2 The class will begin shortly 1. Please sign the sign-in sheet. 2. Please take a PowerPoint packet.
3 Class will begin in one minute. Please take a seat.
4 Ohio Housing Finance Agency Jonathan Duy Real Estate Relations Manager Ohio Housing Finance Agency 57 East Main Street Columbus, OH (614) Toll Free: OHFA (6432)
5 Please register online if you haven t registered yet.
6 OHFA Classes are Now Available Online!
7 Download the Presentation and Follow Along on Your Mobile Device
8 I hope to educate you on OHFA Homeownership Programs so you can help your clients make educated decisions when purchasing a home. Man walks into bear while walking and texting.
10 OHFA Mission Statement We open the doors to an affordable place to call home. The Ohio Housing Finance Agency (OHFA) facilitates the development, rehabilitation and financing of low- to moderate-income housing. The Agency's programs help first-time homebuyers, renters, senior citizens, and others find quality affordable housing that meets their needs.
11 Affordable Housing Rental Development Through partnerships with the private sector, OHFA has financed the rehabilitation and creation of over 100,000 affordable housing rental units.
12 Homeownership in America
13 According to the Census Bureau, the highest point of homeownership was in 2004 at 69.2%. Does anybody know the homeownership rate in America as of 3 rd quarter, 2015?
14 Midwest Homeownership Rate -68.1% Homeownership Rate Region Midwest Northeast South West 2014 Fourth Quarter 68.1% 60.8% 65.4% 58.7% U.S. Census Bureau 3 rd Quarter 2015
15 First-time Buyer Rate Under Historical Norm of 40% 32% The typical first-time buyer was 31-years-old. National Association of Realtors- Profile of Homebuyers
16 Sales Price of Existing Homes-Nationally Source: National Association of Realtors Year Median Sales Price Average Sales Price 2013 $197,100 $245, $208,300 $255, $222,400 (7.6%) $266,400 (4.7%)
17 Historical New Home Sales m , , U.S. Census Bureau: Time and Trend Charts-New Homes Sales-2016 and January NAR Realtor Magazine 2016 Forecast
18 2016 Housing Forecast Source: National Association of Realtors Chief Economist: Lawrence Yun Homeownership Rate Year Forecast Existing Home Sales 4.9 Million 5.2 Million Million Housing Starts 1 Million 1.1 Million 1.3 Million New Home Sales 437, , ,000
19 Columbus is the 13 th fastest growing city in the country with an estimated census population of 835,957 in An estimated gain of 12,421 people between 2013 and The city has never declined in population since Source: Columbus Dispatch Columbus population keeps rising Source: US Census
20 Numeric Change in Population July 1, 2013 to July 1, ,000-19,999-Franklin 10,000-14,999 5,000-9,999 2,500-4,999-Hamilton 1,000-2, to ,000 to -2,499-2,500 to -4,999-Cuyahoga Source: OSU Extensions in the City 2014 Population Changes in Ohio s Cities
21 County Population Growth Comparison Source: U.S. Census Bureau Stagnation in most areas besides Central and Southwestern Ohio. A Decade of State Population Change January 10, 2013
22 Things are looking up! Ohio Existing Home Sales Sales Activity Average Sales Price Year-end ,108 $142, ,399 (-1.3%) $149,210 (5%) ,632 (8.7%) $155,427 (4%) Ohio Association of Realtors: January, 2016
24 Three Important Items to Know about OHFA Our funds are always available. OHFA homeownership programs can be used anywhere in the State of Ohio. Not all lenders (Banks or Mortgage Companies) are OHFA participating lenders. Participating lenders can be found at:
25 How do OHFA Homeownership Programs work? 1. Realtor or Lender typically informs homebuyer about OHFA loan programs. 2. Homebuyer chooses the loan program that best fits their needs. 3. Homebuyer goes through normal home buying process. There are no major differences in the process except taking a one hour homebuyer education/budgeting course.
26 First-Time Homebuyer Down Payment Assistance Grants for Grads Ohio Heroes Limited 203(k) (Repair Loan) Weatherization Mortgage Tax Credit These products fall underneath the First-Time Homebuyer umbrella.
27 Next Home Down Payment Assistance Ohio Heroes Limited 203(k) (Repair Loan) Weatherization Next Home is a loan program for homebuyers who are not first-time buyers and are looking to purchase their next home.
28 OHFA participates in all of the major loan types:
29 Requirements For All Homebuyer Programs Must meet OHFA income limits and properties must meet purchase price limits (Listed on When calculating borrower income, only the borrower(s) living in the home and listed on the mortgage and promissory note will be used. Must occupy the property for the first year. Credit Score: 660-FHA and 640-Conventional,USDA,VA Must be a 1-4 unit property. No manufactured homes. Up to 2 acres inside municipal corporations and up to 5 acres outside municipal corporations. 1 hour homebuyer education class required. This is completed online and over the phone. Must occupy property within 60 days of closing.
