A Pennsylvania nonprofit group is offering home loans with 0% interest rates in a “rent-to-own” arrangement to first-time homebuyers and distressed borrowers.
With the new program, Community Clearinghouse Agency Inc. of Lancaster, Pa. is expanding its services from helping abused women and families in need to include mortgage services.
Prospective borrowers locate a single-family property and apply to CCA for the loan. The 501(c)(3) nonprofit acquires the property and allows the borrower to move in, paying off the loan over the course of 12 years.
In the case of an impending foreclosure, borrowers can get CCA funds to reduce, but not necessarily eliminate, their mortgage debt, but the program stipulates that in order for the borrower to receive the funds, the lender must terminate the foreclosure proceedings.
Borrowers must provide a down payment and cover closing costs. The loans are issued based on a borrower’s ability to repay, regardless of credit score.
After covering insurance, taxes and a $100 CCA monthly administrative fee, borrower payments go toward the loan principal. In addition to regularly scheduled monthly payments, CCA requires borrowers to make supplemental payments throughout the year to pay the debt off faster.
The group says its new program will stimulate the economy by promoting home sales activity and lets borrowers own homes faster because more of their monthly payment is paying down loan principal. The program is funded with federal funds, grants, and sponsorships.
