Here at Home Town Mortgage Inc we have the perfect solution. It’s the Alabama Bond Loan. Home owner ship is made easy for millions of families with the Mortgage Revenue Bond, also known as Bond Money. Through the IRS selling tax exempt bond the state and local governments are allowed to finance mortgages with low interest rates. Over 2.4 million families, that’s over 100,000 families a year, have been able to achieve their goal of owing their own home because of Alabama Bond Loans. Compared to a traditional loan a family can save an average of $100 a month, which is $40,000 for the life of their mortgage loan, by going with Alabama Bond. With the Alabama Bond Loan a family can save money monthly and yearly, but also has the opportunity to receive assistance with their down payment and closing cost.

The two Mortgage Revenue Bond programs provided by the Alabama Housing Financing Authority are the following:

Step Up Program

If a family has moderate income and can afford an average rate on a mortgage, but does need assistance with the down payment then we would suggest the Step Up Program.

AHFA does not have a sales price limit when assisting with the down payment and has a higher income limit then the First Step Program. To make it more convenient for homebuyers AHFA combines the first and second mortgage so they will have one billing statement instead of two. The first mortgage may have a higher interest rate than the average market rate and is a 30 year fixed rate. The second will secure the down payment for 20 year. To qualify for the Step Up Program a borrower must complete a homebuyers education course.

First Step Program

The First Step Program is funded by AHFA selling tax exempt mortgage revenue bonds. The revenue to purchase mortgages from AHFA participating lenders helps funds the loans for homebuyers.

With the First Step Program AHFA will help provide closing cost assistance because the down payment is usually what keeps borrowers from purchasing their home. To qualify for the First Step Program a borrower must complete a homebuyers education course.

The First Step Program does have income limits and sales price limits. Depending on where the homebuyer is planning on purchasing their property and the size of the house hold the income limits vary between $54,900 and $76,860. The IRS sets the sales price limits and they range between $237,031 and $289,705, this includes new homes and existing homes.

Frequently Asked Questions

Is the First Step Program for First Time Home Buyers only?
No, the First Step Program is for anyone looking to purchase a primary home, but the property chosen must be in the targeted area.

What qualifies as a targeted area?
The US Census Bureau determines where the targeted areas are by focusing on economic growth. Contact Home Town Mortgage to find out the specific areas.

Do new construction homes or homes that are under constructions qualify for the First Step Program?
New home, under construction homes, and existing homes qualify for the First Step Program.

What is Recapture Tax and will it affect me as a borrower?
The Federal government requires few to pay a portion of their gain at the time of the sale if a mortgager finances their home under the First Step Program. This is known as recapture tax. If a borrower is now earning more income than they were at the time they purchased their home and is gaining from the sell of their home within 9 years, then they may have to pay recapture taxes. The amount is minimum if the borrower has to pay recapture taxes. Taxes are usually half the gain of the sale of the home or 6.25% of the original mortgage, which ever is less.

Out Line of The First Step Program

• 5.87% below market rate with FHA loans.
• Down payment assistance is available up to $7500 or 3%
• If the income is $41,360 or less for the house hold down payment assistance is paid back at 0% for a 20 year term
• Commitment fee required within 72 hours, .5% of loan amount for 30 day lock, 1% of loan amount for 90 day lock.
• Sales Price limit: Target= $271,050 (FHA limit) Non Target= $237,031
• Income limits for house hold: Target= $77,480, Non Target 1-2 in family= $64,500, Non Target 3+ in family= $74,175
• Bond Money is on a first come first serve basis.