30 First-Time Homebuyer Program To qualify for OHFA s First-Time Homebuyer program, you must meet at least one of the following criteria: 1. Someone who has not had an ownership interest in his/her primary residence in the last three years. Example #1 Someone who has never bought a home. Example #2 Potential homebuyer owned a home 10 years ago but decided to sell the home and rent an apartment. He/she now wants to buy a home again. OHFA would consider them a First-Time Homebuyer.
31 First-Time Homebuyer Program-Continued 2. Anyone buying in a Target Area -A target area is an economically distressed area designated by the U.S. Department of Housing and Urban Development. 3. Honorably Discharged Veteran- Regardless if they currently own a home or have owned a home in the past three years. If current property owned is not sold before loan closing, it will be counted as rental income in homebuyers income calculation. Please note that the property they are purchasing must be owner occupied after closing.
32 Your Choice! 2.5% or 5% Down Payment Assistance If you qualify for OHFA's First-Time Buyer program you also qualify for our Down Payment Assistance product. OHFA will issue assistance in an amount of exactly 2.5% OR 5% of your home's purchase price. You can use the assistance to pay for the down payment, closing costs, or other prepaid expenses incurred prior to closing. Your interest rate will be slightly higher than OHFA s standard mortgage rates.
33 Repayment Requirements The Down Payment Assistance will be issued as a second mortgage with a 0% interest rate that is forgivable after a seven-year term. If the buyer sells or refinances prior to the end of the seventh year, the buyer is responsible for paying the entire amount of the assistance back. Example: Closing date 1/1/15, forgiven 1/1/22.
34 Ohio Heroes Through OHFA s Ohio Heroes product, Ohio s Heroes can receive a rate that is slightly lower than OHFA's standard mortgage rates. Available to full-time employees in the following professions: Active Military, Active Reserve, Veterans Firefighters, Volunteer Firefighters, Emergency Medical Technicians or Paramedics,911 Operators Licensed or Certified Direct Patient Caregivers Police Officers and Correctional Officers Teachers and College Professors
35 2.5% or 5% Grants for Grads Borrowers must have graduated within the last 48 months with an associate s, bachelor s, master s or doctoral degree. (Recognized by the U.S. Dept. of Education s Database of Accredited Postsecondary Institutes and Programs.) You can use the assistance to pay for the down payment, closing costs, or other prepaid expenses incurred prior to closing. Grants for Grads buyers also receive an interest rate that is slightly lower than OHFA's standard mortgage rates.
36 Repayment Requirements The Grants for Grads assistance will be issued as a second mortgage with a 0% interest rate that is forgivable after a five-year term. If the buyer moves out of Ohio before the end of the fifth year, they will be responsible for paying a portion of the grant back as listed below. This is intended to keep those with advanced degrees within the State of Ohio. OHFA will resubordinate the second mortgage if the homeowner refinances.
37 Mortgage Tax Credit Program This program allows you to take a federal tax credit for a portion of your mortgage interest for the life of the mortgage. The mortgage credit is in addition to the IRS home mortgage interest deduction. The percentage of the annual tax credit you can claim is based on the location and/or status of the property: 20% credit for non-target areas [Areas not designated as economically distressed by the U.S. Department of Housing and Urban Development (HUD)] 25% for target areas (An economically distressed area designated by HUD). Target Areas:
38 Mortgage Tax Credit Program-Continued 30% for Real Estate Owned (REO) purchases. (Any property purchased from HUD, Fannie Mae, Freddie Mac or a financial institution that acquired the property through foreclosure.) 40% for OHFA loans- If a homebuyer uses an OHFA loan, they can receive up to a 40% tax credit. They are also able to combine multiple programs and products together. Examples will be provided later in the course. There is no interest rate increase for the mortgage tax credit program.
39 Mortgage Tax Credit Eligibility Can be used with all OHFA First-Time Buyer loan programs/products. $2,000 maximum credit per year for the life of the mortgage. *No limit on the 20% credit rate. Credit amount will decrease each year as a portion of the interest paid decreases each year. Borrower must have earned taxable income each year to offset the mortgage credit. If a homebuyer already has a low tax liability, this credit might not help them because this can only be used as a credit, not a refund.
40 Mortgage Tax Credit Eligibility-Continued Must be requested at time of loan application. Buyers are strongly encouraged to consult a tax professional for advice on claiming the credit. Two options for credit: End of the year tax credit. (Not a refund.) Adjust W-4 withholding so homebuyer pays less taxes out of each paycheck throughout the year.
41 What happens if the borrower refinances or sells the property? Refinance- Borrower has one year to request new tax certificate. Home Sold- The tax credit is non-transferable and the original certificate becomes void. (This is a First-Time Buyer tax credit.) If the first year of interest on a $100,000 loan is $5,000, how much credit would the borrower be able to claim the first year?
