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ADDI
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ADDI Frequently Asked Questions (FAQ) What is the Madison
American Dream Downpayment Initiative? What is the Madison American Dream Downpayment Initiative? The purpose of the Madison American Dream Downpayment Initiative is to increase homeownership opportunities by providing loan assistance to homebuyers for down payment and closing costs. The program is funded by the U.S. Department of Housing and Urban Development (HUD). The homebuyer should contact a lender to initiate the first mortgage application. The homebuyer must inform the lender that they are interested in applying for the Madison American Dream Downpayment funding. If the homebuyer qualifies for the first mortgage loan, the lender will submit the appropriate documentation to the City of Madison Community Development Office. The Community Development Office will contact the homebuyer to begin the Madison American Dream Downpayment loan process. What type of loan will the Madison American Dream Initiative provide? The loan will be a long-term deferred loan. The loan will become a second mortgage on the property. What is the minimum and maximum loan amount? For 2008, the loan assistance will range from a minimum of $1,000 to a maximum of 6% of the purchase price, not to exceed $10,000. Homebuyers can buy a single-family dwelling, a condominium or half of a duplex located within the City of Madison. Is there a maximum home purchase price? For 2008, the U.S. Department of Housing and Urban Development has established the maximum home purchase price as $223,250. Who is eligible for this program? Eligible homebuyers must meet the income guidelines listed below and are defined as one of the following:
Income Guidelines: Gross annual household income may not exceed 80% of the area median income limits as published annually by HUD.
Will I need to pay a portion of the down payment and closing costs? There is no minimum cash down payment requirement. The repayment is due and payable to the City of Madison at the time the property is sold, transferred or ceases to be the primary residence of the family. What is the interest rate on the loan? The interest rate of the loan depends upon the percentage of assistance that is initially provided. The repayment is equal to the amount of Madison American Dream Downpayment funds invested or the percent of appraised value, which the Madison American Dream Downpayment funds represent in the value of the property, whichever amount is greater. Repayment example:
Am I required to have any inspections completed on the property? All properties require a home inspection verifying that the home meets the City of Madison Minimum Housing and Property Maintenance Code and an environmental review performed by Community Development Office staff. All properties built prior to 1978 require a lead paint inspection as well. The Community Development Office contracted inspector will perform all inspections. Am I required to attend homebuyer education training? The homebuyer must complete an approved first-time homebuyer education course or a homebuyer study guide. A training certificate must be submitted to the Community Development Office prior to receiving funding. Homebuyer education courses are offered through:
Can Madison American Dream funding be used with other down payment programs? Combining funds from more than one down payment and closing cost loan program will be allowed; however, the Madison American Dream Downpayment loan must remain the second mortgage. Exceptions will be allowed for the Madison American Dream loan to be the third mortgage in the case of Inclusionary Zoning Units or when used in conjunction with other Community Development Office funds. Where can I get more information on the Madison American Dream Downpayment program? For more information about the Madison American Dream Downpayment program, please contact:
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