Wednesday, April 16, 2014
For decades, first-time home buyers would look to family for help scrounging up enough money to cover hefty closing costs.
More recently, bridge loans could help buyers come up with thousands of dollars for a down payment.
Now, the Maine State Housing Authority will provide cash to hundreds of home buyers, and possibly boost the overall housing market, too.
On Thursday, the agency launched its ''Gift of Green'' program, which will provide grants of up to $5,000 that first-time home buyers can put toward a down payment, closing costs or escrow funds.
In addition, the program will provide coupons worth up to $500 to pay for energy audits that could reveal ways to cut heating and cooling costs, saving home buyers more money in the long run.
The grants can be used in conjunction with an $8,000 federal tax credit for first-time buyers -- and a buyer in Maine could convert that tax credit into cash toward a down payment under state legislation approved this spring, although details are still being worked out with the Internal Revenue Service.
''A program at MaineHousing hasn't generated this much excitement in a long time,'' said Dale McCormick, authority director.
McCormick said an average of about 2,500 Maine first-timers buy a house every year, although that number is likely down now because of credit-market turmoil and the uncertain economy.
She said about 90 percent of first-time buyers would meet income and other eligibility requirements of the program.
McCormick said the grants will be funded by bonds sold by MaineHousing, not with state tax money.
The bonds are expected to provide enough money for about 500 grants.
The program will end Nov. 30.
Gov. John Baldacci, on hand for the program's announcement Thursday, said it will do more than help first-time buyers.
''So much of our economy is based on housing,'' Baldacci said.
''To stimulate and get activity going in this sector will have a ripple impact'' on the economy as a whole.
Chris Pinkham, president of the Maine Association of Community Banks, said the program can have a ''trickle-up'' effect, boosting the housing market.
Making it easier for first-time buyers to close on a home frees up that home's current owner to buy another home.
That, in turn, allows another homeowner to sell and move, he said.
Pinkham also noted that the economic crisis has led lenders to be much more scrupulous with mortgages.
Although that means an end to some dubious loans, it also makes it hard for even financially sound borrowers to cover down payments and other costs.
So, even with very low mortgage rates and reduced home prices, many first-time buyers need the kind of boost the grants will provide, Pinkham said.
McCormick said the energy audit coupons can help first-time buyers with the long-term costs of homeownership. She suggested a buyer could buy a house with the help of a MaineHousing grant, get money toward a home energy audit, and then use the federal first-time buyers credit to pay for energy improvements.
Those improvements, she added, will probably be eligible for yet another federal tax credit.
Staff Writer Edward D. Murphy can be contacted at 791-6465 or at: