Simi Weighs Loan Program to Help First-Time Buyers

Simi Valley renters may have an easier time becoming homeowners under a plan that the City Council will consider tonight.

The proposed First-Time Homebuyer Program would use $400,000 in federal funds and $110,000 in community development agency money to leverage 17 home loans, thus lowering mortgage payments for prospective home buyers by about $130 a month.

City officials said the program would meet a demand by giving low-income families a chance to buy houses.

“There’s always a need to assist individuals to get into their first home,” said Dulce Conde-Sierra, deputy director of housing and special projects for Simi Valley. “Now that interest rates are climbing again, it becomes even more important.”

But Mayor Greg Stratton said helping potential home buyers was not the only idea behind the program.

“It helps real estate sales, too,” he said. “We look at it as an excellent opportunity for getting people who want houses together with houses that need to be sold.”

City staff has recommended that the council allow the city manager to sign an agreement with Pacific Central Mortgage Inc. of Thousand Oaks to implement the program.

Kathy Julian, senior loan consultant at Pacific Central Mortgage, said some low-income families may have trouble saving up the down payment required for a mortgage. She said there are also other programs to assist with down payments.

Julian said she thought that the program’s $150,000 loan limit is enough to cover the cost of a condominium or townhouse in Simi Valley.

Conde-Sierra said the program could begin as soon as late February, after the city receives the $400,000. The loans would then be promoted through local real estate brokers and over public-access cable television stations.

Restrictions on the federal funds require that the prospective home buyers have annual incomes of less than $39,900 for a family of four.

Up to $30,000 would be made available to each low-income home buyer at a 2% interest rate. The rest of the loan would be at market interest rates.

For a $150,000, 30-year mortgage at present rates, the subsidy would bring interest rates down from 9% to 7.77%, city officials said.

The mortgages would have to be insured to protect the city’s investment, they said.

A separate program to provide up to 70 below-market mortgages to one- and two-person households was approved by the City Council in October and awaits state approval of bonds to finance it.

Last week, the Thousand Oaks City Council voted to lobby the state to be allowed to distribute its share of the federal housing money as grants rather than loans. Thousand Oaks officials want to use the money to assist high- and moderate-income residents whose homes were damaged in the Northridge earthquake.