Lots of interest, little follow through in program, which has
$200,000 available to first-time homebuyers
Gilroy – Big interest and little follow-through sums up the state of Gilroy’s Homebuyer Assistance program, which after five months has only connected one family with part of the $200,000 available to first-time buyers.
The low success rate is not for lack of effort on the city’s part, according to Gilroy Housing Planner Regina Brisco.
“We’ve advertised through Realtors, local lenders, and other nonprofit housing agencies,” she said. “There’s interest in the program but I’m not sure why they haven’t followed through.”
The city has received an average of seven or eight calls a week since resuming the program in November, but so far only one family has qualified for assistance.
The program offers 15-year loans ranging from $10,000 for a mobile home up to $50,000 for single-family houses. In the first five years, borrowers will not have to pay any interest on the loan; in the second five years, they only have to pay 5 percent; and in the last five years, they are only required to pay 8 percent.
The program was originally intended to help firefighters, teachers and other city employees buy their first house in Gilroy’s pricey real estate market, but officials have widened the candidate field to all low- and middle-income earners who’ve lived in Gilroy for at least a year. Employees of the city or Gilroy Unified School District do not have to already live in the city, but they must have completed their employment probationary period. The city is offering homebuyer loans to people who earn as much as the county’s moderate income level. In Santa Clara County, that translates to a family of four with an annual income of up to $126,600.
Brisco guessed that some families that expressed interest may have failed to pass the initial round of screening.
Before people can apply for a home loan, they must complete a laundry list of requirements that includes a financial training session. The program is a primer on how lenders review credit scores and how people can improve their scores, how to budget and pay a mortgage on a monthly basis, and how to take advantage of different loan programs.
The pre-screening also includes a credit check.
“A lot of people have credit issues and those could take anywhere from a few months to two years to clear up,” she said.
Others simply don’t earn enough to afford a house in the current market, even with a creative loan package that leverages local and state assistance, according to Edward Moncrief, executive director of Neighborhood Housing Services Silicon Valley. The nonprofit agency has a Homeownership Center that evaluates people’s ability to secure loans and purchase their first home. It not only teaches them how to budget and manage a monthly mortgage, but also provides direct loans and realty services to help secure a first home.
“Gilroy may not have a whole lot of (affordable) units on the market in the first place, so finding the right set of folks to qualify for the right houses at the right time certainly could be a challenge,” Moncrief said. “It’s a shame to see resources go unused.”
The city’s Homebuyer Assistance Program is supported by the city’s Housing Trust Fund, a $3.2-million pool of money earmarked for the construction of affordable housing and other programs that help connect low-income earners with homes.
Brisco urged people to inquire about the program: “As long as the funds are available, people can apply.”
Pre-Loan Workshop
– What: Pre-Loan Workshop for 1st-Time Homebuyers
– When: Saturday, May 20, from 8:30am to 3pm
– Where: Council Chambers, City Hall, 7351 Rosanna St.
To get application guidelines, visit the city’s Web site at www.ci.gilroy.ca.us or call Regina Brisco at 846-0242.
