Free money does not come around too often. Right now if you are a first time homebuyer in Illinois you could get $7,500 for free and a lower interest rate on your mortgage as well. The Illinois Housing Development Authority (IHDA) has launched Welcome Home Illinois to encourage first time homebuyers. For all the details visit www.welcomehomeillinois.gov.
Of course there are restrictions – the amount you make and the amount you are buying is capped based on where you will be buying. For example, if you are single buying a place in the Chicago area you have to make less than $90,960 and buy a house worth less than $378,461. (Note to anyone selling a house. Don’t hold out for $379,000. If a first time home buyer is offering $378,461 it really is their best and final offer!)
What if you have already owned a home? As long as you have not owned a home for 3 years you are eligible as a first time home buyer.
This program is to promote home ownership, so you need to stay in the home for 5 years. If you leave before then or refinance your mortgage you will have to pay all of it back. Here is how it works — at the time of the purchase a 2nd lien is placed on the home for the $7,500 with no interest and no payments due. After 5 years the 2nd lien is terminated. Voila! Free money.
Not every mortgage company can offer this loan, so look on the website to find the current list as more are being added every day. I spoke to my friend Kim Murphy (check out her website at www.1amllc.com/murphy) whose company is part of the program. She tells me that the program is open ended, yet it is unclear how much money will be distributed so it could run out at any time. You will need to apply for the IHDA program when you apply for your loan and reserve the money when you have an accepted offer.
Home-ownership is not always the best use of your money and buying a house just to get the $7,500 is not a good idea, especially if you plan to move in the next 5 years. However, if you have already decided to buy and you have your down payment already, this is a great opportunity to use the cash from the state to put more money down on the mortgage, or use the extra funds to remodel or furnish your new place.
I would love to hear how this program is working for you. If you are taking advantage of it, please let me know in the comments so we can all learn together.