The Simi Valley City Council has voted to expand its low-interest loan program for first-time home buyers with the condition that Pacific Central Mortage Inc., which underwrites the program, does a better job of promoting it.
Under the plan approved by the council Monday, the city will issue $12 million in tax-exempt municipal bonds to cover about 100 loans that would be made available from 1992 through 1994, said Deputy City Manager Jay Corey. The maximum household income for participants buying new homes will be $51,980, and for families buying older homes, it will be $45,200, Corey said.
The interest rates for the 30-year fixed-rate mortgages will be 8.25%, which is below the current market rate of about 10.5%.
Borrowers could use the money to buy new homes with a maximum purchase price of $225,000 or resold homes with a maximum price of $184,400, according to the program’s guidelines. Although the program is geared to first-time home buyers, those who have not owned homes in the past three years would also be eligible to apply for the loans, Corey said.
The program began in September, 1989, when the council issued $15 million in bond money to be used for 125 loans through 1992. The only difference was that the 30-year loans issued under that program had interest rates of 8.45%, city officials said.
To date, 28 families have bought homes or are in escrow through the program, and an additional 60 have pre-qualified for the low-interest loans, Corey said.
Council members Ann Rock and Bill Davis, who also sits on the city’s affordable housing subcommittee, said that although the council was strongly in favor of continuing the program, they were concerned that many realty agents and residents are still not aware it exists.
“The biggest problem we’ve had is getting out the word to the real estate community,” Rock said.
As a result, the council required that Pacific Central Mortgage come up with a promotional plan for the program as a condition to continuing it.
Under a new marketing plan, the mortgage company has agreed to hold a minimum of six annual seminars for real estate agents and potential home buyers to inform them of the low-interest loan program. In addition, the company will regularly take out ads in local newspapers and mail flyers to apartment residents with information about how they can apply for loans.