Orientation

Purpose of Orientation

What Eastern Eight can and can not do for you

Determine if Eastern Eight will meet your needs

Introductions

Name

Area you hope to live

One question you hope to have answered today

Topics Covered

Financing options available

Building vs. Existing Home

Building process

Land selection process

Plan selection process

Sweat equity requirements

General program policies

How much can you borrow?

Housing Ratio– 29% of your gross monthly income– Income x .29 = maximum monthly house payment– Will include taxes and homeowners insurance

Debt Ratio– 41% of your gross monthly income– Income x .41 = maximum monthly total debt

payment– Will include house payment

Example

Gross Monthly Income = $1,500 Gross Monthly Debt = $300

Housing Ratio – $1,500 x .29% = $435

Debt Ratio– $1,500 x .41% = $615

Total Available for house payment– $615 - $300 = $315

USDA Rural Development

May be used for new construction or existing home

Home/lot must be located in a “rural” area Income limit based on family size and county

of residence Fixed Rate Loan – 4.875% Term – 33 years

THDA New Start

Available to first time homebuyers Reduced interest rate based on income Available only on new construction Covers 75% of appraised value Must provide $500 down payment Recapture

– If own home for 9+ years, no recapture– If sell before 9 year, may be subject to repay some of the

subsidy received

USDA Rural Development (con’t)

Interest Credit Assistance– Interest rate can be reduced based on income– Can be reduced as low at 1%– Income reviewed bi-annually– Income increases, interest rate may increase– Income decreases, interest rate may decrease

USDA Rural Development (con’t)

Recapture– Only applies if you have received an interest rate

credit– You will be required to re-pay a portion of the

subsidy you received Pay when you sell the home Pay immediately after you have paid off the home Allow the owed portion to remain as a lien against the

property so it will be paid when the house is sold or transferred

Other THDA Programs

Great Rate – 4.98% Interest rate– Requires 3% down payment– Can be used for new construction or existing home– Closing costs can be paid by buyer, seller or grant

Great Advantage – 5.28% Interest rate– Provides 2% grant to cover closing costs and/or down payment– Must use the entire 2%

Great Start – 5.58% Interest rate– Provides 4% grant to cover closing costs and/or down payment– Must use the entire 4%

Note: You must access these programs through a local lender. Can make up to $57,880 for family of 3 or more.

Grant Programs

Not available in all situations or locations

Often limited funds, so will be allocated on a first come, first serve basis

Sweat Equity Opportunity Program (SHOP)

Must provide at least 100 hours of work towards home

Work can be completed by self, family or friends

Could receive up to $12,000 in grant funding, depending on availability

Grant is repayable upon sale or transfer of the property

American Dream Down payment Initiative (ADDI)

Available to first time homebuyers

Up to $5,000 in grant funds

Must contribute 1% of purchase price

Can not be used with THDA New Start loans

Available in Carter, Hancock, Hawkins, Greene, Johnson and Unicoi counties

Grant is forgiven after 5 years

Only available at certain times

Northeast Tennessee/Virginia HOME Consortium

Available to first time homebuyers

$5000, $7500, or $10,000 depending on income

Must contribute $500 towards purchases

Can be used with almost any loan

Available in Sullivan and Washington counties only

Grant is repayable upon sale or transfer of the property

Principle Buy Down Assistance

Extremely limited pool of funds

Only available in certain counties/locations

Up to $14,999 in grant assistance

Income limit based on family size and county of residence

Grant is repayable upon sale or transfer

Building vs. Existing Home

Not all financing products work for both

At this time, more resources for new construction than existing

New construction is not right for everyone

Consider the pros and cons of each

Building vs. Existing Home

Building– Pros

Brand new Choices Less maintenance More affordable

financing

– Cons Length of time Cost of new

construction

Existing Home– Pros

Quicker More house for dollar House easier to find

than lots

– Cons Less affordable

financing options Home maintenance

Why Eastern Eight?

Eastern Eight– 1st Mortgage

$97,500 $391.00/month

– 2nd Mortgage $20,000 $113.00/month

– Grant $12,000 $0.00/month $500 cash required

Total Monthly Payment– $504.00/month + taxes/insurance

Market– 1st Mortgage

$130,000 $790.00/month

– Grant $5,000 $0.00/month $1,300 cash required

Total Monthly Payment– $790.00/month + taxes/insurance

Purchase price = $130,000

Building Process

Homebuyer information sheet

Orientation

Commitment form signed

Lot selection

Building Process (con’t)

Plan selection

Pre-construction meeting

Homebuyer Education

Finance One-on-One Meeting

Building Process (con’t)

Contract signing

Construction Inspections

Sweat Equity

Pre-closing finance meeting

Building Process (con’t)

Secure homeowner’s insurance

Walk-through of property

Loan closing

Post-homeownership workshops/counseling

Lot Selection

Provided a minimum of four Eastern Eight approved lots

Must select one of four lots shown

Lot not selected within 90 day time period, file will be inactivated

Plan Selection

Plans viewed after lot has been selected

Eastern Eight staff will select plans based on your lot and budget

Provided 2-3 plans that can be scaled based on budget

House plan not selected within 90 day time period, file will be inactivated

House Plans

To keep home affordable, no changes allowed to plans Items that are included

– Refrigerator– Dishwasher– Range– Microwave

Items that are not included– Washer and dryer– Jacuzzi tubs– Tray or vaulted ceilings– Hardwood floors– Fireplaces

Pre-Construction Meeting

Meet with Housing Counselor, Project Coordinator and Construction Manager– Finalize specifications of house– Develop site plan– Develop sweat equity plan– Identify donated labor or materials

Sweat Equity

Most clients find rewarding

Helps reduce cost of home

Everyone required to complete– General site clean-up– Landscaping

Homeowner’s Insurance

Client responsible for selecting provider

Must show proof of insurance at least 2 week prior to closing

Client responsible for paying 1st year’s premium up front

Remaining premiums will be paid from escrow account

Time Clock

90-days available after attendance at orientation – Complete initial loan documents– Select lot– Select plan– Attend homebuyer education– Provide $500.00 down payment– Sign contract

Two 30-day extensions available– Must request in writing– Request subject to Executive Director approval

Donated Labor and Materials

Must be identified at pre-construction meeting

Provide specs of all products Must have access to products at contract

signing If not provided in timely manner, Eastern

Eight will pay to have items purchased or services provided at your cost.