For first time home buyers, the American Dream Down Payment Act has made it easier to make their dream true of buying their own home. A home is not just an investment but a personal joy and a stronghold that brings a sense of security to you and your family.
The good news is that the American Government has sanctioned $200 million for grants each year for the coming four years to low-income groups who want to buy their first home. This certainly makes the castle in the sky closer for those who dream of buying their own home and are unable to do so because of the heavy initial down payments in the process.
Government Grants For First-Time Home Buyers
The Government has launched the American Dream Down Payment Initiative Grant for which it has tied up with banks to facilitate this process in order to boost the country’s economy by allowing more fluidity in loans to first time home buyers. One of the best things that have come out of this is that there is no window for getting cheated because the state and federal agencies are the most credible people you can literally speaking, bank on as compared to any realtor or predatory loan shark.
Now, not only has the problem with the initial finance been obliterated but the interest rates with banks are also touching rock bottom and all financial assistance professionals are urging you to benefit of this wonderful opportunity. Once you are in possession of your own home the equity in it can be the source of making the next down payment.
As this facility is not available to you if you are a first time home buyer and you don’t have any equity in property, the Federal Government has come up with this scheme of offering first time home buyer grants.
Not only are these grants a boon to making the payment but are also immensely practical in closing the mortgage. In this case, even bad credit can’t be counted against you as you have not had in your own name any housing ownership within the last three years.
Tax Benefits
A substantial amount of tax savings can be generated through your mortgage interests too. If you are renting an apartment for a certain amount, the same amount when applied to your mortgage loan payment would result in a huge tax deduction as practically speaking, the preliminary mortgage payment is generally to cover up interest rather than actually paying off the loan and this interest is tax deductible. If you are in the conventional 28% tax bracket with all the normal expenditure, this deduction could cause a major dent in your annual savings.
There are absolutely no issues and hang-ups and the only quantifiable point is that your annual family income should meet the stipulated minimum in order to receive the grant, which is calculated on the basis of income v/s dependents, the location of the home etc. However, not every state in the USA is offering this kind of a grant yet, though it is still possible to obtain a grant through federal assistance. It is important to note that each state has its own set of rules and regulations that apply to the grant program as instigated by the state legislature.
Why is this Free Money?
The government is labeling this money as free money because as there are no interests or monthly payments to be made it is virtually free, these funds remain mute as a second mortgage until they are repaid.
In other cases, they are simply forgiven like in the State of Wyoming; the government grant for first-time home buyers can be as high as $2,000 and is forgiven in the case that you reside in the house for a period of 30 years.
This differs in different states and some states offer a loan that turns into a grant after a certain period of time. Thus a loan calls for the amount to be repaid in installments even if it for a low interest rate. However this is only a qualifying process for the mortgage and in most cases you receive a percentage of the mortgage amount making it all very easy in the long run.
Unmasking the Grant Availability
All this may be a little difficult to believe at first and reason dictates that this kind of money will be hard to obtain for the average seeker but in reality these grants are not highly advertised by the government and there are few sources that can give you the necessary data so the chances that you will have people queuing up outside these agencies and going away with pot loads of money is very, very slim. Most of these agencies have not exhausted their capacity which simply goes to say that there is money available for obtaining that grant.
Lastly, a home is definitely high on the list of safe investments into the future as the escalation of prices for properties is constantly on the rise owing to growing population and economy that gives way to inflation that causes real estate investments to be stable if not a climber. Now is the best time to take advantage of the extremely low interest rates and make good your dream of owning your home.
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Rate Cuts and Grants for New Home Buyers
The seven-year high in first home buyer commitments showed the property sector would benefit from the government extending the increased grants until at least the end of 2009.
Don’t Bet your House – It Can Be Cheaper to Buy
A combination of slashed interest rates, increasing rents, falling house prices and generous first-home buyer grants means that for the first time in many years, buying has become an economical option.
The Home Buyer Stimulus Bill
Chief among these is an $8000 home buyer tax credit for new home buyers. While we are disappointed and would have preferred a more enhanced tax credit like the Senate version, the conferees did retain some key elements from the Senate and made other modifications that are beneficial to home buyers.
Grants For First Time Home Buyers
One of the plans for the government to stimulate the economy is to provide first time home buyer grants to help home sales increase. With over $850 billion available and counting, millions of Americans are benefiting from the stimulus.
By Jayashree Pakhare
Published: 4/20/2007
