You want to own a house. You've never owned one before. You've found one you like. It is old and needs work. What's your next step?
Ellen Warren of Jefferson Bank in Philadelphia said lots of people were not sure how to buy a first home. That point was driven home to Jefferson earlier this year by the folks at Philadelphia Architectural Salvage Ltd., a nonprofit outfit that deals in used architectural elements at its warehouse at 26th Street and Girard Avenue in Philadelphia.
The salvage company said "many of their customers were looking for that kind of information," Warren said. Jefferson joined with Philadelphia Architectural Salvage to sponsor two recent evening seminars on the topic.
The response was overwhelming. Sixty-seven people attended the first seminar in Manayunk, 50 went to last week's South Philadelphia session, and 55 people are on a waiting list. For more information, call Jefferson at 667-7950.
CREDIT LINE OR LOAN
According to Scott Megargee, Jefferson's vice president for consumer loans, home buyers who need to arrange financing to restore or rehabilitate a house can either set up a line of credit or obtain a fixed-rate installment loan.
"A line of credit is a good tool for a person who has self-control," he said. If a customer, for example, has a fixed-rate installment loan of $25,000, he or she is required to pay back that amount, with interest, over a certain period. With a line of credit, that $25,000 would be available as long as the customer wanted. That's why credit requirements for the line of credit are much stricter than for an installment loan.
One thing a person with a line of credit can do, Megargee said, is use the credit line during the renovation and later refinance it as a mortgage.
The Federal Housing Administration has a program that combines acquisition and renovation financing into a single loan. This 203K program is not offered at the moment by any area lender, according to Mike Zerega of the Philadelphia office of the Department of Housing and Urban Development, though the Philadelphia Redevelopment Authority is a participant. In fact, lenders were invited Friday to a HUD seminar on the program to drum up interest.
HOW IT WORKS
