Like other young couples aboard the interest rate roller coaster, Vernon and Leann Grapes spent the better part of the past five years looking for a house to buy and never quite succeeded.
After their marriage in 1978, the couple lived in two mobile homes, her parents' place and a rented house, all in western Maryland. In November 1981, they moved to a $360-a-month apartment in Laurel. Interest rates put even a no-frills, $50,000 home out of their reach.
Today, though, thanks to a Montgomery County program designed specifically for moderate-income, first-time home buyers, the Grapeses are owners of a $46,900, three-bedroom town house in Silver Spring. Over the past four years, they and 3,500 other families were helped by the Montgomery County Housing Opportunities Commission's offering of mortgages at up to three points below the going interest rate.
In Prince George's County, a housing authroity sale last year of nearly $36 million worth of bonds made mortgages available to several hundred first-time buyers at eight developments, an authority spokeswoman said. The mortgages were issued at a 10.5 percent interest rate.
Later this month, the P.G. agency expects to announce the sale of $28 million in bonds, she said.
"Without the HOC program, we wouldn't have a house today," said Vernon Grapes, 25, a senior technician at an electronics testing firm in Falls Church. "Mongtomery County was on the ball with this one."
"The bonds and the lower mortgages get people into the ownership cycle, the American dream," declared Bernard L. Tetreault, HOC's executive director.
The special mortgages have drawn the praise of developers and home builders, who, despite an unpredictable market, are virtually assured some units will sell if set aside for the HOC program. The mortgages are most popular among prospective home buyers, who flooded HOC with hundreds of telephone inquiries.
Three hundred people a day are calling HOC's mortgage hot line (565-HOME), a HOC spokeswoman said. HOC will mail callers information about the program.
HOC is a public corporation formed in 1966 as a traditional housing authority. It won state approval in 1974 to issue tax exempt bonds to finance the special mortgages. The interest on the Grapeses' mortgage, for example, approved after the sale of bonds earlier this year, is 11 1/4 percent. Last week, HOC announced the sale of $32 million more in bonds to finance 500 mortgages at 10.87 percent, or about three points lower than the regional rate.
While the bonds have been the key to the success of the special mortgages--HOC has sold $300 million worth in nine years--they now also threaten to kill the program this year, HOC officials say.
Because interest on the bonds is exempt from federal and state taxes, governments are losing millions a year in revenues, say Reagan administration officials and other opponents of the program. A newly formed association of housing finance agencies is fighting the administration's proposed legislation to end bonding programs in December.
For the Grapeses, the HOC program means a start to building equity, Vernon Grapes says. At the time he saw a television announcement about the HOC mortgages, the Grapeses were paying $400 a month in rent, he said. "We were just on the verge of being able to buy--and not being able to buy."
Grapes' income qualified the family for an HOC mortgage and the couple closed on a two-level town house in the Stonehedge subdivision on April 30, he said. Principal and interest are $431 a month; property taxes, insurance, fees and other costs bring the total to $517, Grapes said.
"It's just about all we can afford," Grapes said, "and maybe we don't have all the conveniences of a single-family home. But it's a nice place. Overall, I'd say we were very happy."
Area developers also like the program, despite occasional snarls in processing mortgages, they say. "It helps individuals of moderate means to buy their first house," said Stephen Eckert, vice president of Porten-Sullivan Corp. of Bethesda.