Buyers who purchase a foreclosed property may qualify for down payment incentives similar to the First-Time Homeownership Program. The program is not limited to first-time buyers.
Program Overview: The City of Woodbury has made down payment and closing cost assistance loans available to encourage the purchase of foreclosed properties in the City of Woodbury. Current available dollars for loans are based upon the fund balance for any given period.
Loan Amount: The maximum loan amount is $25,000.
Eligible Use of Funds: The loan funds can be used for down payment and closing costs. The borrower cannot receive any portion of these funds as cash.
Interest Rate & Deferred Loan Term: The interest rate is below market rate and will be fixed with percent simple annual interest, with monthly installment payments of interest only. Borrowers aged 65 or older or who are military veterans receive a discounted rate. Payment of principal will be deferred until sale, transfer of title, when the primary mortgage is paid off, or when the property ceases to be owner-occupied. Loan term shall not exceed 30 years.
Loan Security: All loans will be secured by a mortgage in favor of the city. The loan may be secured in a subordinate lien position behind other loans. Applicant will be required to obtain title insurance on this loan for the City of Woodbury.
- Debt-to-Income Ratio: Applicant “debt-to-income” ratio cannot exceed 50 percent.
- Current on Debt Payments: Applicant(s) must be current on any ongoing debt payments.
- Minimum Contribution: There must be a Minimum Contribution of 5 percent of the purchase price paid by or on behalf of the home buyer. Acceptable sources of the Minimum Contribution include: earnest money, buyer funds brought to closing and seller paid closing costs.
- Income Limit: Applicant total gross annual household income shall not exceed $95,000.
- Education: All applicants must have 8 hours pre-purchase education or an online equivalent, as evidenced by an acceptable completion certificate. Applicants may work with eligible counseling agencies that are HUD-approved that have adopted the National I ndustry Standards forHomeownership Education andCounseling. Applicants who have previously completed their pre-purchase education through an approved provider must have a completion certificate that is dated not more than 12 months prior to closing.
- The Woodbury Foreclosure Purchase Program may not be combined with the Woodbury First-Time Homeownership Program.
- Purchase price cannot currently exceed $312,600.
- Single family homes, townhomes, twin homes, or condominiums in the City of Woodbury to be used as the buyer’s principle place of residence.
- Property must be in a foreclosed status, with the Woodbury loan recipient as the first owner-occupant after the foreclosure, OR the property must be in foreclosure prior to the sheriff’s sale.
- The first mortgage must be a prime/A-rated fixed rate mortgage loan.
- Properties may not be within the flood plain as identified by FEMA.
Loan Costs: Washington County Recording fee, title insurance, title company settlement fees, wire transfer fee and prepaid daily interest will be paid by the borrower(s) and may be paid from the Woodbury loan funds. Credit report fee may be paid by the borrower(s) at application. There is a $25 processing fee requested after the loan estimate is provided to the home owner.
Application Process: City of Woodbury is partnering with NeighborWorks Home Partners to process the loan funds. Please click the “Get Started” button to begin the process.
Disbursement Process: After receiving the application and all of the documentation listed on the A, the following procedures shall apply:
- If the application meets the program requirements, Woodbury will send a check (not to exceed $25,000) and the Woodbury loan documents to the loan closing or title insurance company prior to the loan closing.
- The purchaser must sign the deferred loan note and mortgage at the loan closing. The loan closing or title insurance company conducting the loan closing will be responsible for recording the mortgage. Documentation of the recording must be sent to Woodbury. The purchaser will pay the filing fee.
- After the loan closing, the title company must provide Woodbury with the original signed Woodbury loan documents including the Note and Closing Disclosure, the City of Woodbury Title Insurance Policy, and a copy of the first mortgage executed Closing Disclosure.
What do I need to get started?
Your loan officer will submit your application for you. Please let your loan officer know you are interested in the Woodbury Foreclosure Purchase Program.
Once your application has been received, your loan officer will contact you for any additional documents we need.