[Springfield, IL] - Don’t wait until it’s too late to take advantage of the $8,000
federal tax credit for first-time homebuyers and Illinois’ new Home Start Advance Loan,
which allows qualifying buyers to get an advance loan on their anticipated tax credit to
use toward a down payment. Both options end by December 1.
“The tax credit and now the Home Start program, through the Illinois Housing Development Authority, are great incentives for first-time buyers who have been thinking about buying a home, but they won’t last forever,” says Nancy Long, ABR, CRS, GRI, president of the Capital Area Association of REALTORS. “Buyers must close on their new homes before December 1 to qualify but because the buying process can take time, they should ideally be under contract before October to make sure they have plenty of time to make the deadline.”
The temporary tax credit has drawn many first-time homebuyers into the housing market. Available for home purchases made on or after Jan. 1, 2009, and before Dec. 1, 2009, the tax credit is equal to 10 percent 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.
In July, the Illinois Housing Development Authority (IHDA) offered yet another incentive with the announcement of its new loan program called Home Start, which 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 percent 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.
* Tax advance must be repaid in full by June 30, 2010 or it becomes a 10-year amortizing loan at 0.5 percent above the interest rate on the Illinois Home Start 30-year loan.
* A $300 application fee must be paid at closing. Tax advance loan can be used and if the loan is repaid in full by June 30, 2010, $100 of the fee will be refunded.
“There are so many great buying opportunities for first-time buyers in this housing market with the low interest rates, affordable prices and the temporary tax credit and now is the time to act,” says Long. “You can depend on a REALTOR to help you make sense of all the incentive options as well as the home buying process in general.”
Consumers can also learn more about Home Start at www.ihda.org or the first-time homebuyer tax credit at www.SeeHouses.com or www.YourIllinoisHome.com, a consumer site developed by the Illinois Association of REALTORS. While there, consumers can also check IAR’s tax credit clock to get an up-to-the-minute update on how much time is left for using the tax credit.
The Capital Area Association of REALTORS® is the Voice for Real Estate in the Capital Area representing more than 700 members involved in all aspects of the residential and commercial real estate industry. The Capital Area’s Resource for Real Estate Information can be found at www.SeeHouses.com.
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