Loans & Programs Available to First-Time Home Buyers in Orange County

home.ownership-400x0 (1).jpeg

It’s an exciting day when you finally receive the keys to your new home. The rush of freedom kicks in once you slip the key into the lock of your new abode. Walking around the dining room, you envisioning your family growing up around your table. Looking at your backyard you imagine a play space for your children.

To say it’s overwhelming enthusiasm might be an understatement.

It’s the dream so many of us are working for. Yet, for those who have never claimed the title of homeowner, taking that first step might feel like a giant leap. There are a thousand little steps that get you to that moment. This is particularly true if you live in Orange County. Our slice of paradise isn’t known for affordable living.

Homeownership is achievable.

Even more, you’re not alone in the process. We have counselors at the ready to walk with you throughout every phase. In fact, there are several unique programs designed specifically to help you experience that rush when you unlock the door to your new home.

nwworkshop_2016-1-600x400.jpg

Terminology: AMI

Before digging into the specifics of these programs, there is one term you need to be familiar with. AMI is the area median income. This is an income guideline used by the U.S. Department of Housing and Urban Development (HUD) to determine eligibility for government programs. The AMI of every region is recalculated each year. A separate AMI is factored for each family size, noting that the median income of a family of four differs from a single individual.

Most of the programs we work with require an AMI of 80% or less. This means you make a minimum of 20% less than the medium income levels in your area. For example, if the AMI for a family of four is an income of $97,500, then 80% is an income of $78,000.

Our counselors can help shed light on where your income for your household sizes falls on the AMI scale.  Most families are surprised that they qualify with their incomes.

Here are four programs that our counselors at NeighborWorks Orange County can help you see if you qualify for. 

WISH Program

This down payment assistance program matches funds that you raise toward your down payment three-to-one. If you bring $1,000 to the table, the WISH Program will bring $3,000. They will match up to $5,000 of your money. Three to one of $5,000 is $15,000, giving you $20,000 to put toward your new home. 

The WISH Program is a grant program. This means that if you receive funds from this program, everything will be fully forgiven after living in the home for five years. Should you and your family need to move before that, the remaining balance is due at a prorated term.

Qualifying applicants are at 80% or less of AMI and have attended a First-Time Homebuyer Workshop.

IDEA

The IDEA program is very similar to the Wish program. The difference is that the IDEA program works with you if you haven’t prepared to save the $5,000 today. To help facilitate saving up the funds, IDEA places you in a ten-month program. You meet with your counselor every month to review how things are going and submit funds to your initial investment. The minimum monthly investment is $25 and the maximum is $500.

If you max out your investment each month, you have the full $5,000 at the end of the program. The IDEA program then matches three to one, just like the WISH program. IDEA also has the same restrictions on living in the home for five years, the property being the primary residence and 80% or less of AMI. 

After five years, IDEA will also fully forgive all the funds.

CALHome Loan

CALHome is a 30-year term gap loan for up to $57,000. When you take out a CALHome loan to help with closing costs or a down payment, all payments are deferred for up to 30 years. Over that time, it will accrue 3% simple interest. No monthly payments are due until that 30-year gap passes.

This program is first come first served, so it is recommended you work with one of our counselors sooner than later.

To qualify, recipients must be a first-time homebuyer, have attended the workshop, and be at 80% AMI or less.

NSP

At Neighborworks Orange County, we were awarded redevelopment funding through the Department of Housing and Urban Development Neighborhood Stabilization Program (NSP). This program is solely designed to create more affordable housing opportunities in our community for low-to-moderate income families. 

Through this program, we purchase and rejuvenate foreclosed homes. Once they are fully renovated, we limit the sale exclusively to individuals and families in our First-Time Homebuyers Club.

There are two separate NSP programs. 

NSP 1 funded projects require that eligible buyers receive financial assistance to purchase the home. The maximum mortgage loan is $80,000 with the minimum $3,000. The buyer must bring 3% of the total sale price for the purchase. The applicant’s income must not exceed 120% AMI. All NSP1 loans are forgiven after the recipient stays in the home for 15 years.

NSP 2 funded projects have many similar stipulations to the NSP 1 projects, such as the minimum and maximum mortgage loans, qualifying AMI and the 3% down payment. The main difference is that NSP 2 has a 30-year mortgage that is not forgivable. 

Learn more about the NSP program here.

