Everyone in the Metro area knows that housing costs have risen at what seems to be an exponential rate in the last few years. If you are a first time home buyer, the shock of Metro area home prices must be like watching the Texas Chain Saw Massacre. But what about affordable housing?
What happened to affordable housing? According to the Greater Capital Association of Realtors (www.gcaar.com), the average sales price for a single family home in Montgomery County in January 2005 was $512,743. Comparatively, the price of a single family home in January 2004 was $435,898. Evidence that it is becoming increasingly harder for a first time home buyer to own a single family home.
Although the price of a home may not seem affordable, there are some ways to make it affordable. Montgomery County has always had some form of assistance to boost home ownership. Some of the programs that have been prevalent for some time now include the moderately priced dwelling unit program (MPDU), special loan programs and closing cost assistance.
The moderately priced dwelling unit program was established in 1974 by Montgomery County to provide affordable housing. The program allows a homebuyer to purchase a home at a special price. The homebuyer must qualify for financing and meet other criteria. There are MPDU’s scattered throughout the county in many communities and exist in many forms, such as townhomes, condos and semidetached homes.
There are restrictions on purchasing a MPDU, as one can imagine. The restrictions include a certificate of use, resale restrictions, and shared profits. The certificate of use requires the owner to live in the property, and not be able to rent to tenants. Additionally, when you are ready to sell your home, the price is restricted. Any profits that incur from the sale must be split with the Housing Initiative Fund (HIF) (which spends the money for additional affordable housing). The current price for a townhome is very affordable (check the website below). Information on qualifying and other regulations for the MPDU program, please visit the Montgomery County Department of Housing and Community Affairs website www.montgomerycountymd.gov/apps/dhca/index.asp.
If you choose not to go through the MPDU program, or if you do not qualify, there are other programs available to help with your purchase. Community programs, such as the Housing Opportunities Commission, offer special financing and closing cost help. If you visit their website, www.hocmc.org, you can see that there are currently two loan programs that offer below rate assistance for qualifying purchasers. One loan program offers a starting interest rate of 3.55%. These loan programs will qualify you to purchase a home that you might not otherwise qualify.
If financing is not a problem, you might need some closing cost help. The Housing Opportunities Commission has a couple of options for this too. One program offers a loan for up to five percent of the purchase price of the home. If you are short on cash, help such as this is a Godsend.
Although the average price of a home may not seem affordable to many first time home buyers, there are programs that are available to help with the purchase. Each program mentioned here does have qualifying criteria, as well as restrictions, and should be checked before embarking on your endeavor. Both agencies mentioned here are very knowledgeable and want to help you with any questions you may have.
by Dan Krell
Copyright Dan Krell 2005