ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, July 23, 1996 TAG: 9607230053
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
First Union Corp. on Monday introduced two new types of mortgage loans that the bank said are designed to increase home ownership among low- and moderate-income families.
First Union said its new loans - the Neighborhood Development Mortgage and the Community Partnership Mortgage - will increase the options available to hard-pressed families who have been able to pay their monthly rent, but who are unable to cross numerous financial hurdles to home ownership.
Both mortgages are available to families with incomes of 80 percent or less of the median household income in the area. The median household income for the Roanoke area is $43,400, and 80 percent of that is about $34,700, the bank said.
The Neighborhood Development Mortgage carries an interest rate one percentage point lower than the conventional rate, resulting in lower monthly payments. Buyers have a choice of repayment periods of 10, 15, 20, 25 or 30 years.
A 5 percent down payment is required, but only 3 percent of that must come from the borrower's own funds. The remainder can come from gifts, grants or other sources. Normally banks require 10 or 20 percent down.
The loan can be up to 95 percent of the home's value, compared with the typical 80 or 90 percent of conventional loans. There is no minimum or maximum size for the loan, but the home must be in a low-or moderate-income area as defined by the U.S. Census Bureau.
The Community Partnership Mortgage has loans up to 100 percent of a home's value with no down payment and with $500 of the borrower's own funds needed at closing.
The borrower, however, must work with a nonprofit community organization in the locality to gain understanding of the home-buying process and financial planning.
LENGTH: Short : 45 linesby CNB