Cents and Sensibility

To ensure you have a home

Staff WriterJuly 19, 2009 

If you're worried about losing your home, there's a state agency you need to know about.

If you're thinking about buying your first home, the same agency can help.

The N.C. Housing Finance Agency administers numerous programs with a similar mission: to make sure people have an affordable home.

If you assume it only helps people who have very low incomes and the elderly, you'd only be half right. Two of its programs should have a broader audience: those who are looking to buy their first home and those who have seen their incomes reduced because the economy is in the toilet.

Yes, both programs have income limits, but they may not be as low as you might suppose.

For instance, in Wake County if you're single you can make up to $75,000 and still qualify for the agency's mortgage credit certificates. These let you take a federal tax credit of 20 percent of the interest you pay on your home -- up to $2,000 -- every year you live in the home. This is on top of the mortgage interest you can claim if you file an itemized tax return.

Here's what I mean: If you pay $10,000 in interest on your mortgage, you can take 20 percent or $2,000 as a direct reduction (or tax credit) while the other $8,000 ($10,000 minus $2,000) is your mortgage deduction filed with your Schedule A.

Combine those breaks with the one-time $8,000 federal tax credit being offered to first-time home buyers who purchase a home before Dec. 1, and you've got a pretty sweet deal.

Of course, there are other eligibility requirements. In addition to the income cap, there's a limit to how expensive a home you can buy.

But both caps vary from county to county to reflect reality. In Wake, Johnston and Franklin counties, if you're single you can make up to $75,000, and the home you have your eye on can cost as much as $220,000 if it's new; $210,000 if it's not. If you have two incomes and another mouth to feed, the income cap rises to $86,000.

In Durham, Chatham and Orange, the income limits are $64,000 and $73,000; homes have the same caps as in Wake.

The average home price in the Triangle was $231,800 in May. The median household income in Wake was $61,706 in 2007; in Durham County, it was $47,885.

It would seem that plenty of people would qualify for the credits, but Margaret Matrone, a spokeswoman for the agency, told me that the average income of people who received the credits last year was $30,000. So far this year, 159 people have qualified. Those low numbers could reflect an understandable skittishness to buy in an uncertain economy.

It could also mean that many people don't realize the credits are an option. Now you know.

The other program the agency administers -- one that I think more people should be aware of -- is the home protection program.

It started in 2004 and is simplicity itself: It helps people keep their homes by paying their mortgage up to 24 months or $24,000, whichever they need. It's a deferred loan with zero percent interest.

To qualify, you have to have seen your income reduced by half (either through a layoff or reduced hours) because of the current economic conditions. In other words, you can't just have been fired for being a slacker. You have to be a state resident, own real property (mobile homes don't count) and have satisfactory credit -- up to a point. If your missed payments have occurred since you've lost your job, that is taken into account.

The program was first introduced in eight counties; it is now in all 100. So far it has helped 436 people keep their homes and paid out $4.8 million in loans.

I like this program because it offers peace of mind to people who often fall through the cracks: folks who have always worked hard, paid their bills, made their house payments and built a life only to find it in jeopardy because their employer has hit a rough spot.

It is a program that tides people over until they get a new job or get trained for a new career. Some people just need enough to get current on their mortgage payments. Charlene Smith, the servicing manager for the program, said the average loan is $10,160.

The other thing I like about the program is that the agency's counselors (there are offices in many communities) help you figure out whether you really need the loan or whether, by changing a few habits, you can make it on the money you have coming in. And if your house payment is too large, if your debt is too great, they will tell you that as well, and you won't get the loan.

Tough love, I know, but Smith says the agency doesn't want to just put a bandage on the problem. If $24,000 isn't enough to really help, getting it will just put you deeper in debt.

In addition to the loans, the agency can delay foreclosure of your home for up to 120 days. That can be enough time to work something out with a mortgage company, arrange a short sell or find a job. It's breathing room.

The need is obvious. Smith said the number of applications doubled in the last month. Part of the reason is that the agency is getting the word out to clerks of courts and foreclosure attorneys. But it's also because unemployment is up and furloughs are increasing.

The agency has seen the greatest need in the Triad and in Charlotte but is starting to see more applications from Wake and Johnston counties, Smith said. And where once the loans mainly helped blue collar workers at mills and furniture plants, they now are going to teachers, car dealers, engineers and former executives.

The program was able to help those people because the legislature increased the program's budget to $3 million last year. There's $3 million in this year's budget for it as well. Right now, it doesn't look to be in jeopardy. Let's hope that doesn't change.

For more information on either program, visit www.nchfa.com.

mary.cornatzer@newsobserver.com or 919-829-4755

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