The numbers do not lie. In fewer than four months, more than 250 borrowers have applied for VHDA’s new Homebuyer Tax Credit Plus mortgage loan. The loan is definitely sparking the interest of potential first-time homebuyers who thought they’d be left out of the current affordable market due to lack of funds for down payment and closing costs.
It means that those 250 first time home buyers would not be able to afford to purchase a home, but for VHDA program.
VHDA is helping make the $8,000 federal tax credit work for first-time buyers by addressing their critical need for up-front cash. Homebuyer Tax Credit Plus makes it easy to come up with the cash, by combining a VHDA FHA first mortgage with a second mortgage of up to 5 percent of the sales price. Not only can that 5 percent be used for down payment and closing costs, there is no interest and no payments due on the second mortgage for the first 12 months.
“While this program is similar to VHDA’s current down payment assistance program,” said VHDA Director of Homeownership Programs Michele Watson, “it’s unique in that the second mortgage offers no payments and 0% interest during the first year. This gives borrowers the flexibility to choose a preferred payment plan for the second mortgage.”
Homebuyer Tax Credit Plus enables the borrower to use their tax credit to pay off the second mortgage at no cost. Or they can keep their tax credit and have the loan amortized over 29 years at the same affordable fixed interest rate as the first mortgage. Pricing options are available, and the interest rate on the first and second mortgage will be the same. In addition, no points or origination fees are charged on the second mortgage.
“The hope for full market recovery lies with first-time homebuyers,” said Watson. “The Homebuyer Tax Credit Plus loan provides first-time homebuyers a resource to take advantage of this market.” Needless to say, first-time home buyers are crucial in real estate market.
Homebuyers still have time to take advantage of the program. As with the federal tax credit requirements, loans must close by November 30, 2009. All the program details can be found at vhda.com.