The MIT Faculty Housing Assistance Program (FHAP) has been established to support newly hired junior and senior faculty as well as recently tenured faculty in purchasing a primary residence in the local housing market.
About the program
The program is available to newly hired junior and senior faculty up to four (4) years from their hire date and newly tenured senior faculty up to four (4) years from their tenure date.
Note: Since the primary motivation for the FHAP is to help compensate for the high cost of housing in the Metro Boston area, in future years the program may be altered on a going forward basis in any and all respects or may be terminated entirely depending on changes in the local housing market. The terms of any then outstanding loans, however, would continue to be governed by their existing loan documents.
Prior to starting a home search, it is advisable to contact Christine Holland in the Faculty Relocation Office at 617-253-4249 or firstname.lastname@example.org, for more detailed information about the program.
The application process begins once the faculty member has a signed Offer to Purchase. It is important to notify the Faculty Relocation Office as soon as an offer is accepted on a property.
It is, however, recommended that the faculty member contact the Faculty Relocation Office prior to starting a real estate search, as it is important to have a full understanding of the details of the Faculty Housing Assistance Program.
Yes. The Faculty Housing Assistance Program (FHAP) is a second mortgage program only.
There is no requirement to use a specific first mortgage lender. However, there are many first mortgage lenders that are unable to work with the MIT mortgage program in the current lending climate.
The Faculty Relocation Office has a list of the first mortgage lenders who are able to work with the MIT mortgage program.
A down payment of at least 10% is required. Therefore, the combined value of the first and second mortgages on a property cannot be more than 90% of the total value.
If a No-interest, Fully Amortizing Loan (NIFAL) is used, MIT will consider the funds from the NIFAL as part of the 10% requirement. However, most first mortgage lenders will require a percentage of cash funds from the faculty member, in addition to the funds from the NIFAL, even if the NIFAL funds equal the full 10% of the purchase price.
The faculty member is responsible for the cost of the appraisal, recording fees, lenders title insurance, and prepaid interest, if applicable.
MIT will bear the cost for MIT’s attorney to represent MIT’s interests at the closing.
Yes, the No-interest, Fully Amortizing Loan (NIFAL) funds can be advanced for the 5% deposit that is usually required at the signing of the Purchase & Sales Agreement. Any NIFAL funds remaining will be funded at the closing.
The AFR can be found at https://www.irs.gov/applicable-federal-rates. The Annual Long-Term Rate is used for the CIM and the Annual Mid Term Rate is used for the No-interest, Fully Amortizing Loan (NIFAL).
There are several monthly payment options for the Contingent Interest Mortgage (CIM) program.
Junior faculty may choose to pay $1.00, ½ interest or full interest.
Senior faculty may choose to pay ½ interest or full interest.
The monthly payment option can be changed at any time. The change will take affect on the last day of the month the change was made.
Opting to pay full interest may result in an overpayment of interest. If this is the case, any overpayment of interest will be deducted from the principal at the time of payoff.
In most cases, yes. In the tax year interest payments are made, a 1098 Mortgage Interest Paid Tax Form will be issued for the amount of mortgage interest paid in that tax year.
Any deferred interest, either fixed or contingent, is not tax-deductible until the tax year it is actually paid.
No, there is only one Contingent Interest Mortgage (CIM) per property.
Transferring ownership of your home while still holding your MIT Contingent Interest Mortgage (CIM), without notification and approval of MIT, is prohibited. Any proposed transfer of ownership should be discussed with MIT. For example, putting your home in a revocable trust for estate planning purposes needs to be discussed and approved by MIT prior to transferring the home to the trust.
The mortgage can be “paid in full” at any time. There is no penalty.
The value of the property is determined by the sales price or the appraised value determined by a certified appraiser approved by MIT at the time of the payoff, which ever is greater.
The faculty member is responsible for the cost of an appraisal and the recording fee to record the Discharge.
Capital Improvements are taken into consideration when calculating the annual appreciation of the property. The value of the capital improvements is determined using a 20-year straight-line depreciation method. All capital improvements need to be pre-approved by the Faculty Relocation Office prior to making the improvement.
For further instructions and documentation requirements in regards to capital improvements contact the Faculty Relocation Office.