GARDEN GROVE : City Offers Hand to Home Buyers

Officials extended a helping hand to first-time home buyers by seeking continued participation in a state bond program that uses a federal tax credit to reduce by 20% monthly mortgage payments for some first-time home buyers.

The City Council, acting as the Garden Grove Agency for Community Development, also voted to help low-income, first-time buyers by continuing a plan that limits down payments on their residences to 10% of the purchase price. Down payments are be reduced through the use of second mortgages, which do not need to be repaid until the new owners refinance or sell their property.

Under the tax credit program, the effective monthly payments are reduced by permitting the homeowner to take a 20% federal credit for interest on the note.

A home buyer with a 10.75%, 30-year loan of $130,000, who would ordinarily pay $1,214 monthly for principal and interest, would be able to apply the tax credit savings and reduce the monthly payment to about $990, according to Jennifer Mack, the city’s neighborhood improvement specialist.

Garden Grove, along with five other cities in Orange County--Santa Ana, Anaheim, Buena Park, Irvine and Fullerton--are seeking an allocation of $30 million to participate in the home buyer program through the California Debt Limit Allocation Committee, an organization that issues bonds on behalf of the cities and counties to finance the housing assistance program, Mack said.

Garden Grove is seeking $5 million in credits and has participated in the program in the past.

Buyers seeking the mortgage credit must not have owned a residence for three years. Household income must be below $52,200 for two people or $60,030 for three or more people. The purchase price of a new house must be below $240,030, and for a resale the maximum is $239,760.

Mortgage Credit Certificates are limited and will be offered on a first-come, first-served basis until funds are exhausted, Mack said.

People interested in participating can call the Community Development Department at (714) 741-5115. The certificates probably won’t be available until after the first of the year, however.