Rhode Island is teaming up with a group of private banks to help first-time homebuyers obtain low mortgage rates and improve their access to down payment and closing cost assistance.
The RI AnchorHome program will use up to $60 million in state funds to match mortgages that the banks approve for eligible buyers, state General Treasurer James Diossa said in a Dec. 4 statement. Access to the additional money will enable the banks to offer rates starting at 3.99% on 30-year fixed-rate mortgages. Participating buyers won’t have to get private mortgage insurance.
“RI AnchorHome has all the right components for success: lower monthly costs, closing cost assistance and financial counseling,” Gov. Dan McKee said in the statement. “But its real value comes from helping more Rhode Islanders realize the dream of owning their own home.”
The state’s investment policy allows up to $10 million to be deposited in each bank that takes part in the AnchorHome program, Wil Arboleda, Diossa’s deputy chief of staff, told Homes.com. Navigant Credit Union, Centreville Bank and BankNewport will be the first to participate and receive a total of $30 million in state funds, enough for 70 to 90 home purchases.
The maximum loan amounts homebuyers are eligible for through the program are $525,000 for a single-family house or $575,000 for a two-family. While the 3.99% figure could fluctuate, it will always be well below the average mortgage rate, Arboleda said. The average for a 30-year, fixed-rate mortgage was just above 6% this past week.
The median home sales price in the state for October was $505,000, a 4.1% year-over-year increase, according to the Rhode Island Association of Realtors.
“We believe that homeownership is one of the most meaningful pathways to long-term financial stability and community strength,” Jack Murphy, BankNewport president, said in the statement. “RI AnchorHome embodies that belief by using public resources in an innovative way to help first-time buyers overcome barriers like high upfront costs and mortgage insurance.”