42 Mortgage Tax Credit Example Annual Interest x % = Yearly Credit $5,000 20% $1,000 25% 30% 40% $1,250 $1,500 $2,000
43 Program Review MTC Basic (Can be used with any loan including non-ohfa loans.) Non-target areas = 20% Target areas = 25% REO s = 30% MTC Plus (Can combine with multiple programs and products and receive maximum 40% tax benefit under the MTC program.) OHFA Loans = 40%
44 MTC Example Realtor Johnny B. Selling made $63,000 in real estate 1099 income. He owes approximately $7,300 in taxes. His mortgage tax credit is $2,000 (40% on $5,000 mortgage interest). Total taxes now due are $5,300 (Savings of $2,000). If he claimed this credit for the first 15 years on his mortgage, that would be a savings of $30,000 in federal income taxes! This could be a significant amount of savings for your client.
45 Limited 203(k)-Repair Loan By using OHFA s Limited 203(k) product, you may combine the mortgage and repairs into one long-term, fixed-rate mortgage. Up to $35,000 in repairs. The total mortgage amount is based on the projected value of the property after all of the repairs and updates have been completed, including the labor costs. All repairs must be done by a contractor. Repairs can be completed after closing. The lending institution will reimburse the contractor for work completed. Mortgage Loan + Repairs = One mortgage
46 Weatherization Program FHA guidelines allow homeowners to add up to $2,000 in energy efficient improvements to their mortgage, without the improvements being included in the appraisal valuation. Thermostats Insulation wrap for water heaters Insulation wrap for ducts, pipes, unheated spaces Attic insulation Insulation for Floors, foundation walls Installation if weather stripping/caulking Installation of Storm windows/doors All repairs must be done by a contractor. Repairs can be completed after closing. The lending institution will reimburse the contractor for work completed.
47 Next Home Next Home is available for Ohio homebuyers who are not first-time homebuyers. All other criteria is the same as the First-Time Buyer program. Homebuyer must use OHFA Down Payment Assistance (Your Choice) product with Next Home. If current property owned is not sold before loan closing, it will be counted as rental income in homebuyers income calculation. Please note that the property they are purchasing must be owner occupied after closing.
48 Common Combinations of Conventional Loans Think of the First-Time Homebuyer Program (Conventional or Government) as the meat of the burger and the additional toppings (DPA & MTC) can be added to the loan.
49 Common Combinations of Government Loans
50 The Down Payment Assistance product is required when using the Next Home Program.
51 How this can help a Realtor help their buyer.
52 Conventional Loan (3% DP Requirement) Purchase Price $100,000 5% Down Payment Assistance (DPA) $5,000 Subtract the Down Payment and Closing Costs: 3% Down Payment -$3,000 2% Closing Costs -$2,000 Approximate out-of-pocket funds for down payment and closing costs: $1,500 This is based on approximate closing costs of $3,500. Closing costs vary for each lender. Buyer could request the additional closing costs from seller during negotiations to avoid bringing any down payment or closing costs to closing. Homebuyers may receive up to a $2,000 mortgage tax credit each tax year.
53 FHA Loan (3.5% DP Requirement) Purchase Price $100,000 5% Down Payment Assistance (DPA) $5,000 Subtract the Down Payment and Closing Costs: 3.5% Down Payment -$3, % Closing Costs -$1,500 Approximate out-of-pocket funds for down payment and closing costs: $2,500 This is based on approximate closing costs of $4,000. Closing costs vary for each lender. Buyer could request the additional closing costs from seller during negotiations to avoid bringing any down payment or closing costs to closing. Homebuyers may receive up to a $2,000 mortgage tax credit each tax year.
54 How to apply the down payment assistance. Buyer is able to choose how to apply the 5% down payment assistance in any combination they would like. Example: 5% towards down payment and $0 towards closing costs.
55 Homebuyer Programs Flyers can be printed from this website and given to your clients.
56 Daily Rates (Rates change everyday. These are not today s rates.) Income and Purchase Limits Vary by County and Program
57 Income and Purchase Limits Vary by County and Program Franklin County Mortgage Tax Credit Non-Target Area Mortgage Tax Credit Target Area SF Market Rate and Grants for Grads Income Limits Income Limits Income Limits 1 or 2 person family: $69,600 3 or more person family: $80,040 1 or 2 person family: $83,520 3 or more person family: $97,440 1 or 2 person family: $83,520 3 or more person family: $97,440 Purchase Price Limits Target: $312,368 Non-Target: $255,574
59 Your certificates will be ed within 5 days.
61 Two questions to ask yourself before you leave 1. Did I sign the sign-out sheet? 2. Did I register online so I can receive my certificate?
62 All information in this presentation, brochure, or term sheet is for informational purposes only. OHFA Homeownership Programs and Products are subject to change. Additional eligibility requirements may be required based on borrower specific criteria.