First-time home buyers who obtain a KHC (Kentucky Housing Corporation) home loan will be eligible for $4,500 towards down payment and closing costs. The program was announced recently by Governor Steve Beshear and is effective May 1, 2009 - November 30, 2009. Unlike the $8000 first-time home buyer tax credit offered by the federal government, this is a loan. However, the terms are very favorable and the money is provided at the closing.
Plan Highlights
- The loan is in the form of a second mortgage on the home.
- Principle and Interest payments are deferred until July 1, 2010.
- The loan is repaid based on a 10-year amortization schedule at 6%.
- If you repay the loan by July 1, 2010, $300 will be forgiven.
Let's consider how to best use this loan in conjunction with the $8000 tax credit for an FHA loan.
- Purchase a house before November 30th. (Remember it takes 4-6 weeks to close so you need an accepted offer by mid September).
- Use the $4,500 to help pay the 3.5% downpament requirement from FHA.
- File for the $8000 tax credit with your 2009 taxes.
- Repay the KHC Down Payment Assistance loan before July 1st and save an additional $300.
If you follow these steps, you will have $3,800 cash and equity in your new home by next summer. Further, you will have little to no out-of-pocket expenses beyond inspections and partial closing costs.
If you are looking for a home in Shepherdsville, Mt Washington, Taylorsville, or Shelbyville, the deal can be even better. Rural Housing Service (RHS) loans do not require a down payment and do not have monthly mortgage insurance payments. In this case, the $4500 should easily cover all closing costs.
Requirements
- First-time Home Buyer
- Meet KHC Income and Purchase Price Guidelines
- Minimum Credit Score - 620
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Use a KHC approved lender
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Erik Hitzelberger is a licensed REALTOR with RE/MAX Alliancein Louisville. If you need a Louisville Real Estate agent please email me or call 502.921.3989.
I specialize in the following areas of the Metro Louisville Area: Prospect, Middletown, Jeffersontown (J-Town), Fern Creek, Okolona, Shepherdsville, Mt Washington, Hillview, Brooks and Pewee Valley. Click the following links to learn more about Louisville and Bullitt County Real Estateor to Search for Louisville Homes
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Nice little package...I hope it gets some momentum going for your area. Spread the word about these incentives.
Erik - I think I commented on one of your previous Blogs - but congrats and keep posting these types of messages because people simply miss them and they are great for the serious buyers.
Cheers
Michael - With $4500 available on the front end, $8000 after closing, great selection and 5-5.5% interest rates, if you are able and don't buy now, you should check yourself into the asylum.
Fredyt3 - You are correct about people not knowing. I talked to someone on the phone this weekend who didn't have a good understanding of the $8000 tax credit. Life often intereferes when something isn't top priority.
More good news to help buyers make their way off the fence my friend. Take care out there Erik.
You're showing your buyers how to make great use of all of the governmental programs available to them currently.
Excellent information for your First Time Home Buyers, again. A First Time Home Buyer would be lucky to come across your post and utilize your Real Estate Knowledge.
JL - This is certainly one less excuse.
Christine - This program certainly has a lot of potential. First-time home buyers often have difficulty coming up with the down payment.
John - Thanks. I hope you are correct :)
Sounds like a great program Erik. It is great that you are letting everyone in your area know about another great help in becoming a home owner.
Erik - Informative, positive and enthusiastic. Great post! Interesting to know what other states are doing to help their citizens.
Erik,
According to the KHC website, "A portion of Kentucky Housing's funds are derived from the interest earned through the sale of tax-exempt mortgage revenue bonds".
The IRS has been saying that a home purchased with funds from tax-exempt mortgage revenue bonds cannot claim the first time home buyers credit.
It may not be possible to take BOTH the $4,500 AND the $8,000.
Best check directly with the IRS -- BEFORE making any decisions.
Sounds like another great loan option when it comes to buying a home for the first time. As a Real Estate agent you really need to know the different mortgage programs that are available for all buyers. Simply referring them to your lend er of choice can really discourage borrowers these day. Great job getting this information out for your Kentucky home buyers.