortgage on the home.

“It’s adding a rather modest amount monthly to your payment, but for those who need a little bit more down payment and closing cost assistance,” Perrey said, “if you are in a higher-cost market and you need a little more to get in on the front end. In both cases, first-time home buyers don’t anticipate closing costs. In the not-too-distant past, sellers would cover part of that for you. But in the current climate where you can sell your house in about 10 minutes, the sellers aren’t offering you anything. Coming up with the funds for the closing costs are increasingly important, and we wanted to help buyers do that.”

Perrey also said the incomes served by the THDA are higher than many people think. A single person in Sullivan County can make up to around $71,000 and be eligible for THDA assistance. A family of three can make around $82,000 to be eligible.

“We run a variety of housing programs in the state and sometimes people feel ‘THDA helps poor people, and I’m not poor,’” Perrey said. “The mortgage program is not a poverty program. You have to have sufficient income where home ownership makes sense for you, and it is going to be a financially viable option.”

Perrey said when he began his position nine years ago, TDHA was doing around 22% of its mortgage business in East Tennessee. That number has increased to the 35% to 40% range.

“I’m glad we are helping more East Tennesseans buy that first home and succeed in it,” he said.

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