Jackson Free Press

Jasmine Brooks, a special education major at Jackson State University, wants to buy a home in the west Jackson area. Her goal, she says, is to create a community of young professionals in west Jackson. The 23-year-old Illinois transplant believes west Jackson is a viable investment for her.

Certainly, reasons to live in Jackson abound. It offers a short commute for people who work in the city (which means fewer trips to the gas station to fill up), a multitude of restaurants, convenient shopping and plenty of entertainment. And choosing to live inside the city limits brings needed tax base into the city.

Now, Bo Smith of Cornerstone Home Lending Inc. is giving prospective home buyers two more reasons to make Jackson home, in the form of a FHA 203(k) Buy and Repair Mortgage and the Homebuyer's Assistance Program—a loan option Brooks is looking into. Someone like Brooks who has dreamed of renovating an older home may find that his or her dream is within reach. The loan, which has been around since 1978, was designed to help people renovate existing homes regardless of distressed condition.

Smith thinks the 203(k) loan is a great tool for revitalizing vacant homes in this area and attracting young professionals who will want to stay in Jackson. "We're trying to create healthy neighborhoods," he says.

The loan is a mortgage that allows home-buyers to roll major repair and upgrade costs into the mortgage itself. Currently, the interest rate for a 203(k) is less than 5 percent; and 30-year fixed-rate mortgages are available. Smith says this type of loan typically closes in about 45 days, and construction on the property can begin the day of closing. Home-buyers may choose their own contractors.

An approved consultant will conduct a feasibility study to determine if improvements can be justified upon completion of renovations. The consultant then monitors the progress of the construction and performs a final inspection upon completion of the work. The presence of the consultant protects the buyer by ensuring transparency and providing oversight of the project.

This type of loan has a $5,000 minimum requirement for eligible improvements on the property's existing structures. The list of ineligible improvements is short and includes installation of saunas, exterior hot tubs, swimming pools and satellite dishes. The list of eligible items is considerably longer: structural repairs, such as the addition of another bathroom; kitchen and bath remodeling; new exterior siding; repair or replacement of plumbing, heating, cooling, and electrical; and addition of accessibility for a person with a disability.

Loan applicants must have a credit score of 640 or greater, but there is no income or asset requirement. The maximum loan amount is generous: $271,050. Commercial property can be converted to residential under a 203(k). It's a versatile loan for revitalizing neighborhoods and repurposing vacant commercial buildings. Eligible properties are one- to four-family dwellings that have been completed for a minimum of one year. Even properties that have been demolished are 203(k) eligible, as long as a portion of the existing foundation remains. A home can be refinanced using a 203(k) loan as well.

Smith is also a participant in the Jackson Home-buyer Assistance Program, which is available to those who meet certain income requirements. The program helps qualified borrowers get a home loan by providing up to $14,999 toward expenses such as a down payment and closing costs. The program comes with some stipulations. Applicants must finance a home within Jackson city limits, be a first-time home-buyer or not have owned a home in the past three years. Their income cannot exceed a certain amount per family size, and they must occupy the property as their primary residence. Homebuyers must also complete an approved Home Ownership Training Program. The money can be used along with a 203(k) mortgage to renovate an older home. As an advocate of marketing sustainably, Smith combines the 203(k) he services with energy-efficient vendors.

Smith has allied with Kimberly Hilliard, director of the Center for University Development, to revitalize neighborhoods in west Jackson off the JSU corridor. Smith cites properties that can be purchased for as little as $10,000 to $15,000 in this area—houses that range from 2,000 to 4,000 square feet. He refers to this area as "acres of diamonds."

If your interest is piqued, log on to Bo Smith's website at BoKnowsMortgages.com for additional information. Extensive information regarding incentives for investing in up and coming neighborhoods can also be found at the City of Jackson's website under Office of Housing and Community Development (http://www.jacksonms.gov/government/planning/communityservices). The U.S. Department of Housing and Urban Development offers additional information on the 203(k) loan at http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm.

Attend an FHA 203(k) Loan Seminar Saturday, Nov. 13 at 9:30 a.m. at Koinonia Coffee House (136 Adams St.). Learn how an FHA 203(k) can help you rehabilitate a home or make it more energy efficient. The event includes a trolley ride through west Jackson. Attendees will be entered in a drawing for a chance to win dinner for two. Call 601-979-2255 for information.