The Fund Finder News
Public Safety Grants Consulting
The Fund Finder News
A Bi-Weekly Grants News and Information Update By Kurt Bradley
Issue 42, Nov. 18, 2005
"Own a Home with the HUD Good Neighbor Next Door Program"
Note: This program was previously known as the "Officer Next Door" program.
With home prices going up, how can fulltime but underpaid cops, firefighters and EMTs possibly become homeowners? The federal government has a program that can make a home a reality for you and your family.
Any fulltime public safety officer, especially one raising a family, knows only too well that sometimes we live from paycheck to paycheck. The thought of coming up with a $10,000 or $20,000 down payment for a home, and living with $2000-a-month mortgage payments is, in most cases, a pipedream we will never realize. Well brother and sisters, let me tell you about something that may literally change you and your family's lives a whole lot.
Public Servants Can Escape Renting
If you never thought you would escape from the monthly rent payments or never being able to afford to own your own home, on that meager public servants wages, you are about to be enlightened so, read closely and pay attention here! This is an absolutely fantastic opportunity for many of you.
When I formerly dealt with the Housing and Urban Development grant programs, I was aware of a program called the HUD Good Neighbor Next Door Program (formerly known as the "Officer Next Door" program). It only applied to law enforcement officers at the time, and we always complained that firefighters and EMTs were also in the same "public servant" category and should be allowed into the program. They finally listened, and now this new program is open to any fulltime firefighter, law enforcement officer or EMT. Keep reading.
What Is It?
The U. S. Department of Housing and Urban Development (HUD) wants to make American communities stronger and to build a safer nation. Public safety improves when law enforcement officers, firefighters and emergency medical technicians live in a neighborhood and can better contribute their expertise and knowledge to the betterment of the community. The HUD Good Neighbor Next Door Program helps make this goal a reality, by making homeownership faster and more affordable for any fulltime law enforcement officer, firefighter or EMT.
Who Can Participate?
In order to be eligible, you must be
"employed as a full-time law enforcement officer, firefighter or EMT by a police, sheriff, fire department or emergency medical services responder unit of the federal government, a state, a unit of general local government, or an Indian tribal government serving the area where the home is located. The employment requirement must be satisfied both at the time when you submit a bid to purchase the home, and at the time of closing on the purchase of the home."
Your employer must certify that you are a full-time law enforcement, firefighter or emergency medical technician as described here. You must meet this employment requirement "both at the time the firefighter or emergency medical technician submits a bid to purchase the home, and at the time of closing on the purchase of the home."
You don't have to be a first-time homebuyer to participate. However, you cannot own any other home at the time you close on your "future" home. You must agree to live in the home you purchase as your only residence for three years after you move into it. In all other respects, the regulations for the Officer Next Door Sales program, 24 CFR 291.500, will be applicable to sales of homes to firefighters and emergency medical technicians.
How Do I Participate?
Available, eligible properties are listed and sold exclusively over the internet. Properties are single-family homes located in Revitalization Areas. Properties available through the program are marked with a special button in the listing online, that shows them as eligible under one of the "Next Door" programs.
Bids are awarded once each week. Your bid must be for the amount of the list price. You may submit your bid directly or utilize the services of a real estate broker. Winning bids are randomly selected by computer. The winning bid is posted each week on the web site where you made your bid.
In all cases, HUD requires that you sign a second mortgage and note for the discount amount. No interest or payments are required on this "silent second" provided that you fulfill the three-year occupancy requirement.
What that means is this: if the home is listed at $100,000, you would be given a first mortgage of $50,000. A second mortgage note of $50,000 would also be issued. Normally the second mortgage would mean that you had an additional payment due every month. Since a normal second mortgage is always at a higher interest rate, it would be more than your first mortgage loan but, (and here's the good part) since this is a "silent second," no payments are made on it as long as you abide by HUD's rules.
Additionally, if you actually stay in the home for three years, they "forgive" the second and mortgage and, miracle of miracles, you have just doubled your investment money in 3 years. Now, couple that with three years of property appreciation, and you have probably made 125% return on your investment!
What are the Benefits?
The selected bidder may purchase the property at a 50% discount from the list price. Was that house you saw in the HUD listings going for $100,000? A fulltime public safety officer such as yourself would be able to buy it for $50,000.
To make a HUD home even more affordable, you also may apply for an FHA-insured mortgage with a down payment of only $100. You are even allowed to finance all the closing costs.
If the home you want to purchase needs repairs, you may use FHA's 203(k) mortgage program. This program allows you to finance both the purchase of the home and the cost of needed repairs. This gives you the benefit of one loan for both costs and one monthly payment. Discuss these financing options with your lender.
Because homes sold through this program are located in Revitalization Areas, there may be additional assistance from state or local government sources. Local or state governments want to encourage families and businesses to move into Revitalization Area neighborhoods. Contact your state government housing office or local municipal government and request information on assistance for homebuyers.
This is a wonderful program that is a huge benefit to fulltime law enforcement, fire and emergency medical workers. It has helped many of these folks stop renting and become homeowners. Get sure to check it out yourself: HUD Good Neighbor Next Door Program. For more information, contact your local HUD Homeownership Center or call (800) 569-4287. I can also help guide you through this process.
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