Other Mortgage Programs

In addition to the traditional 30-year and 15-year fixed-rate mortgages, adjustable-rate mortgages, and balloon mortgages, other less common mortgage programs are available. These include state and local subsidy programs, reverse annuity (sometimes known as reverse equity) mortgages, mortgages insured by the Rural Development Service, and biweekly mortgages.

State and Local Housing Finance Authorities

There are thousands of public housing programs developed by state and local governments that promote home ownership. Most of the programs are targeted at:

• First time homebuyers (or homebuyers who have not owned for at least three years)

• Low- and moderate-income homebuyers

• Teachers, policemen, firemen, and other municipal employees

• Neighborhood redevelopment

The programs differ widely from state to state and from county to county. The benefits to a homebuyer may include:

• Lower mortgage rates – ½ percent to 1 percent lower than prevailing market rates

• Tax breaks – For example, first-time homebuyers in Washington, DC, may get a $5,000 tax credit

• Low-cost housing – Teachers and police officers can buy a home for half-price from the FHA in selected neighborhoods.

• Easier qualifying and lower down payments

If you think that you fall into one of these categories, getting your mortgage or your home through one of these programs might mean even greater savings than shopping through normal mortgage channels. Appendix L (Internet Resources) lists the Web site addresses for state housing finance authorities. Many counties also have subsidized housing and subsidized mortgage programs. Call your local government to find out if there is a program that might benefit you. Appendix L also has the Web site addresses for two associations of housing finance authorities.