 Steps 

All of the mentioned programs require attending a HUD-approved First-Time Homebuyer Workshop. Not only is this required, this in-depth course gives you all the information you need to successfully purchase a home.

You can sign up for the course here.

Following the course, it’s important to work with a counselor to fully evaluate your situation and eligibility to determine if you are home-ready today. If you aren’t prepared to purchase now, our counselors will help you chart the path to achieving your dream.

If you are ready, they will help you apply for the program you qualify for, as well as navigate the other necessary steps.

charity_moving_in-8-600x400.jpg

Requalifying After a Foreclosure or Short Sale 

While the programs highlight first-time homebuyers, that classification isn’t as cut and dry as you would expect. If you went through a foreclosure, short sale or for whatever reason haven’t owned a home for more than three years, you reclassify as a first-time homebuyer.

For families that went through a short sale or foreclosure, you will need to wait four years and seven years respectively to purchase again. This is when those transactions fall off of your credit report allowing you to qualify for a mortgage.

Your Guide for the Entire Home-Buying Process 

Hopefully, this excites you about the possibilities of owning your own home! Our goal is to empower you. That’s why we provide so many resources to assist you. Homeownership is possible. 

If you have a lot of enthusiasm to move forward but aren’t quite sure what to do next, start with our first-time homebuyer workshop. This deep dive into all aspects of purchasing a home equips you with the most powerful information to move ahead on your journey. Even better, the $25 per person fee is refundable after you enter into escrow.

Once you complete the class, schedule a free one-on-one meeting with one of our dedicated counselors. They sit down with you, reviewing tax returns and bank statements and really work to understand everything about your unique situation. Then, they chart out the best path for you to move toward achieving homeownership.

first_time_buyers-600x511.jpg

How to Buy a Home in Orange County

buy.in.oc-400x0.jpeg

For California buyers, it can be daunting to watch the news constantly report on rising home prices. We are all familiar with the cost of living in our Golden State. It’s old news.

The news media always forgets to mention though is that we live in paradise! With perfect year-round temperatures, access to the beach and to the mountains, you know you wouldn’t live anywhere else in the world.

Orange County is home.

The challenge of purchasing a home in Orange County is worth it. Additionally, you get to invest in the best state. While the real estate market is volatile at times, investing in California real estate is a good investment.

So if you are curious if you will ever be able to enjoy the sweet victory of owning your own home in our glorious region, you will. Here’s how:

homebuyer_workshop-600x288 (1).png

Attend a Homebuyer Class

Buying a home will be one of the most complicated transactions you will undergo. From qualifying for a mortgage to understanding loan options to navigating real estate disclosures to working with an inspector and more, purchasing a home is a complex ordeal. It will also represent the largest purchase you have ever made. According to the CBS Money Watch, Orange County is one of the “10 most expensive places to live in the U.S.” 

Homeownership is possible here, but it’s essential to be a smart buyer. Which is why you need to be equipped with the most powerful tool possible going in: knowledge.

The more you know about the process, the more successful you will be. We have all met homeowners with buyer’s remorse. Oftentimes it results from the fact that they weren’t ready to purchase or they bought too much house. You don’t want to follow in those footsteps.

Instead, attend our Homebuyer Workshop.

This eight-hour, in-depth course fully prepares you for every decision you will need to make throughout the process. We will cover:

  • Credit
  • Budgeting
  • Lending
  • Down Payment
  • Home Insurance
  • And More

We leave no stone unturned. When you leave this course, you’ll know how many credit cards you need to have, different loan options, what the process looks like from start to finish and the responsibilities that come with home ownership.

 

Meet with a Homebuyer Coach

Working with a homebuyer coach is probably the most underutilized resources in the real estate world. To prove our point, there is a large possibility you have never even heard of a homebuyer coach. 

We believe it is the most important step. That’s why we provide free coaching for first-time homebuyers.

All first-time homebuyers have a lot of questions about determining how to best move forward. You’ll likely be asking:

  • What is my credit score?
  • Do I qualify for any assistance or first-time homebuyer programs?
  • Am I ready to purchase today?
  • How much house can I afford?
  • What type of interest rate or loan type is best for my situation?
  • Where do I fall on the AMI (Average Medium Income) scale?

Our coaches work with you one on one to understand if you are mortgage ready today. If you aren’t there today, they outline specific steps to get you there.

