A Q&A about buying an NSP house
Who can buy a house through the Neighborhood Stabilization Program?
You must meet several requirements before you can qualify to take part in the NSP: First, your income has to fall below a certain threshold. This income ceiling depends on the number of people living in your household. For a family of four, for instance, the household income has to be less than $90,100.
You do not have to be a first-time homebuyer. However you must contribute a down payment of $1,000 or 1 percent of the home’s purchase price (whichever is greater).
You have to be able to get a 30-year “fixed rate” mortgage from a participating NSP lender as well as attend 8 hours of housing counseling.
And you cannot owe money to the City of Chicago.
This is only a partial list of requirements. For a full list, visit www.chicagonsp.org .
Q: Can I buy a house through the Neighborhood Stabilization Program and then flip it?
A: No - The new home must be owner-occupied and there are restrictions on selling it within a certain period of time after buying it. Also the idea of flipping houses goes against the spirit of the program, which is meant to help stabilize neighborhoods by making it easier for people in the middle class to invest in homes over a length of time.
Q: What will I learn in the required housing counseling class for NSP homeowners?
Crystal Kimbrough is the first NSP homebuyer in the Chicago area. She says the class “teaches you how to be a savvy homebuyer as well as how to manage your home.”
“You learn the contract process, the inspection process,” she said. “When you’re buying a home you want to make sure you have it inspected. Don’t just move in and not have it inspected. You also learn about insurance and tying your insurance into your mortgage because you have to have your home insured and you want to tie all those costs in together.”
Kimbrough took the class twice because of a rule that says you have to purchase the property within a year after taking the class. She doesn’t regret taking the class two times but understands other people might not feel the same way.
“And then - most importantly – [the class taught me about] being financially savvy,” Kimbrough says. This means that even though you just purchased a brand new home and may want to fill it up with new furniture to match, you don’t, because you likely won’t be able to afford it. “Take your time,” Kimbrough said. “This home deserves a beautiful décor. I’m not going to rush and buy the first furniture I see.”
“Be humble and be patient and purchase it when you can afford it. You know? Don’t go out and acquire new debt. That’s very important.”
And the number one thing Kimbrough learned in the class was to “Get an inspection! You don’t know what’s hidden in these homes. It could devastate you financially.”
How long will it take from the time I sign up until the time I’m in an NSP house?
It depends. For Kimbrough, the process – from finding a house to financing the house to moving in - took more than a year to complete.
Was there an excessive amount of paperwork to buy a home through the NSP?
Rose Hughes, Kimbrough’s realtor, says, “You know when you’re working with the government you gotta do extra paperwork. It’s red tape, so get used to it. If you want to get something, you gotta deal with the red tape. Just mentally be prepared.”
Kimbrough says homeowners need to persevere. “Hang in there,” she says. “They were asking for information constantly, constantly. It was like every day: I think we’re here. Then: You need this, you need that. Because they’re dealing with the Department of Housing and Urban Development, a federally-funded program, they’re going to require documentation above and beyond what your lender is requiring for documentation.”
“It was like I was faxing things in daily,” Kimbrough says. “I was not sure what kind of loan I was going to get in the beginning. Later when we realized it was going to be an FHA loan – they needed an FHA certificate and an amendatory form, signed, a waiver of some sorts.”
You might be surprised at how personal some of the paperwork is. Married or divorced? “Your marital situation matters. Bank statements, check stubs, tax returns.” All of these things are among the paperwork that Kimbrough had to turn in.
Kimbrough says: “Just look at the goal, because if it’s something that you want, it’s going to work out in the end.”
Hughes: “You have to provide them whatever it is they ask for. And they do ask for a lot.”
Kimbrough: “And if they ask for it again, you have to do it again.”
What things should I take note of when touring an NSP property?
Everything. Note the square footage of the interior, as well as the property. Note the type of heating and cooling the house uses, the age of the property, everything.
And branch out. When she was looking for a house to buy, Kimbrough went to all the neighborhoods where there are NSP homes until she found the one she liked.
What’s something people always forget to ask about?
Hughes: “A lot of time people neglect the lights.” Take the time to learn where all the switches are, Hughes says.
Would you recommend that a friend buy a home through the NSP if they qualified?
Hughes: Absolutely. “You’re putting a little bit of your money down but really it’s getting you whatever help you need to be subsidized for your situation.”
What if I don’t want a home in Chicago? Does the NSP operate in other parts of the region as well?
Hughes: “In our local area it’s in Cook County, Chicago, Cicero has one. DuPage County has a program. Some of the things are dissimilar about what the requirements are. So if you’re gonna go to DuPage they might have a different down payment requirement but pretty much most of the guidelines are in check with each other. You want to make sure you find out what the details are though.”
What advice would you give to potential homebuyers?
Kimbrough: “Go to the NSP website. Take the home-buying class. It takes about a month – one class per week for four weeks. Pursue it. Fill out the application. It’s very much worth it. The NSP process takes away certain obstacles by providing subsidies and home-buying assistance for the middle class.”
“You have to make sure everything is transparent. When I thought I was finished faxing everything in I had to fax more in. Whatever they ask you for, just provide it. There’s nothing to hide. Just go along with the program. And keep every document, every e-mail in the event that somebody needs something.”
If I’ve read through everything and still have questions, who should I call?
Cardigan Shipman is the home buyer facilitator at Mercy Portfolio Services. He can be reached at email@example.com or 312-447-4500.
Kimbrough said, “The NSP was very responsive. Cardigan Shipman was great. And when Cardigan went on vacation, Mr. William Towns was excellent with communication and follow-through.”
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