NeighborWorks supports GROW South Dakota’s statewide home mortgage lending
Knowing where to look for financing when making the decision to purchase a home is key in the home ownership process, but what happens when you hit an obstacle in your journey? In rural communities, obtaining financing can prove to be challenging, especially since mortgages collateralized by these properties don’t always fit the ‘cookie cutter’ mortgage lending requirements. Thanks to a partnership with NeighborWorks America, GROW South Dakota is able to assist with mortgage lending when obtaining traditional financing may not be an option.
“With the support of NeighborWorks America through a $100,000 Expansion Grant, GROW South Dakota will expand their existing Home Ownership Lending Line of Business into rural communities across the State of South Dakota,” says Marcia Erickson, GROW South Dakota CEO. GROW South Dakota will provide a maximum mortgage loan in the amount of $175,000 to credit-worthy customers living in rural communities.
Homebuyer education is highly recommended by GROW South Dakota prior to closing the home mortgage loan. “We encourage consumers to gain the knowledge needed to succeed in homeownership,” said Erickson.
Some of the key homeownership questions to consider when purchasing a home are:
1. How much mortgage can you comfortably afford?
2. What are the current mortgage rates?
3. How much have you saved for down payment and closing costs?
How much home can you comfortably afford is an important first question because it probably will not change during the home buying process. How much a homebuyer can afford is based on their income at the time of purchase. “The rule of thumb for housing expense is that it should be no more than 30 percent of gross income,” said Erickson. “So if your annual income is $60,000, then a homeowner’s total annual housing costs shouldn’t be more than $18,000 per year or about $1,500 per month. Going above that payment amount could lead to budget troubles down the road.”
That leads to the next consideration: mortgage rates. “Mortgage rates are still lower than they were for most of the past 20 years, creating an opportunity for affordable mortgage payments,” Erickson added. GROW South Dakota’s housing counselors can help consumers identify several mortgage lending options.
Another number that doesn’t usually change overnight is a buyer’s savings or money available for down payment and closing costs. “To help homebuyers close the time gap, we encourage them to seek out down payment assistance programs that may be available from us or other sources,” explained Erickson.
For more information about GROW South Dakota’s housing programs and services, please visit our website at www.growsd.org or call (605) 698-7654 Ext 114.