Prospective first time home buyers planning to buy foreclosures houses in Virginia can grab the opportunity offered by the Virginia Housing Development Authority under its Tax Credit Plus home loan program.
The VHDA crafted the program to help families planning to buy their own homes but have insufficient funds to cover the closing costs and the down payment. The program can also help reduce the number of vacant forclosures houses across the state.
In a recent foreclosure report, Virginia had more than 5,000 properties that received foreclosure notices in May, with over 1,000 of these already counted as foreclosures houses. One house in 608 housing units received a foreclosure action in the state, putting Virginia 14th in the report’s listing of state foreclosure rates for the month of May.
Under the Tax Credit Plus plan, VHDA provides the first time buyer with a low rate 30-year primary home loan and a second home loan that will help pay the closing costs and down payment.
The Tax Credit Plus plan is an improved version of the current home purchase assistance program because the borrower is not required to make payments for the second home loan throughout the first year of the loan. The second mortgage is also interest free during the first 12 months.
Borrowers are given three options to pay off the second home loan. They can use the first time home buyer tax credit, they can spread out payments over 29 years, or they can make second-loan payments during the first 12 months of the loan to reduce monthly payments after the first 12 months.
At the 13th month of the principal home loan, the second home loan will bear the same loan rate as the principal home loan.
Prospective home buyers are encouraged to look for foreclosures houses now as the Tax Credit Plus scheme will end by November 20, 2009, which is the end of the federal tax credit program. All applicants must meet household income and home price limits. They must also have a minimum credit score of 620 and must contribute at least one percent of the house sales price towards the home purchase.
Before first time home buyers can participate in the program, they must first complete a VHDA homeownership counseling class, which is provided for free. Participants will learn about personal finance management, house inspection, sales closing and other topics that help homeowners take care of their homes and prevent them from becoming foreclosures houses.
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