“I am 34…” Option B - Other Housing Programs
While it would be nice to live in a $600000 home for the cost of a $300000 home, not everyone is going to get the opportunity to live in one of those BMR housing units. For the rest of us, there are other housing programs.
The housing programs could be sponsored by the city, county, state or federal. The housing programs may go by different names, but they will all accomplish the same thing…to help first-time homebuyers purchase homes that they would otherwise not be able to purchase.
Since most first-time homebuyers have difficulties coming up with the down-payment, most housing programs are geared towards helping with the down-payment. For example, in San Francisco there is a program called “Downpayment Assistance Loan Program” (DALP). The program will loan up to $100000. The loan is deferred for up to 40 years. And, instead of paying back the loan with interest, the homebuyer pays back the loan with a share of the home appreciation. The question that I have is can the imputed share of the home appreciation be treated as interest expense and tax deduction.
In California, there is California Housing Finance Agency (CalHFA). Again, most of the programs are down-payment assistance programs. There is one program that provides below market-rate loans. The interest rate is around 4.50%. According to Bankrate, the overnight average of a 30-year fixed is about 5.30%.
Finally, on the federal level, there is something called Mortgage Credit Certificate (MCC) program. This allows the homebuyer to take a tax CREDIT (as opposed to DEDUCTION) of up to 20% of the homebuyer’s interest expense. The remaining interest expense would be deducted as an itemized deduction like normal.
As I have written in part 1, a modest income homebuyer can get into a very expensive home by teaming-up with someone. This is certainly nothing new. But, it is certainly being used a lot more often these days, particularly, in places like the Bay ... Read
The number of first-time homebuyers who can afford to purchase a median-priced (about $660,000) home in the Bay Area has steadily declined for years. The percentage is now in the teens. Given the high cost of a median-priced home, most first-time homebuyers are forced to ... Read
As you already know, home prices in the Bay Area are literally through the roof. It is beyond the reach for most of the local citizens. So, what is the city's solution? BMR Housing. BMR stands for "Below Market Rate". Every new building complex that ... Read
So, what is it like to be 34 and still living at home? In short, it is both good and bad. On the one hand, I am definitely building a nice pool of money for a future down payment on a house. On the other ... Read
I second that. Two years ago, I was looking at 900 sq ft, 40 year-old condos in the Los Angeles area. Instead I moved to Las Vegas and bought a 2200 sq ft brand new home for about 20% less than those condos would have cost.
Nevada isn't as great a bargain as it was two years ago, but you'll still get twice the house for half the price of CA's cities. Plus no state income tax, less traffic, and fewer cops. Schools suck though. Can't have everything. ;)
in deeeeeeeeeeeeeeeeeeeeeeeeeeeeee
