I have been doing some home shopping the last few weeks and have been doing a lot of research into different programs that I may be able to take advantage of and other options that I have.
If you don’t know about the new bill it is essentially an interest free loan that you pay back over several years. It starts at $7.500 and phases out based on your income. For singles it starts phasing out at $75k and ends at $95k.
From looking at this program I don’t see how it is really going to help new home buyers. Everyone assumes that it will help people with the down payment on a new home. The problem is you don’t get the rebate until you file your taxes so how do you get the money for a down payment? You don’t!
What I thing the bigger problem will be is the way real estate agents are going to sell this. You don’t get the rebate until you file taxes so they are going to suggest that you change your deductions at work and get the rebate spread over the next 5-6 months, so you get an extra couple hundred bucks every months. They will show how with now you can afford that new house and the monthly payments, but what people won’t realize is oops they won’t have that extra hundred bucks a few months down the road. That’s the main reason a lot of newer condos are foreclosing because when you buy the builder uses some of the closing cost to pay your condo/home owner fees for 12-18 months and that time ran out for a lot of people so that’s an extra $200-$300 a month that they can’t afford.
The other issue is a lot of states have first time buyer and low income housing programs with reduced interest rates and things like that. I read up on this because I actually I qualify for something with the Virginia Housing Development Authority. I didn’t read into the exact reason why but if I partake in any program with the VHDA I am not eligible for the tax credit. So a lot of people that the rebate will help are going to have to make a choice about what they want and take advantage of both.
So to me it seems like the only the thing the rebate may be good for is paying for some new furniture.
Also through this whole process no one is looking out for you need to look out for yourself, I have talked to 4-5 different real estate people, they all knew how much I was making and what price house I wanted to buy. None of them mentioned that I could be eligible for something with the VHDA, they just wanted me to use their lender.