As Americans are feeling the crunch of this economic crisis, many potential first-time homebuyers are putting their plans on hold. However, U.S. Sen. Claire McCaskill says that the combination of an $8,000 federal tax credit offered through the American Reinvestment and Recovery Act of 2009 (ARRA) and an advance loan program through the Missouri Housing Development Commission (MHDC) can put the American dream back within reach.
While the $8,000 federal tax credit was intended to boost the economy by encouraging home buying, the timing of the benefit causes a catch-22 for some homebuyers. The credit can only be claimed by a homebuyer after the purchase of the home, usually at tax filing time. Many would-be homeowners can afford monthly mortgage payments, but need some help up-front to cover the down payment or closing costs. Without that help, some people have been unable to realize their dream of homeownership.
To help first-time home buyers with these expenses, MHDC has introduced a program to accompany this federal tax credit that advances the credit as a loan. The loan program lends buyers money for down-payment and closing costs. The homebuyer then pays MHDC back when their federal tax refund arrives.
“Buying a first home is an integral part of the American dream and the economic recovery package gives first-time homebuyers a tremendous incentive and help in realizing that dream. Combined with the MHDC loan offer, these programs create a two-for-one return by helping people achieve their dream of a first home, while also helping our economy recover,” McCaskill said.
For homes purchased before Dec. 1, 2009, MHDC will loan first-time homebuyers in Missouri the $8,000 to help with down-payment and closing costs to be repaid with the federal tax credit. If the loan is repaid by June 1, 2010, the buyer pays no interest. MHDC loan programs are available for households with incomes up to $79,800. The federal tax credit is available for first homes purchased between Jan. 1 and Dec. 1, 2009.