In a Nutshell: For many first-time homebuyers, obtaining financing and closing a deal can be daunting experiences. That’s why Liberty Bank of Utah offers a variety of products and services to aid in the buying and financing processes. That includes the Home$tart and NAHI grants that can help reduce the ancillary costs of purchasing a home. The bank also provides a free homebuyer education course and additional guidance on improving credit and obtaining more favorable loan terms.
A single man on a limited income who lived in Section 8 housing longed to buy a home of his own. But he couldn’t afford it without assistance, so he set out in search of financing. The only way he could qualify for a home loan was to buy a duplex, live in one of the units while leasing the other, and use the rent to help pay his mortgage.
After securing financing, his real estate agent helped him find a suitable property and also connected him with a property manager who handled the rental paperwork. In the end, this man became not just a homeowner but also a landlord, earning income from his property investment.
That is just one of the many homebuying success stories facilitated by Liberty Bank of Utah. Buying a home is one of the most significant financial decisions of a person’s life, and it can be an intimidating and confusing experience.
Liberty Bank helps homebuyers better understand the purchasing and financing processes, overcome the financial obstacles that stand in their way, and claim their very own piece of the American dream.
“That’s what we love to do. It’s nice to help people who never thought they could own a house,” said Carole Painter, Mortgage Loan Originator at Liberty Bank.
Liberty Bank specializes in facilitating grants that help homebuyers make down payments and meet closing costs. It also provides personalized mortgage services, including no-cost financial education, credit improvement guidance, and other homebuying advice.
Those services can help people overcome their challenges and achieve the financial and personal stability that homeownership can offer.
Home$tart and NAHI Grants Help Underserved and Credit-Challenged Buyers Achieve Homeownership
One of Liberty Bank’s most popular products is the Home$tart grant, which provides up to $7,500 that can go toward a down payment, closing costs, or home rehabilitation — in the case of fixer-uppers. The grant applies to the purchase of single-family homes, including manufactured homes, townhomes, and condominiums.
A buyer’s household income must be up to 80% of the area median income based on household size, and prospective buyers must have a credit score of 550 or higher to qualify. The purchased home should also serve as the buyer’s primary residence. Applicants complete a free first-time homebuyers educational course, qualify for a mortgage through a lender, and observe a five-year deed restriction.
This restriction stipulates that the buyer must live in the home for at least five years or else refund a portion of the grant money. The amount owed is forgiven if the house is sold at a net loss, if the owner sells it to another low-to-moderate income buyer, or if the home is lost due to foreclosure.
Liberty Bank also offers the Native American Home-ownership Initiative (NAHI) grant, which provides up to $10,000 toward buying a home in 13 states and three territories — all listed on the program’s web page. This grant is available to Native American, Native Alaskan, and Native Hawaiian homebuyers, and, as with the Home$tart grant, the funds must be used to make a down payment, pay closing costs, or go toward rehabilitating the home.
Also, as with the Home$tart grant, the homebuyer’s household income must be up to 80% of the area median income, the home must serve as the buyer’s primary residence, and the buyer must observe a five-year deed restriction. For homebuyers who meet these requirements, the Home$tart and NAHI grants represent a convenient way to reduce the cost of their life-changing purchase.
Educational Resources Teach People How to Save Money and Improve their Financial Standing
Liberty Bank offers free educational resources for first-time homebuyers, but, just as importantly, it helps them better understand the entire homebuying and financing processes.
“Because we’ve been in the business for so long, we try to educate the borrowers on what to look for so that they don’t get taken advantage of,” Painter said.
Because qualifying for a mortgage depends heavily on the applicant’s credit score, Liberty Bank also provides credit education as well as its Rapid Rescore program, which helps homebuyers raise their credit rating to qualify for better loans and lower rates. And the Mortgage Guaranty Insurance Corporation (MGIC) offers first-time homebuyers free online educational resources.
“Sometimes, just by changing your credit score by two points, you can save thousands of dollars on interest rates,” Painter said.
To improve their scores, Painter recommends first-time homebuyers keep low balances on their credit cards. Moreover, using credit and paying it off shows financial responsibility and the capacity to repay debts in a timely fashion, making them a better risk for lenders.
Painter also recommends paying bills in a timely fashion — the sooner, the better, preferably before the due date, but no later than 29 days after the due date. On day 30 of being overdue, the truant payment posts to that consumer’s credit report and lowers their score. Luckily, older incidents — two years or more — carry less weight than more recent truancies, so when looking to buy a home, avoid making any late payments for at least 12 to 24 months.
“We help a lot of the people who only have a 580 credit score. They’re so grateful that they can get into a house,” Painter said. “So many people think that they need 20% down or that they need perfect credit. You really don’t. We can make this work. As long as they don’t have any derogatory credit in the past two years, generally, we can make it work for them.”
Offering Additional Tips and Advice for Homebuyers
One of the most critical steps in buying a home is to have it inspected before purchase. If anything needs to be repaired, replaced, or renovated, a home inspector will spot it, and it is the seller’s responsibility to take care of such tasks before closing. Once the sale is complete, the onus of repairs falls firmly on the buyer.
Another important note when shopping for homes is to keep an open mind and consider all your options. You may have a dream home in mind, but your budget may not accommodate that purchase. Even if the home you can afford doesn’t meet your vision, consider its potential for improvement through renovation and repairs. Also, you may want to take into account the neighborhood and the length of time you’re planning to live in the home.
The latter point is a crucial factor when deciding on a financing option. Conventional loans allow the buyer to drop their mortgage insurance after paying down 20% of the house’s equity, which will save them more money in the long run. This is a good option for anyone planning on living in a home for more than five years. But if you intend to live in a home for fewer than five years, an FHA loan may provide more favorable terms and enable you to save more money.
“If people can’t afford to buy in a preferred neighborhood, but there’s a house in that neighborhood that needs to be fixed up, we can actually do an FHA home improvement loan,” said Henry Palma, Vice President of Residential Mortgage Sales at Liberty Bank. “Included in the loan is money to repair the house, so all the repairs are done in a six-month time frame, there’s instant equity, and it’s all included in one mortgage payment.”
Expertise and Decades of Experience Contribute to Success
When a new mother from California decided to move to Georgia, she faced an uphill battle; state-funded maternity leave had left her without proof of income, making it difficult to obtain a loan. In the end, it was Liberty Bank that helped her fund the home purchase and make her cross-country move.
And when another couple was expecting a baby, they decided to sell their manufactured home and purchase a new home. That’s not an easy situation to navigate under normal circumstances, but one made even more stressful due to the slow progress on their USDA loan. But Liberty Bank helped them through these ups and downs, and their documents were delivered to the title company on the day of closing so they could finalize the purchase before the baby arrived. The new family started their new life together in their new home.
All of these situations, while challenging, are learning experiences — both for homebuyers and for the staff at Liberty Bank. Its team brings that combined experience and knowledge to the table when helping homebuyers achieve funding for their purchases.
“The more people we help, the more we learn,” Painter said.
And the more people know, the easier it is to deal with the confusing and anxiety-inducing process of homebuying. Liberty Bank’s expertise in both buying and lending allows it to transform the process into a positive, educational, and financially empowering experience for its clients.