Citizens South Bank has announced it will use all of its $20.5 million in federal Troubled Assets Relief Program (TARP) money to create a 30-year loan program with a starting interest rate of 3.5 percent to stimulate the housing market.
The loan program has a maximum rate of 5.5 percent and no closing costs.
“Capital Purchase Program funds issued as part of the TARP are intended to stimulate the economy by enabling banks to increase lending, and we are glad to utilize the funds we received under the program as Congress intended,” said Kim S. Price, president and CEO of Citizens South Bank.
“We are participating in the program from a position of financial strength and our new reduced-rate mortgage program represents an expansion of our current lending.”
The new Citizens South program will bring together builders and developers, who are Citizens South customers and have extra housing stock or residential lots ready for sale, with consumers who are looking for the best possible mortgage rate. Participating builders and developers will agree to pay the closing costs on the mortgages as a form of assistance to qualified homebuyers.
“Recent consumer surveys show that lower interest rates provide people with the assistance they need to purchase a home,” Price said. “We believe this program is the best use of our CPP funds because it promotes home ownership and generates work for builders, developers, construction workers and real estate agents.”
While the program sets the interest rate for the first 24 months of the loan at 3.5 percent and adjusts the rate to 5.5 percent at the start of the 25th month, all applicants will be qualified as if they were receiving a 5.5 percent interest rate for the life of the loan.
The bank has branches in Salisbury, Rockwell and Mooresville.