First Time Buyer Opportunity in Indianapolis
First time home buyers in Indianapolis have been given a great opportunity to buy a home! Changes on Friday in the first time tax credit and Indiana Housing have created a perfect storm for home buyers who have been trying to take advantage of the tax credit, which ends on December 1, 2009.
If you have never owned a home or it’s been three years since you have owned a home, you could qualify and buy your home this year. Changes to Tax Credit HUD announced on Friday the first time home buyer tax credit can now be used up front for closing costs, points, buying down interest rate and additional downpayment. You don’t have to wait to file your taxes to receive the credit.
Changes to IHCDA Indiana Housing & Community Development Authority (IHCDA) has reduced the interest rate to 6% with an additional .125% reduction for those who take the online home buying course. Indiana Housing offers first time home buyers 5% or up to $3500.00 for downpayment on a home.
The First Home/PLUS program offers the First Home special mortgage rate, as well as 5% down payment assistance. Capped at $3,500 with zero interest , this is a perfect program for Hoosiers who do not refinance once they have moved into their new home, and who are also committed to staying in their new home for a specific period of time. The Down Payment Assistance funds must be repaid in full once the borrower sells or refinances the home.
The Power of Two You can use both programs together; Indiana Housing for a down payment and the tax credit for closing costs. You can use the tax credit for additional downpayment with the Indiana Housing program, but can not buy down the interest rate.
If you have the 3.5% down payment for an FHA loan, you can use the tax credit for closing costs, buy down the interest rate or use for additional downpayment. There are income guidelines for the use of Indiana Housing first time home buyer down payment assistance.
Discussion
People were hoping they could use the money for the down payment. Still, you only have to come up with 3.5% down...that's a far cry from the 20% I had to when I bought my first house.
I have family in Indianapolis who are real estate appraisers. They frequently send me listings of homes for sale in Indi for less than $20,000. First-time home buyers (or anyone who hasn't owned a home in the past 3 years) would qualify for an $8,000 tax credit for a house purchased before December 1, 2009. That means that these entry-level home buyers can get close to a 50% discount on their first house, as a tax refund from the purchase of home that is already substantially reduced in price. I can't imagine why everyone wouldn't want to do that. Homes in San Diego CA start at closer to $300K, so the incentive isn't nearly as great.
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