Apr 14, 201612:50 PMOpen Mic
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Down payment assistance: An important step to home ownership
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A thriving winter housing market could set the pace for an even busier spring and summer for Wisconsin homebuyers, many of whom could be eligible for federal or state programs to help purchase their dream home.
Statewide in January and February, the most recent data available, sales of existing homes and median prices each increased 7.9% compared to 2015, and new listings decreased 7.5%, according to the Wisconsin Realtors Association. With February home sales up throughout the state and fewer listings making inventory tight, potential homebuyers would be wise to get qualified for lending programs now in order to move quickly when they find a home they’d like to buy. That’s especially important because many programs require having an accepted offer to purchase in order to reserve funds.
Multiple programs exist at the state and local levels to help buyers with down payment assistance. In addition, many loan and assistance programs are stackable, meaning prospective buyers can often qualify for more than one, providing extra purchase power in a competitive housing market.
Downpayment Plus (DPP) – The Downpayment Plus program, offered through the Federal Home Loan Bank of Chicago (FHLBC), is an assistance program for low- to moderate-income households. Applicants must have household income equivalent to 80% or less of the median income for the county where the subject property is located.
In 2016, DPP assistance of up to $6,000 is available from lenders who are members of FHLBC, for use toward down payment and closing costs for purchases of property in any state in which the lender does business. The funds are available on a first-come, first-served basis and cannot be reserved until the borrower has an accepted offer to purchase a home. The borrower must also contribute a minimum of $1,000 toward the purchase.
Under the program, 1/60 of the assistance is forgiven for each full month the borrower occupies the home. (Downpayment Plus is a program from the Federal Home Loan Bank of Chicago. Restrictions apply. Please see the Federal Home Loan Bank of Chicago’s website at www.fhlbc.com for complete requirements. “Downpayment Plus” is a registered trademark of the Federal Home Loan Bank of Chicago.) For more information, go http://www.fhlbc.com.
WHEDA Advantage – The Wisconsin Housing and Economic Development Authority offers 30-year fixed-rate loans with higher income limits than traditional down payment assistance programs, therefore allowing more buyers to qualify. The loans may be used to purchase existing single-family homes or duplexes as a primary residence. Home buyer education is required. Buyers who qualify for a WHEDA Advantage mortgage may also use WHEDA’s Easy Close Advantage, a 10-year fixed-rate loan for use toward a down payment or closing costs. These buyers might also qualify for a Mortgage Credit Certificate (MCC), which provides federal tax benefits for as long as the borrower lives at the property or up to the life of the mortgage. The amount of the MCC is based on the annual interest paid on the mortgage and can be up to $2,000 per year. Tax credits are available to first-time homebuyers who meet the purchase price and income limits. There are also added tax savings for MCC eligible veterans who have an honorable discharge. For more information, go to: https://www.wheda.com/Home-Buyers/Available-Programs/.