Help with home ownership: Unique pilot program launched in Becker County
Home ownership just got a little easier to achieve for some Becker County residents.
The Detroit Lakes based Midwest Minnesota Community Development Corporation, or MMCDC, is piloting a new program called the Employer Assisted Housing Fund.
It’s a collaboration between the MMCDC, Greater Minnesota Housing, three large, area employers (Lakeshirts, Arvig and Ecumen), as well as Becker County and the cities of Detroit Lakes, Frazee, Lake Park and Audubon.
The unique combination of private and public entities are coming together to create a fund to help with the two things that are often difficult for first homeowners to come up with — the down payment and the closing costs.
“What prompted us to create a program like this is, you may have a husband and wife who are both working, maybe they’re recent graduates of college or technical college and they haven’t had the opportunity to accumulate cash for a down payment,” said MMCDC President Kevin Shipley, “so where a bank might require 20 percent down on a house, with our lending program here, we’re not going to prevent them from home ownership just because they haven’t had the time to accumulate enough for that down payment.”
Shipley says it doesn’t matter if the potential homeowner secures a first mortgage through MMCDC or their own lender, it all works the same.
Britton Ramsey works in homeownership product development for the MMCDC.
She says this new program is a bit like a la carte, starting with which employer you work for.
“Each employer has agreed to do different things — they’ve chosen how much they can give and what fits in their budget under what terms,” said Ramsey, “and then we come in and match exactly what the employer is doing.”
Once that is figured out, a client can then look to their chosen city to see how much assistance they can get there.
The city of Detroit Lakes is offering a $500 grant to first time home buyers, Frazee is offering a $500 five-year forgivable loan and both Audubon and Lake Park are offering assistance in the form of a $500 tax abatement.
Becker County is also offering an additional $500 tax abatement.
The very large cherry on the top of this is a $2,000 grant from the Greater Minnesota Housing Fund.
“So for instance, if you’re working for Ecumen, you’ll get $3,000 in the form of a forgivable loan ($1,500 from Ecumen and $1,500 from MMCDC), plus your $2,000 grant from Greater Minnesota Housing, so you have $5,000 in down payment assistance,” said Ramsey, “…plus if you’re purchasing in Detroit Lakes, you’ll get an additional $500, and you’ll get a $500 tax abatement from Becker County…totaling $6,000.”
There’s no interest or monthly payment on the loans; it’s just due at the time of sale or maturity.
“So if they sell the home ten years from now, it’ll just come out of their equity at that time,” said Ramsey.
The MMCDC also has funds available to help in home improvement needs.
“Sometimes you get in a situation where a home has been foreclosed on, and sometimes it’s not in the best condition,” said Shipley, “so realizing that, MMCDC has put together a pool of funds to provide home-buyers with money to fix their homes.”
Shipley says a program like this one is unique for this area, but believes all parties involved can benefit from it.
“By providing home ownership opportunities, the cities and counties benefit by increasing the tax value of underdeveloped properties, and the for the employers, homeownership provides for stable employees willing to put some roots down, so it benefits them as well,” said Shipley, adding that the MMCDC is also reaching toward its non-profit goal of helping communities and individuals create wealth.
Applicants must be at 80 percent or less of the county’s median income level in order to qualify.
“And not everybody will qualify,” said Shipley, stating that the MMCDC will be evaluating each case individually and assessing credit history and a participant’s ability to pay their monthly payments.
With so many local entities having “skin in the game”, Shipley says they have a responsibility to make sure the people they are helping are truly ready to own a home.
Anybody taking this assistance will be required to attend home ownership counseling with experts in real estate, tax, insurance and title/closing so that new home owners understand all of the responsibilities that come along with home ownership.
Right now the program is just in its infancy, with Ecumen offering its deal to one employee, Lakeshirts two employees and Arvig 10 employees.
MMCDC has allocated $2 million dollars, including the home improvement dollars, to the pilot program that Shipley believes could last roughly two years, depending on how things roll out.
“But if it’s successful, we believe this could be replicated throughout the state,” he said, adding that they are hoping to expand on the program with more loan offerings and more employers.
For more information, visit the MMCDC website and click on the “Home Loan Division” or call Britton Ramsey at 218-844-7010.