RISMEDIA, September 8, 2009—The end is nearing for the first-time homebuyer tax credit. In order to qualify, homebuyers must close on or before midnight on November 30th of this year to qualify for the tax credit. The National Association of Realtors(R) estimates close to two million first-time buyers will have taken advantage of the $8,000 tax credit this year, stimulating an additional 350,000 home sales.
Qualified Illinois first-time homebuyers have a double advantage utilizing the tax credit with the Illinois Housing Development Authority’s new Illinois Home Start Loan program. The Home Start program offers a 30-year fixed rate amortized loan insured by the Federal Housing Administration (FHA) along with a zero-interest, short-term advance loan of up to $6,000 to use towards a down payment on their home purchase and to be paid back when they earn their tax credit in 2010.
“We are hearing many first-time homebuyers are generally unaware of the tax credit and the Illinois Home Start program so we are working to increase awareness about how these programs can work together to help more first-time homebuyers realize the dream of homeownership,” said Pat Callan, president of the Illinois Association of Realtors. “Potential homebuyers are in a position of strength in terms of financing into a secure, mortgage option program at a time when we are seeing improved affordability conditions, historically low long-term interest rates and solid inventory levels.”
While the federal tax credit deadline officially ends at midnight on November 30, consumers should be aware that the closing, not the contract signing, must take place before the expiration date. “Ideally, we are encouraging buyers to consider contract signings by late September or early October to comfortably meet the IRS tax credit deadline, as the buying process can take time to proceed to closure.” said Callan.
The tax credit is equal to 10% of the cost of the home, up to a maximum of $8,000. Only properties used as a principle, single-family residence- including condos and townhouses qualify and there are income guidelines. People earning more than $95,000 (or $170,000 if filing jointly) cannot claim the credit. The tax credit does not have to be repaid if the buyer stays in the home for three years.
Home Start, the Illinois Housing Development Authority (IHDA) loan program, offers first-time homebuyers a 30-year mortgage insured by the Federal Housing Administration (FHA) and the second option of also taking out a Home Start Advance Loan, a zero-interest, short-term loan that can be used toward a down payment and then repaid when buyers receive their tax credits. The maximum loan amount under the Home Start Advance Loan is $6,000 or 3.5% of the purchase price, whichever is greater.
Other terms of the Home Start Advance Loan include:
-Homebuyers must qualify and secure a Home Start 30-year loan to qualify for the Advance Loan option.
-Homebuyer education must be completed through a HUD-certified counselor.
-Veterans and active duty service personnel don’t have to be first-time homebuyers to qualify.
-The tax advance must be repaid in full by June 30, 2010, or it becomes a 10-year amortizing loan at 0.5% above the interest rate on the Illinois Home Start 30-year loan.
“There are many great buying opportunities for first-time buyers with property prices having been adjusted to meet current conditions,” Callan said.
For more information, visit www.ihda.org.