Philip Smith is a physical education teacher in the Buffalo school system -- and a longtime renter.
But he wanted to build some capital, so he started looking to buy a house. “I was a renter for six or seven years, so I was sick and tired of not gaining any equity in my money and just paying my landlord.”
Still, he worried about finding enough money for the down payment and other expenses, like mortgage protection insurance.
Things got easier when he signed up for Five Star Bank’s “Home for You” program. It’s specifically for first-timers and doesn’t require a big down payment.
“I was concerned about putting the 20 percent down, but then I got a mortgage from Five Star that was only 3 percent down and it had no MPI at all,” he said.
Five Star’s program is just one of the options for first-timer buyers here. All of them aim to lower the financial barriers for buyers.
Johnathan Graves is a loan Officer at Five Star. He says the program -- which helped Smith and his wife buy a house in North Buffalo -- has a range of benefits.
“We also give a $3,000 grant that comes right from Five Star Bank for down payment and closing costs," he said. "The program also has an interest rate that is a quarter below whatever the market interest rate is on a day, which is great. Also, we do wave some of the closing cost fees for the program as well.”
Graves says the program has some eligibility limits -- for example, buyers in Erie or Niagara County must have income of about $60,000 or less.
“When you here about all of the pluses about the program and how it can help, people almost think that is too good to be true," Graves said. "You’re never going to repay that $3,000 or anything like that, it’s just a pure grant that you are going to get.”
M&T Bank has a similar program for first-timers. It’s a savings program through the Federal Home Loan Bank of New York. For every dollar saved by a potential home owner in the program, M&T will match it with four dollars.
M&T’s Scott Guthrie says some people might not even try to buy because they’ve heard it’s too hard.
“I think a lot of people who are not homeowners, current homeowners, have this myth that you need a lot of money to put down, you have to have established credit," he said. "And actually that is not really always the case. So what we always like to recommend is anyone who is looking to purchase a house, either today or in the future, is to sit down with a loan officer and go ahead and get pre-approved.”
Guthrie says M&T enrolled 239 area homebuyers into its program last year -- and hundreds more across the state.
M&T also partners with agencies like State Of New York Mortgage Association to provide low interest rates to first-time buyers who have low and moderate income.
And banks work with local housing agencies that cater to these buyers. For example, the agencies offer home buyer education classes that may be required by bank programs.
Five Star’s Graves says these agencies are great for the banks and the community.
“They’re a great resource: Belmont Neighborhood Housing, West Side Neighborhood Housing, Buffalo Urban League, Consumer Credit Counseling of Buffalo," he said. "There are a lot of different places that are out there and we really try to drive a lot of our efforts to them in order to let the community know.”
Spreading the word is especially important among blacks, Latinos and other people of color, says Beverly Robinson-Smith of the Buffalo Urban League.
Census Bureau statistics show that the homeownership rate for whites is double that for people of color. And that can have long-lasting impacts -- like maintaining the gap in building wealth.
“We are doing public service announcements from different radio stations," Robinson-Smith said. "We’ve been interviewed several times, so when people see that they’re like, ‘Oh I didn’t know the Buffalo Urban League did that,’ which is always an issue -- they didn’t know what we did.”
Every month the Urban League holds an orientation to lay out options for people who want to buy a home.
“Our process is to make sure that folks are educated and they are aware of their options available to them,” she said.
For the people still interested, Robinson-Smith has one-on-one credit counseling.
The Urban League also works to ensure that buyers are making enough money to keep up with their mortgage payments.