Advertisement

Would-be homeowners may need help with savings plan

January 21, 2003

Two years ago the Borough of Chambersburg, Pa, began a program to help renters who are buying homes for the first time. So far there hasn't been much interest, with only four homes occupied. Officials chalk that up to a lack of publicity, but it's possible that even with help, would-be homeowners may find the challenge overwhelming.

With the aid of a $150,000 state grant, the program was started to encourage more home ownership in the borough, where 48 percent of the residents are renters. The borough will pay half the closing costs and 17 percent of the down payment for those who meet program guidelines.

Those guidelines say the house must be located in the borough and cannot cost more than $65,000. It must be the first home for the buyer, who must meet Section 8 credit levels and be deemed "credit worthy."

Under Section 8 guidelines, a single person can earn no more than $26,650 a year, with two-person and four-person households limited to annual incomes of $30,450 and $38,100 respectively.

Advertisement

Finally, applicants must complete a financial counseling class to learn how to keep their spending priorities straight. It sounds good, but for renters at those income levels, saving almost $2,000 for a down payment can be a tough task.

Officials in Delaware have addressed that issue with the aid of a federal program called Move to Work, which sets a three-year limit on rent subsidies. After that, tenants who haven't found alternative housing must pay higher-than-normal rates.

Sound harsh? It isn't, because a portion of the higher rent payment is used to create a savings account that goes toward an eventual down payment. While that cash accumulates, tenants get financial counseling and training on how to deal with common household maintenance issues.

That may not be the total answer for Chambersburg, but given the difficulties that lower-income families face, a mechanism that makes saving for a down payment automatic couldn't hurt.

The Herald-Mail Articles
|
|
|