One of President Joe Biden̵
Lawmakers recently introduced a pair of bills that could result in $ 25,000 in initial payment assistance and new tax credit up to $ 15,000.
So, if you’re still waiting on the sidelines of the housing market, these new offers could help you get in the game and take advantage of interest rates that are still among the lowest in history.
Increase your down payment with the help of Uncle Sam
One of the bills, which the sponsors call the “Initial Payments to Equity Act 2021”, will create a grant program that allows countries to provide cash for initial payments, closing costs or fees for the first time. which lead to lower mortgage rates.
Malcom Glenn, a spokesman for online mortgage lender Better, told MoneyWise that if adopted in its current form, the legislation would make 10% of the country’s tenants – about 4.37 million people – eligible for down payment assistance.
To qualify, individuals must be eligible for income and be first-generation home buyers, meaning anyone who has either never owned a home or who has owned a home once but lost it due to a financial disaster. , including foreclosure.
The bill, which was introduced last month, provides homebuyers with up to $ 20,000 in assistance, or up to $ 25,000 if the buyer qualifies as socially or economically disadvantaged.
An earlier draft proposal provided up to $ 15,000 in initial payment assistance, the amount Biden originally provided. For most Americans, this is significant money. Typical tenants will take 14 years to save an initial installment of this amount, based on calculations by Moody’s Analytics.
The amount you will have to return depends on how long you have owned your first home. If for some reason you do not live in it within one year of purchase, you will have to reimburse the full amount paid to you by the government.
Otherwise, the amount you have to return drops by 20% each year. Occupy your home for five years and you and the program can go differently.
If the bill passes and you start shopping at home, one important step will be to make sure that your credit rating is as high as possible. The lower your score, the higher the mortgage you will be asked to pay, so check your credit rating for free and work on strengthening it before applying for a loan.
Get a lower tax bill – or money back
The second bill, introduced in late April and called the First-Time Home Buyers Act, will provide a tax credit of up to 10% of the purchase price of the home – or up to $ 15,000 – for the original.
The tax credit is refundable, which means that if the amount is greater than the amount you owe on your taxes, you will receive a refund of the difference.
“The bill would provide a repayable tax credit that would increase home ownership among low- and middle-income Americans, especially those from marginalized communities with historically low levels of home ownership,” said Sunny Shaw, president of the National Association of Housing and Reconstruction Workers. .
You do not have to be a “first time buyer” to access the tax credit. You will be eligible if you have not owned or purchased a home in the last three years.
This proposal is a little more mathematical than the other. To qualify, you cannot make more than 160% of the average income in your area. This means that if you live in, say, Orlando, Florida, where the average income is about $ 42,000, you will not be able to participate if you make more than $ 67,200.
Also, the price you pay for your home cannot be more than 110% of the average purchase price in the area.
Like the other bill, if you want to take advantage of the proposed tax credit, you will have to use the home you are buying as your main home for at least four years. Otherwise, you will be taxed as a way for the government to repay part of the loan.
If the legislation is adopted, borrowers will be able to apply for a loan for all primary homes purchased after December 31, 2020.
Don’t wait for Washington
Because the housing market is so sparkling, thanks to historically low interest rates and the positive impact of the pandemic on home purchases, properties are looted in a matter of weeks, if not days, after they are listed.
In this fast-paced environment, waiting for Congress to come up with a solution for home buyers for the first time can leave you looking outside – as house prices continue to rise.
One strategy you can use to free up some much-needed cash flow is to consolidate your various debts. Taking out a loan to repay multiple lenders can significantly reduce the amount of interest you pay each month. Use this money to boost your down payment instead.
If student loan debt limits your purchasing power, you may be able to refinance your student loans and reduce your monthly payments. Add this newly discovered amount of money to your closing expenses.
And if your profits need a boost, there’s a simple, affordable way to generate real returns on the stock market – by investing nothing more than your “reserve change.” Use this money for the expensive bottle of wine you will buy to celebrate the closing day.