INFORMATION #2 02-05-1996ELK,J IVER HOUSING AND REDEVELOPMENT AUTHORITY
ELK RIVER HRA SEEKS FUNDS FOR HOME MORTGAGES
On January 30, 1996, the Elk River Housing and Redevelopment Authority
(HRA) authorized an application to the Minnesota Housing Finance Agency
(MHFA) for an allocation of mortgage funds as part of MHFA's first time
home buyer program. The program, known as the "Minnesota City
Participation Program" (MCPP) provides a way for local units of government
to access funds for first time home buyers. In the very near future, MHFA
will create a pool of mortgage revenue bonds in the range of $38 to $58
million for this program. The bond proceeds provide below-market interest
rate home mortgages for low- and moderate-income home buyers that are
entering the market for the first time.
The Elk River application requested a maximum allowable allocation of
MCPP mortgage funds. MHFA utihzes a population-based formula to
determine the specific allocation of funds to respective cities. In 1995, Elk
River obtained an allocation of $256,501. This allocation was increased to
$344,981 as of December 31, 1995, which was sufficient to fund 4 (four)home
mortgages for first time buyers.
Under the MCPP, qualifying income and maximum purchase price guidehnes
will apply. Applicants seeking the Elk River MCPP funds can possess an
adjusted gross income of up to $40,800 and qualify for the mortgage funds.
The maximum purchase price for each housing unit acquired through the
'MCPP program is $95,000 (for both new construction and existing housing
stock). Single family detached homes, townhomes, condominiums, and
duplexes (existing only) are eligible housing units under the 1996 MCPP.
The Elk River HRA will rely on four lenders to help originate ioan requests
from first time home buyers. Lenders include First National Mortgage, Heigl
Mortgage, Norwest Mortgage, Inc., and TCF Mortgage Corporation.
Although the 1996 interest rate has not been finalized, the 1995 interest rate
for a 30-year mortgage was 6.5 percent (7.423 percent annual percentage
rate).
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P.O. Box 490 · 13065 Orono Parkway · Elk River, MN 55330-1743 · (612) 441-7420 · Fax: (612) 441-7425
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