New Horizons Lending: Your Path to Becoming a Good Neighbor

The dream of owning a home is within reach for public servants in Texas, thanks to the Good Neighbor Next Door program. At New Horizons Lending, we're committed to helping you navigate this unique opportunity to make homeownership more affordable while revitalizing specific neighborhoods.

In this article, we'll provide you with a comprehensive guide to qualifying for the Good Neighbor Next Door program in Texas, designed for teachers, law enforcement officers, firefighters, and EMTs.

Who Qualifies for the Good Neighbor Next Door Program in Texas?

To be eligible for the Good Neighbor Next Door program, you must meet certain criteria. Here's a breakdown of who qualifies:

Teachers: To qualify, you must be a full-time teacher at a state-accredited public or private pre-kindergarten through 12th-grade school. The home you intend to purchase must be within your school's district. If you teach at a private school, your principal must provide proof that at least one student from the school lives in the neighborhood where you plan to buy the home.

Law Enforcement Officers: Eligibility extends to those working full-time in law enforcement, whether for a federal, state, local, or Indian tribal government. You must have been sworn in and possess the authority to uphold the law. Additionally, you must serve in the locality where you intend to purchase your home.

Firefighters: If you are employed as a full-time firefighter by a fire department within the federal, state, local, or Indian tribal government where you plan to buy a house, you meet the eligibility criteria.

EMTs: Full-time EMTs working for an emergency medical services unit within the locality where you plan to buy a home are eligible. Your employment must be with a federal, state, local, or Indian tribal government agency in that jurisdiction.

Please note that civilian personnel, dispatchers, and volunteers are not eligible for the program.

Additional Eligibility Requirements

Apart from the occupation-specific criteria, several other requirements apply to all participants in the Good Neighbor Next Door program:

1. You cannot have participated in the Next Door Neighbor program previously.
2. While you do not need to be a first-time homebuyer, you must not have purchased or owned a home in the past 12 months.
3. The home you purchase through the program must become your primary residence.
4. You must reside in the home for the next three years and certify your residence annually during this period.

How Does the Good Neighbor Next Door Program Work?

Now that you know who qualifies, let's explore how the Good Neighbor Next Door program operates:

1. Get Preapproved for a Loan: To participate, you must secure two mortgages—one from a lender covering half the home's price (which is offered at a 50% discount), and the other is a "silent" second mortgage that covers the discount. This second mortgage has no interest and requires no payments or mortgage insurance on your part.

Given the seven-day window to bid on HUD-qualifying homes, it's crucial to get preapproved for a mortgage beforehand. While your financing choice is flexible, obtaining an FHA loan from an FHA-approved lender makes you eligible for the $100 down payment. We help you with this part.

2. Work with a HUD-Registered Real Estate Broker: Only HUD-designated brokers can submit bids on your behalf for eligible homes. Find a HUD-registered broker in your area through HUD's online resources or ask us for assistance.

3. Start Your Home Search: Eligible homes are listed online by HUD each week, and you can search based on various criteria, including location, price range, and specific features. These homes are single-family, real-estate owned (REO) properties in HUD-appointed revitalization areas and are sold "as is," so be prepared for potential repairs.

4. Submit Your Bid: When you find a home you're interested in, your broker will submit a bid on your behalf for the full list price. If your bid is selected, HUD applies the 50% discount through a random lottery.

5. Closing on Your Home: You can expect to close on your new home within 30 to 45 days of winning the lottery drawing. If extensive repairs are needed, HUD provides up to six months to complete them before moving in and satisfying the three-year residency requirement.

Good Neighbor Next Door Pros and Cons

Before you decide if the Good Neighbor Next Door program is right for you, consider the following pros and cons:

Pros:

1. You save 50% on the price of a home if you qualify for the program.
2. The program allows you to put as little as $100 down when using an FHA loan, and you can finance the closing costs.
3. Repair costs can be rolled into your mortgage with renovation loans like the FHA 203(k) loan, enabling you to upgrade the home.
4. You can build wealth quickly by becoming a homeowner at a significantly discounted cost.
5. Your participation helps revitalize neighborhoods, potentially improving home values.

Cons:

1. Housing inventory is limited to HUD-owned properties in designated revitalization areas, resulting in a narrow selection.
2. You must act swiftly, as qualifying homes are listed for only seven days before going to the general market at full price.
3. Moving out before the three-year tenure requirement is up can result in a financial penalty, as you may have to repay HUD a prorated balance of your 50% discount.
4. Competition is random, as the buyer is selected by lottery if multiple bids are submitted for a home.
5. Refinancing can be challenging, as it's subject to certain conditions, and HUD won't cover closing costs or broker commissions.

The Good Neighbor Next Door program is a unique opportunity for public servants in Texas to achieve affordable homeownership while contributing to community revitalization.

If you're interested in exploring this program further or have questions about mortgage financing, contact us at New Horizons Lending, and let us help you take the next steps toward becoming a Good Neighbor.