11-10-06
First-Time Homebuyer Programs
Would you like a 4 percent gift toward the purchase of your first home? How about saving 20 percent on your income taxes next year? A two-bedroom in Lakeview for $140K? It’s much more likely than you think, thanks to the terrific first-time homebuyer programs available in the Chicagoland area. Over the next few articles we will be taking a look at three of these programs; but before we do, let’s start with an overview of the three as well as a quick vocabulary lesson.
Are you a “first-time homebuyer”?
It sounds like a simple question, right? However, did you know that you can still be considered a “first-time homebuyer” even if you’ve bought a home in the past? It’s true. According to the guidelines of the Department of Housing, any person who has not owned a principal residence over the past three years is considered a first-time home buyer. Good to know!
What is considered a “principal residence”?
According to the Department of Housing, a principal residence is a home occupied primarily for residential purposes and does not include a home used as an investment property, as a recreational home, or a home in which 15 percent or more of its total area is used for a trade or business. So if you think you might be spending your fair share of time in L.A. and renting out the place, it is something to consider before moving forward with one of these programs.
Income and Purchase Price Limits
Now, just because you’re a first-time homebuyer doesn’t mean you automatically qualify for all first-time homebuyer programs. Most FTHB programs are intended to benefit low- and moderate-income households and will only pertain to properties under a particular purchase price. The good news is that most actors and artists (at least the ones I know, myself included!) will fit nicely within these guidelines. Just head to www.cityofchicago.org/housing for more information about these qualifications and about the programs themselves.
Speaking of which, here are the three first-time homebuyer programs we will be exploring:
TaxSmart
TaxSmart is a Mortgage Credit Certificate (MCC) program which entitles first-time homebuyers to a federal income tax credit. A tax credit is a direct reduction of taxes due. Under the program, a home buyer would receive an MCC to reduce income taxes by an amount equal to 20 percent of the interest paid on a mortgage. And the beautiful part is you’ll receive that tax credit every year for as long as you live in the home!
Important Note: Non first-time home buyers are also eligible if they purchase a home in a designated target area. You can head to www.cityofchicago.org/housing for more information about those target areas or feel free to drop me a line anytime.
City Mortgage
So many actors and artists are hesitant to consider buying a home because they have little or no money in the bank for a down payment. The City Mortgage program offers qualified first-time homebuyers 30-year, fixed-interest mortgages at competitive interest rates and a gift of 4 percent of the mortgage amount to cover down payment and closing costs. City Mortgage is available to qualified buyers of 1-4 unit properties in the City of Chicago. We’ll take a closer look at this program in an upcoming article.
CPAN
The Chicago Partnership for Affordable Neighborhoods is a partnership between the City of Chicago and developers to ensure opportunities for affordable condominiums and single family homes in appreciating neighborhoods, such as Uptown, Logan Square and Lincoln Square. In a nutshell, participating developers write down the purchase price to an affordable level on a percentage of the units in a market-rate development.
There are CPAN developments all over the city, many of which are available right now. For some of the more popular developments, such as the $140K two-bedrooms in Lakeview I mentioned earlier, there are often more applicants than there are available units. Therefore, the city holds a lottery to determine who gets what. Finally, a lottery ticket that’s actually worth something… and it’s free!
For locations and prices of CPAN properties available today, as well as income brackets and other information, you can visit www.cityofchicago.org/housing then click the icon on the right hand side that says “AFFORDABLE CONDOS IN MARKET RATE DEVELOPMENTS.”
I’ve already written one article about CPAN which gave a good overview of the program and the application process. In an upcoming piece, we’ll take a look at the finer points of the program and tips to make the CPAN home buying process as smooth as possible. If you missed the first article (4/29/05), you can easily find it online at www.performink.com under “Owning a Home.”
In our next article, we’ll start with a closer look at the TaxSmart program. If you can’t wait till then, you are always welcome to drop me a line; if I can’t answer your question, I’ll find someone who can. Also, please send me any comments or suggestions about this article and let me know if there are other topics you would like to see discussed. Talk to you next month!
Mike McNamara has been a working actor in Chicago for the past eight years, in theatre, commercials, television and film. Mike is also a mortgage consultant and loan originator with West America Mortgage Company. He can be reached anytime at 773/398-0021 or McNamara310@aol.com.