Press: News clips

Unique programs help Vermont homebuyers
by Lisa McCormack

When Robin and Bill Simmons sold their comfortable condo in Lynchburg, Virginia, two years ago they had hoped to use the small profit they made as a down payment for a home in Stowe, Robin’s hometown.

Today their nest egg is gone — eaten up by the nearly $1,000 monthly rent they paid for over a year to live in an aging Stowe apartment with a sloped floor and faulty heating system. Last summer they gave up on their dream of buying a home here and moved to Chittenden County to be closer to Bill’s employer. There they pay more than 60 percent of their income in rent and wonder whether they will ever be homeowners again.

Robin and Bill aren’t alone. Across Vermont the number of renters who pay 50 percent or more of their income for rent is growing. This is especially true in Stowe where the median rent is the second highest in the state, but 80 percent of the jobs in town are in the low-paying service and retail sectors.

Affordable housing advocates say Vermont’s high rents and relatively low wages put the dream of home ownership out of reach for many, while others must save for years to scrape together a down payment for a modest fixer upper.

The state offers some programs to help low to middle-income Vermonters become homeowners, including homebuyer education workshops, grants and low interest loans. For many they have meant the difference between being a lifelong renter and a first-time homeowner.

It starts with education
Ask Lamoille Housing Partnership Executive Director Carol Collins what she considers to be the first step to becoming a homeowner and she will respond with one word — education.

“Homebuyer education is the best place to start because you learn about all the programs that are out there,” Collins said.

The Central Vermont Community Land Trust creates and manages affordable housing. It offers a full range of homebuyer education services through its NeighborWorks HomeOwnership Center in Barre. The three-part, $60 program starts with a free orientation session where participants complete a personal profile and learn about the services offered through the center.

They then attend an eight-hour class that takes them through the home buying process step by step. The class is followed by a one-on-one session where counselors help them identify credit issues, determine how much home they can afford, find a low-interest loan, and develop a home buying plan.

The center also helps participants fill out paperwork for mortgage lenders and apply for special programs that can help them with down payment and closing costs. After purchasing their homes, they are eligible for home maintenance education and delinquency intervention, if needed.

Low interest loans
When it comes to a mortgage, sometimes getting a loan at just a percentage point or two lower opens the door to affordability.

“There are mortgage programs, like ones offered through the Vermont Housing Finance Agency, that are specifically geared toward low-income homebuyers,” Collins said.

The Vermont Housing Finance Agency has been connecting low-to-moderate income Vermonters with lenders who offer low interest rates for the past 30 years. It offers several programs to meet the needs of first time homebuyers, including one with a cash assistance option that helps buyers with down payment costs.

The agency also helps established homeowners who want to refinance at lower interest rates.

The federal government offers subsidized mortgage loans through its USDA Rural Development Loan Program. In many cases a down payment — a huge obstacle for many Vermonters — is not required since loans may be made for up to 100 percent of a home’s value.

Rural Development charges a fixed rate, but makes it more affordable by giving monthly assistance toward the mortgage costs, which the homebuyer must pay back at a later date.

Grants available, but difficult
Earlier this month prospective homebuyers attended an open house for a Morrisville home offered through an affordable housing initiative called the Homeland Grant Program. With a selling price of $100,000 and available affordable housing grants that could bring the actual purchase price down to just below $46,000, the house is a rarity on the tight Lamoille County real estate market.

The Central Vermont Community Land Trust provides a limited number of grants of up to $20,000 toward the purchase of homes by people who meet income guidelines. Grant recipients must agree to limit the amount they can sell the property for in the future so that the homes will remain affordable forever.

“The land trust model is unique to Vermont,” Collins said. “It keeps an ownership in a portfolio of properties with the intent of keeping properties affordable forever.”

Although they can provide a tremendous asset to homebuyers and protect the future of affordable housing in Vermont, Homeland Grants are much harder to come by than affordable housing loans.

“We’ve only done 10 of these deals since the Lamoille Housing Partnership was founded,” she said. “And, statewide there are only four grants available between now and June.”