“In order to promote the production of new, more affordable housing units for very low, low, and moderate income individuals and families in the state, to promote the preservation and rehabilitation of existing housing units for such individuals, and to provide greater stability to the residential construction industry and related industries to ensure a constant flow of production of new housing units…”
Many times, people have heard of THDA and are confused, thinking that THDA is a certain type of loan. In fact, it is a loan agency. All THDA mortgages must be insured by private mortgage insurance, FHA, VA, or RECD. And since these loans are intended for low-to-moderate-income families or individuals, there is an income limit and a cost-of-purchase limit. Also, you must be a first-time homebuyer, unless your home is in a specific area.
Why is THDA so great for a first time homebuyer? Well, it’s about money. THDA offers a below market rate and will allow up to 100% financing. Have you been reading the newspapers lately? It’s not that easy to find 100% financing these days. Unless, that is, you’re a first-time homebuyer. It also has programs that allow down payment assistance through grants from certain approved agencies (if your type of loan requires a down payment). If you have satisfactory credit and the home you want to buy meets THDA standards, then you’re in business.
All THDA mortgages are 30-year fixed-rate loans, so you don’t have to worry about finding yourself with an ARM (adjustable-rate mortgage) loan and a new payment you can’t pay in 3 years. And THDA allows lenders to only charge customers a standard 1% origination fee and a 0.25% discount fee. It also closely monitors the fees associated with the loan. THDA truly looks out for the best interest of the first time homebuyer. If you’re eligible for a THDA loan, you can be pretty sure that an unscrupulous lender can’t take advantage of you because THDA won’t let them. For many people, buying a home is quite intimidating. THDA removes the uncertainties a buyer faces with its lending guidelines and practices.
If you apply for a THDA loan, be prepared to document your credit worthiness. THDA loans require a little more documentation than average loans due to the uniqueness of their product. In order to offer more, THDA asks for more, ensuring you qualify for their amazing program. Sounds like a fair trade, if you ask me.
What are the disadvantages of a THDA loan? Not many. They have a federal recapture tax if you sell your home within the first nine years of ownership. But it sounds scarier than it really is. I heard that only about 1% of THDA clients pay this tax. That’s because a lot of really cool stuff has to happen to you for it to really apply to you. And if those big things happen to you, paying the recapture tax won’t matter much to you anyway. I’ve been in business for 16 years and have only heard of one person who actually had to pay for one. He graduated from medical school and his income was through the roof. Your property was sold above market value for the area because it was next to a property that a large retailer wanted to buy. Once again, good things have to happen to pay the recapture tax. Therefore, you should not be afraid of it.
More people need to know about and take advantage of THDA’s loan programs. It’s a great product and really helps the community and the housing industry. If you’re a first-time homebuyer or think you’re in a specific area, be sure to ask about THDA to see if you qualify for a loan. You will not regret!