First-time homebuyers are playing a major role on the federal government's efforts to reduce the number of foreclosure properties across the country and prevent them from becoming blights to neighborhoods.
In Missouri, the Housing Development Commission is administering the Neighborhood Stabilization Program (NSP) which is designed to help residents with moderate income purchase foreclosed homes for sale.
The program helps by subsidizing about 20 percent of the foreclosed home's sale price or about $14,999, whichever is the higher.
Nationwide, the increase in home sales in some areas is attributed to the growing number of first-time buyers who take advantage of the federal funds to purchase their own homes.
In Missouri, prospective buyers are required to undergo training, which includes home buying and home ownership classes from developing a household budget and financial plan to dealing with lenders. Completing the training is mandatory for all prospective buyers if they want to qualify for the incentive program.
In Cape Girardeau, the home buying and home ownership training is provided by 4-Sight Counseling, a housing resource agency approved by the U.S. Department of Housing and Urban Development (HUD), twice a month.
Housing counselor Audrey Franklin explains that the Home Ownership Workshop also addresses homeowners' short-term goals such as how to handle and overcome their debts which may lead towards the fulfillment of their long-term goal which is to purchase a home.
Industry experts clarify that NSP federal funds are not a loan. But the program creates a responsibility for buyers because they have to live in the properties that they have purchased for at least five years before their debt is forgiven. In the event that buyers sell or move out of the house, they are required to repay the prorated amount of the loan.
Experts said that encouraging people to purchase foreclosure houses can boost property values by having someone occupy vacant properties. Additionally, the federal initiative also supports families by providing them an opportunity to purchase and live in affordable houses.
They said that combining the federal tax credit of $8,000 and NSP funds allows first-time buyers to receive as much as $23,000 for the purchase of a foreclose house.
The home buying program is available to families and individuals earning less than 120 percent of the area's median household income. The annual income limit in Cape Girardeau County is $54,314, based on the estimated median income of $45,262 in 2007.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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