This isn’t your traditional coaching. Our team members are your accountability partners for the entire journey. We want you to succeed. That’s why we will regularly check in with you to see your progress, answer questions, and help you navigate any challenges that come up in the process.

Whether you are ready to buy today or if it takes you three years to achieve this goal, you’re never alone in the process. Schedule your coaching session today.

dodl-600x545.jpg

Prepare for Homeownership

Our clients fall into two categories: mortgage ready or not ready today. 

If you are not ready today, after working with our coaches you will have a step-by-step plan to address any specifics. Typically this includes paying down debt, increasing a credit score, or saving for a down payment.

Clients who are mortgage ready today typically own a home in six months. Clients working toward home ownership typically achieve the goal in two to three years of working with us.

 

Select a Home Style and Neighborhood 

The median home price in Orange County is $645,000 according to a recent CoreLogic report. The closer you head toward the coast, the more likely the home price will hit $725,000 as it has in Huntington Beach. Moving toward Santa Ana, Aliso Viejo or Buena Park will put you closer to $500,000 for a single-family home.

The most important decision you will make throughout this entire process is choosing a neighborhood and home size that fits your budget.

Orange County home prices vary in different neighborhoods. It’s essential to choose an area that fits your budget. If your family’s income is $70,000 a year, you will not be able to afford Fullerton. Instead, you can find great options in other areas such as Anaheim.

After choosing a neighborhood in your price bracket, it’s time to have a heart-to-heart about home type. Most families purchasing for the first time will need to explore condominium options. The key to purchasing in Orange County is to start small. Get your foot in the door by purchasing a condo. Then after several years of investing into your own home and saving, you can move up in home. It’s not uncommon to have families move up two to three times to achieve their ideal home. 

The key is to start with what you can afford. 

Many communities in the region are starting to build affordable housing options for families who are below 80% AMI. San Juan Capistrano, Irvine, Anaheim and Huntington Beach are just some of the areas. 

You can own a home in Orange County. It all comes down to being a smart buyer and exploring different options around the county.

 

Work With a Realtor

You don’t have to navigate the different communities on your own. Partnering with an experienced Realtor will help you identify the areas best suited to your lifestyle and budget. Especially in Orange County, it’s essential to work with a realtor who understands the different areas, is knowledge about finding affordable options, is up to date on current trends, and wants the best for you and your family.

We break this down to three essentials:

  • Experienced
  • Knowledgeable
  • Passionate

This isn’t a job for your co-worker’s cousin’s former girlfriend you met once. A serious life decision merits working with a professional.

We recommend interviewing three different realtors to determine who is the best fit for you. Hopefully you will consider interviewing our heart-centered realtor with over 26 years experience. We guarantee she hits all three essentials.

A high-caliber realtor will walk you through neighborhood selection, discovering a home, and the purchasing process.

Get to Know the Neighborhood

Once you close in escrow, install new locks on your home (you never know who had a key before you), and submit your mail forward, it’s time to get to know your neighbors. The idea of home doesn’t end at your doormat. Instead, it extends to the entire community.

Knowing your neighbors is an important step of “moving into” your new home. You want to build a community. It’s not just good for neighborhood BBQs. These are also the individuals you will rely on to keep an eye out on your home while you are enjoying a weekend in Big Bear.

While you are at it, you should extend that community invitation to your local police station and fire department. Introducing yourself here helps keep you in the know about anything that happens in your neighborhood.

 

Start Today

You may or may not be ready to buy a home today. The important thing is to start working toward achieving homeownership. Attending our Homebuyer Workshop and meeting with our coaches is the best place to start.

In six to 36 months, you could be settling into your new Orange County home. With a dream like that, it’s hard to not get excited. 

chappellefamily-11-600x400.jpg

Homeownership: Like Starting a New Life

pedro_clientstory-100-400x0.jpg

Pedro Chavez had a dream. His dream was to buy a home that would become a legacy for his wife, children and grandchildren.

Chavez said that he began working part-time as a young father as a way of bringing in more income. But then with two children, he felt he couldn’t afford it.

“I was thinking back in the 1980s, dreaming about having a house for my kids,” said Chavez, account manager for a landscaping company.  “It was impossible. The hourly wage was too low plus I was raising my kids. I decided, one day, I’m going to make it happen.”

His dream began to take shape again about two years ago. By this time, the family had grown to four children – all adults.

“In 2014, I decided to set up my goal, to have my own place in two years,” he said. “I thought I should be saving more for a down payment.”

