Housing Prices Too High For Mortgage Program

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Town officials have $95,000 to help low- to middle-income residents buy their first homes, but they can't seem to give the money away.

In April 1998, the town received a $105,000 state grant to help qualified first-time home buyers offset down-payment or closing costs.

Anyone who meets the program's requirements can qualify for a free $10,000 housing grant.

But after more than a year, only one resident -- a single mother -- has been able to qualify for the program and buy a house.

The problem? Local housing costs.
Most of the people who meet the program's strict income requirements can't find a house in Payson they can afford to buy under the program's loan restrictions, Payson Development Planner Jason Phillmore said.

To qualify for one of the town's housing grants, applicants must:

  • Meet federal income guidelines;
    • Buy property within town limits;
    • Assume a mortgage that is equal to or less than 30 percent of their household's total income.

Those restriction and the town's high cost of housing conspire to prevent applicants from taking advantage of the grant program -- a program that is designed to make home ownership possible for low-income families.

"An individual who makes $1,500 a month, for example, cannot assume a mortgage that exceeds 30 percent of their salary," Phillmore said. "That's $500 a month. It's really tough to find a house here for $500 a month.

"Our biggest problem is the cost of housing. We're getting into this Sedona-like situation. If you were down in Phoenix, you could find a place for $500 a month pretty easy. We just don't have housing in that range here."

Nevertheless, town officials are still encouraging residents to apply for the grants. Qualified applicants can use the grants to buy site-built or manufactured housing, Phillmore said, but the house must be built before the grant can be issued.

"We have to inspect the property for housing standards before the money is granted," he said, " so you can't buy an empty lot.

"Each applicant also is required to attend an eight-hour home ownership counseling program. It helps people understand what to expect as first-time home buyers. It's a great program, and it can help you out on your interest rate when you buy a house if you have this certification."

The town has hired community services of Arizona to administer the program. Anyone interested in applying for one of the town's $10,000 grants, can call the firm at (800) 471-8247 for a prescreening interview. Applicants have until next spring to apply.

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