By Brad Hicks
As he tours the state to discuss the resources his agency makes available to Tennesseans, Ralph Perrey said many are surprised to learn that homeownership is within their reach.
Perrey, executive director of the Tennessee Housing Development Agency, recently visited the area, stopping by The Erwin Record office on May 17, to get the word out about assistance offered through the TDHA for first-time homebuyers.
“We’re looking forward to doing a little bit more business up here,” Perrey said. “We’ve got good lenders. This is just such a nice area. People want to live here. People who live here, at some point, start looking around and thinking, ‘I’d like to buy a house here.’
“If they’re a first-time homebuyer and they meet our criteria, we’ve got a product that can really help them.”
That product, Perrey said, is the THDA’s Great Choice Home Loans program.
“I tell people we call the product Great Choice, but for an awful lot of first-time homebuyers at moderate-, middle-income it really is,” Perrey said. “We have been very pleased that many more East Tennessee families have been able to take advantage of what we offer.”
A first-time homebuyer is defined as one who has not owned his or her property in the past three years. However, the first-time homebuyer requirement to qualify for the Great Choice program has been waived for Unicoi County, Perrey said.
Through the Great Choice Home Loan program, monthly payments are spread out over a 30-year term. The program offers a fixed interest rate, meaning the rate will not change throughout the life of the loan. The THDA’s rate currently sits at 4.625 percent.
“What we can help you with is a competitive rate on a 30-year, fixed rate, no gimmick mortgage,” Perrey said, “and we have some credit flexibilities and we can help you with a down payment.”
Information on the program, including what is needed to qualify for a Great Choice mortgage and financial assistance offered through the program, may be found at www.greatchoicetn.com. Once there, those interested in the Great Choice program can click on the “Homebuyers” tab at the top of the page to learn more about it.
In Unicoi County, a one to two person household can make as much as $68,760 per year and qualify for the Great Choice Home Loan program. Households of three or more have an annual income limit of $80,220.
“This is something that continues to surprise people,” Perrey said. “A single person here in Unicoi County can be making as much as $67,000 a year and qualify for our financing. A larger family can be earning $75,000, $76,000 and qualify for our financing. Because we do so many different things in housing and we do help a lot of low-income Tennesseans, some people just naturally assume, ‘You only help poor people. I thought I made too much money to take advantage of your financing.’”
The maximum purchase price buyers may pay for a home and still qualify for the program varies by county. In Unicoi County, the maximum purchase price is $300,000.
A lack of money saved to cover the down payment and closing costs seems to be the biggest impediment to homeownership, Perrey said. But, Perrey said, those who qualify for the THDA’s Great Choice Home Loan program have the option of financial assistance with their down payment and/or closing costs.
“So they can take advantage of our program and we’ll help them with 5 percent of the purchase price as a down payment,” Perrey said. “If somebody’s buying a $150,000 home, that means we’ll help them with $7,500 toward their down payment and closing costs. That’s often what puts them over the top. That gives them the ability to purchase that home.”
As for credit flexibility offered through the program, Perrey said those with a credit score of at least 640 may qualify. Conventional lenders, he said, prefer scores of more than 700. And Perrey said while conventional lenders may work with those possessing scores below this range, the potential homebuyer won’t receive the advertised rate.
Perry said the buyer’s debt-to-income ratio must be below 45 percent to qualify for Great Choice.
The Great Choice website also provides a list of lenders in the area who offer the THDA program, as well as a list of homebuyer education counselors who can get new homebuyers started and provide tips on the process. Perrey said the THDA encourages this counseling, much of which can be completed online, as it helps people line up their finances, improve their credit scores, and have a better understanding of the home buying process.
“This is the biggest investment most people ever make,” Perrey said. “You can be kind of anxious about what you’re getting into. The counseling really helps you understand what you’re getting into, feel better about it, and be better prepared for it because, for us, this has always been more than just, ‘Can we sell a house? Can we book a mortgage?’ It’s, ‘We’re helping somebody take their first step into homeownership.’ We want them to succeed. We want that to be a building block for their future and their family.”
Perrey said when he became THDA executive director a little more than four years ago, East Tennessee represented about 22 percent of the agency’s business. To improve this number, the THDA based staff in East Tennessee and began an “aggressive program” of community outreach, consumer-targeted marketing, and engagement with lender partners, Perrey said.
“I think that’s how you build your business – strong relationships with your industry partners and making sure that the people you want to serve know you’ve got the product and how it works and how it can help them out,” he said. “And, certainly, the numbers hear it out. The better job that we have done getting the word out, the stronger our business volume has become. That, in turn, lets us turn around and do more things to support housing opportunity in Tennessee.”
And the tours have proven effective. Since Perrey took over as THDA executive director, the THDA has realized a 42 percent increase in loan volume in East Tennessee. Perrey said East Tennessee now represents 36 percent of the THDA’s total loan business, adding this is now a considerable percentage of a “much bigger pot,” as the THDA’s overall business has grown by more than 30 percent over the past few years.
“So that’s a real encouraging trend for us, and we just find the more we get around, the more we talk to people, the more folks wake up and realize, ‘You know, we’ve been thinking about buying a home. We thought that opportunity might be two to three years away from us but, really, this might be something we can do right now,’” Perrey said.