R.I. Housing program helps recent college grads buy their first home

R.I. Housing program helps recent college grads buy their first home

PROVIDENCE – While some college graduates move back home with family or rent an apartment with friends after graduation, state officials want them to consider another option: buying their first home.

Through Rhode Island Housing’s Ocean State Grad Grant program, eligible college graduates can receive a grant of up to $7,000 toward a down payment on a house.

The goal of the program, which began last September, is to “keep our young, fine minds in the state of Rhode Island” and “to attract out-of-staters” who may be looking at Rhode Island as a place to settle, said Peter Pagonis, director of home ownership for Rhode Island Housing.

“One of the largest barriers to home ownership for young people is having money for a down payment,” he told The Valley Breeze & Observer.

Since last fall, 148 grants have been issued, totaling $866,500. The average grant is $5,855, according to Pagonis.

First-time homebuyers who have graduated from an accredited post-secondary institution in the United States and received an associate’s, bachelor’s, master’s, or doctorate degree within 36 months of closing on a mortgage are eligible for the program.

The grant must go through Rhode Island Housing, a privately funded public purpose corporation.

Total annual household income must be less than $89,280 for a one- or two-person household or $104,160 for a three- or more person household, and recipients of the grant can purchase a one-, two-, three-, or four-unit property or a condominium.

Though called a grant, it is listed as a lien on the property. If the borrower lives in the house for five years, he or she will not have to pay anything back, Pagonis said.

The amount of the grant is calculated by multiplying 3.5 percent by the sales price of the home. For a home valued at $200,000, the grant would be $7,000, which is the maximum award.

There are currently no plans to end the program, which is moving at a “very brisk” pace, Pagonis said. “Much quicker than we anticipated.”

Pagonis and Joe Baptista, president of Anchor Financial Mortgage in Pawtucket, one of the 36 participating lenders and mortgage brokers, spoke about the benefits of buying a home versus renting.

People who rent don’t receive any tax advantages nor do they build equity, said Baptista, a Smithfield resident.

He told The Observer last month that his company had given out six or seven grants and was working on a few more.

Baptista purchased his first home in Glocester when he was 23 years old. But, he added, “When you get out of school, you have to be ready to buy a house. It’s not for everybody.”

In Baptista’s opinion, it’s a great time to buy with low interest rates and increasing property values.

For Pagonis, the biggest benefit to buying is that the house is an asset that will appreciate over time.

There’s also pride that comes with owning a home. “You can decorate it and make changes as you wish,” he said. “It’s a place that a lot of people live most of their lives.”

For more information about the program, visit http://loans.rhodeislandhousing.org/GradGrant/ .

This article has been updated to correct an error in the total amount of grant money awarded.

Comments

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