Homeownership is one of the first steps an individual takes on the road to financial stability and independence. Buying a home is also one of the most satisfying things a person can do. A home gives one a chance to put down roots, an opportunity to develop a connection to the community and the ability to make a commitment to a neighborhood, city and state.

The benefits of owning a home are many, but buying one is very expensive. There are closing costs, appraisal fees, and down paymentsnot to mention monthly mortgage notes. Thats one reason why the state partnered with Fannie Mae and Hibernia National Bank to develop the Louisiana Teachers HomeBuyer Program.

The $10 million pilot project gave certified public school teachers home loans with low interest rates, reduced closing and down payment costs, and lower fees including appraisal costs and mortgage insurance. Governor Foster and I joined Fannie Mae and Hibernia to announce the Louisiana Teachers HomeBuyer Program on Tuesday, January 22, and by the end of the week, 84 teachers statewide had applied for the $10 million.

We knew the program would take off, but none of us thought it would be so successful so quickly. The overwhelming response to the program is proof positive that there is a huge demand for affordable housing for our state’s teachers.

The initial program was available on a first-come, first-served basis. Program incentives included access through Hibernia National Bank to Fannie Maes most flexible mortgage products, including mortgages with low down payment requirements of $500 or 1 percent of the purchase price of the home, whichever was less, from the borrowers own funds. Teachers who may not have had an established credit history could benefit from additional flexibilities including the use of a non-traditional credit history.

In addition, the program offered a low basic interest rate of 5.8 percent and reduced rates on mortgage insurance through PMI. When compared to a typical mortgage with a 7 percent interest rate, a teacher choosing the Louisiana Teachers HomeBuyer Program to purchase a $100,000 home would save, on the interest alone, almost $30,000 over the life of the loan. The teacher could also save more than $1,000 on mortgage insurance and $400 on closing costs.

The program is an excellent example of how government and business can work together to develop a terrific incentive for teachers to continue teaching in Louisiana. It was not developed as a substitute for a pay raise by any meansteachers still need and deserve a pay raisebut it was a way for the state to say thank you to the men and women who influence the lives of our young people.

The Treasury will continue to work with Governor Foster as we look for additional funds to expand the Louisiana Teachers HomeBuyer Program. Investing a small portion of retirement system investments or encouraging insurance companies doing business in the state to invest in the program are just two ways expansion is possible. If we can build on the success of this pilot program, we can reach more teachers and other groups including state employees and law enforcement personnel. For more information, visit www.latreasury.com.