YAKIMA, Wa - Interest rates for home loans have been rising steadily over the last year. Today, the interest rate on a 30-year fixed mortgage is 6.375%. But, if you are a first time home buyer, don't let rising interest rates scare you away. The state government has a program to help you become a homeowner.
The Washington State Housing Finance Commission offers a House Key State Bond loan program. It helps first time home buyers buy a home by offering loans at a reduced rate. For example, through the House Key State Bond, a first time home buyer could get a loan for 5.875% , or even lower if they choose to pay down points. It will be 5.675% by paying down one point, or 5.375% by paying down two points.
Why does the state offer this loan program? The idea is that home owners make better citizens and it helps to lower the crime rate.
Now, there are restrictions and stipulations. Anyone who chooses to use the House Key State Bond has to attend a home buyer education seminar. It's a five hour class and the certificate is valid for two years.
Also, not everyone is eligible, a first time home buyer is someone who has not owned or occupied a primary residence over the last three years.
And there are annual income limits. For yakima county; if one or two people are buying a home, their household income can not be more than $60,000. Three or more, it's $70,000. You also can't buy home that costs more than $230,000.
There is a possible penalty if you do not live in the home for nine years before selling. You could be subject to a recapture tax which is 6.25% of the orginal loan, or half of the gain on the sale, whichever is less. You could still avoid this tax if you don't make a profit on the sale, or your income is still within the federal limits.
There's also assistance with down payments and closing costs.