HUD loans easier to qualify for in county

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— It just became easier to use federally backed loans to purchase attainable homes in Routt County -- a lot easier.

The U.S. Department of Housing and Urban Development has revised its requirements for families seeking to qualify for low-down-payment mortgages. The changes bring federal guidelines closer to the reality of the housing market, said Elizabeth Black, executive director of the Yampa Valley Housing Authority.

"This means we're going to widen our client base," Black said.

The changes bumped the maximum mortgage limit in Routt County by 47.4 percent, from $205,200 to $302,500. That change greatly expands the range of housing units that can be purchased with a federal loan. It also increases the financial leverage that previous homeowners can bring to bear as they encounter the higher cost of housing here.

The increment of the adjustment highlights how long overdue it was, Black added.

The 2002 median price for a single-family home in Steamboat Springs was $362,000, according to the Colorado Division of Housing. The Steamboat Springs Board of Realtors reported in 2004 that the median price of a three-bedroom home was close to $390,000.

The upward revision in the maximum HUD mortgage limit will be particularly helpful for homebuyers who previously owned a home in another, less expensive real estate market and are attempting to use their equity to move up to a home here, Black said.

For purposes of discussion, she said, consider a family with $100,000 of home equity trying to purchase a home in Routt County valued at $400,000.

Under the previous HUD guidelines, they would have been able to borrow no more than $205,000 through the federal loan program. Even with $100,000 in equity, they still would need to bring another $95,000 in cash to the purchase. The new $302,500 mortgage limit effectively would bridge that gap in this example.

"At the old limit, more cash would have to come to the closing table," Black said. "As many residents know, working families often just don't have that cash."

Interest rates on HUD loans range from 1 percent to 6 percent, Black said.

Black said she contacted the Denver HUD office after attending a Mountain Housing Coalition Meeting where she learned that other Colorado ski counties had more up-to-date mortgage limits. Coincidentally, HUD was just releasing new figures for Routt County.

The revisions were based on real estate sales data that verified the increasing cost of real estate here.

HUD has raised the median family income. For example, income for a household of four has increased from $67,400 to $72,700. Median income rules also have been revised for other types of families. The median family income serves as the basis for establishing affordable housing guidelines. The upward adjustment will result in more households becoming eligible for HUD loans, Black said.

People applying for HUD loans still must demonstrate that they have good credit records. The YVHA will help people with rough edges on their credit ratings to rectify the situation in an effort to qualify them for mortgages.

Area housing officials agree the HUD changes will make it easier to match families with houses as a pair of self-help housing projects set to break ground in Routt County this year.

"This change will make a big difference for qualifying families in future self-help projects like those in Oak Creek and Hayden, which will begin construction this spring," said Heidi Nunnikhoven, program director for the USDA Rural Development self-help program. "This is just great news. It will make a big difference with their financing."

Black said Routt County continues to have challenges in the area of affordable housing, but the new HUD guidelines will do more to address them.

"This doesn't by any means solve our problem," she said. "We still have a huge demand for low and moderate incoming and working family housing."

-- To reach Tom Ross call 871-4205

or e-mail tross@steamboatpilot.com

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