Loan program helps buyers get into foreclosed homes
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For more information about Wisconsin Neighborhood Advantage, visit wheda.com/foreclosureadvantage or call Tim Shortreed at Johnson Bank, (608) 743-4027, or Matt Prestil at AnchorBank, (608) 755-5031.
JANESVILLE Tara Kasper's home looks, appropriately, as if someone just moved in.
A few photos sit on the mantelpiece, but nails hang empty in the wall where she means to hang pictures.
Kasper loves her new house, she said. She loves having a garage, she loves the privacy and she loves going to the basement to do laundry instead of dragging the laundry down the hall with a bag of quarters.
A few months ago, the house was sitting empty after the bank foreclosed on the previous owner. Kasper, 25, bought and repaired it through a state program that gave her more than $20,000 toward the down payment and closing costs.
"It was a great deal," she said. "I couldn't pass that up."
The Wisconsin Housing and Economic Development Authority introduced the Neighborhood Advantage program earlier this year to encourage people to buy foreclosed homes in five counties, including Rock.
The program uses money from the federal Neighborhood Stabilization Program for loans to buy and repair foreclosed homes.
It can be difficult, especially in today's economy, to get conventional loans to buy foreclosed properties, said Tim Shortreed, mortgage loan officer with Johnson Bank, Janesville. Even if you can get a loan, the homes often need costly repair.
Neighborhood Advantage addresses the problem by offering loans for home purchase and repair to low- and moderate-income families. It also offers a separate, forgivable loan of up to 25 percent of the purchase price for those who make less than 120 percent of the county median income.
Those who make less than 50 percent of the county median income are eligible for a loan of 50 percent of the purchase price.
Ten percent of the loan is forgiven each year the recipient lives in the house. For those who live in the house 10 years, the entire loan is forgiven.
Seven Rock County residents, including Kasper, have bought homes through Neighborhood Advantage, according to WHEDA.
After a couple of false starts, Kasper bought her three-bedroom ranch house for $86,000. She received a loan for $2,600 to repair burst water pipes, chimney problems and loose wiring, she said. She moved in Nov. 13.
"There were some days that felt like it was taking forever, but it actually went really smooth," she said.
The program has a lot of requirements, Shortreed said. The home must go through two inspections, and repairs must be done within 90 days. The buyer must take eight hours of homebuyer classes.
"It's more work, but frankly in the current environment, everything's more work," he said. "The days of walking a consumer through the door and writing an offer quick and making a lot of assumptions are over."
But the work is worth it for the buyers, sellers and community, Shortreed said.
Rock County has a declining real estate market, in part because of the high inventory of foreclosed houses, he said. The banks will continue to drop the prices on foreclosures until they sell, resulting in lower home values throughout the community. The market won't pick up again until some of those foreclosed homes are sold.
"(Neighborhood Advantage) is allowing buyers to purchase these homes at higher prices now," he said. "We need these kinds of programs to continue to help us get through the crisis."