He decided to seek out assistance for first-time homebuyers.

pedro_clientstory-112-800x533.jpg

An Internet search took him to NeighborWorks Orange County. He attended a home-buying class in September 2014. The next year, his wife Teresa and daughter Alicia, also took a class.

“I found the right website with the right people,” said Chavez, a trim man who speaks with confidence about his experience. He said the greatest benefit he got was information.

“Myself, I had a lot of questions, but they explained everything,” he said. “How the process works. How the escrow works.  How to find the right Realtor. How to find the right house.  That helped me a lot, all the information that I got.”

He and his family began working with NeighborWorks to create the right financial package and to find the right house. 

They looked at 10 to 15 houses, and made offers on about a half dozen in Buena Park and Anaheim.  In a competitive market and improving economy, they sometimes would find themselves outbid or among a pack of potential buyers interested in the same house. The “Friendly Experts” at NeighborWorks assured the family that with Chavez’s work history and excellent credit, he would never lack for options.

Finally they came across a house in Anaheim. 

pedro_clientstory-4-800x534.jpg

The Chavezes thought it was perfect. It had three bedrooms, two baths, wooden floors and a fireplace. The back patio was enclosed, providing an added area to entertain the couple’s children and grandchildren on their visits. A city park lies nearby.

“This gives us much more space,” said Teresa.

They offered $430,000. The owner asked if they would come up with a higher offer. 

Chavez offered $432,000, his maximum, yet remained worried that he wouldn’t have enough money to trim two large pine trees in front of the house that he feared would topple over. He also wanted to remove a ficus tree that was damaging the driveway and to grind down an unsightly stump in the back yard. He estimated the job would cost $2,500 at least. 

In the end, everything worked out.

The owner accepted the offer of $432,000. And a friend who ran a tree-trimming business said that he would perform the work on the trees that Chavez wanted for $700.

Chavez had concerns about signing a loan with variable interest rates. NeighborWorks Orange County helped the family put together a loan package that they felt comfortable with that included a $417,000 conventional, 30-year mortgage. The Chavezes put down the balance on the purchase. The house, built in 1955, has 1,461 square feet, built-in cabinet spaces and tiled bathrooms and kitchen counters.

After three decades as renters, the Chavezes made their dream come true when escrow closed Oct. 28, 2015.

pedro_clientstory-105-800x533 (1).jpg

Pedro and Teresa, both 56, met at a dance club in Santa Ana as young adults. He had immigrated from Guanajuato state, Mexico, while she had come from Jalisco.  After he arrived from Mexico, Chavez took a job pushing lawnmowers and cutting hedges for a landscaping business. The couple got married in June 16. 1983.

Chavez wanted more for himself and his family, and he rose through the ranks of the landscaping business to foreman, field representative and account manager. Along the way he learned the ins and outs of irrigation systems, pesticides, and plant identification and disease. He also studied computers through a regional occupational program and became a part-time cook, learning under trained chefs at such venues as Knott’s Berry Farm.

That work created the foundation for the family to be able to pursue its goal of homeownership.

Life is better now, the Chavezes say.

The house has become a gathering place for Chavez’s four adult children, two of whom – Adriana Becerra, 32, and Melissa Rocha, 29, are married, and two of whom – Alicia, 25, and Pedro, 23, - live at the Chavez family home. Three small dogs – Sam, Ninja and Casper – also call the house their home. Dozens of family photos capture key moments in the family’s life.

“Before, it didn’t feel like we had anywhere to go,” said Adriana, whose son is 13.  “Now it feels like we have somewhere to go, a home, somewhere to come to.”

Teresa, a stay-at-home mom, said the area is an improvement over the neighborhood they had been renting in West Anaheim.

pedro_clientstory-113-800x533.jpg

“It’s more peaceful here,” she said. “Where we lived before there were businesses and night clubs. There was a lot of noise.  I like everything here. The rooms are bigger. The other house was much smaller, and I used to have to hang the clothes outside to dry. Here I wash and dry in the house.”

Then she added with a laugh, “It’s bigger, so I have to work more to keep it clean.”

Chavez said he has already told friends about NeighborWorks. He smiled as he talked about having achieved his dream. 

“This process is life changing,” Chavez said. “From now on, it’s like starting a new life, and having new memories.”

pedro_clientstory-102-800x533.jpg