Legislature hits a "Home Run" for Utah Home Buyers!
Lawmakers pass bill creating $6,000 Utah Home Buyer Grants
President's Message
Chris Sloan
As the Utah Legislature wrapped up this week, there was some good news for Utah home buyers. On Thursday, the Utah State Legislature passed a bill that would provide a $6,000 grant to qualified buyers of a newly constructed home - funds in addition to the $8,000 federal tax credit - for a potential of $14,000 in home-buying incentives.
This housing stimulus grant program is called "Home Run," and it aims to stimulate home sales and eliminate a large portion of unsold housing oversupply, which would help stabilize home prices and create jobs. If signed by the governor, there would be 1,666 grants available to buyers on a first-come, first-served basis - grants which would not have to be repaid. For more updated information on the bill's final status, visit http://www.le.utah.gov/
"The idea behind this is we're trying to get existing homes bought and off the market so they can start building new homes," said the bill's sponsor Sen. Scott Jenkins.
While the proposed grant program would be similar to the $8,000 federal tax credit for home buying, there are some notable differences. The first is that the Home Run grants can only be used for newly constructed, never-occupied residences in Utah. Dissimilarly, the federal tax credit applies to both new and existing homes. Utah buyers who purchase a new home could potentially qualify for both incentives.
Second, unlike the federal program which only applies to first-time home buyers, Home Run is available to any Utah buyer who meets the other qualifications, including existing homeowners. The intent is to clear the excess housing inventory in the low- and mid-range price categories. In order to do this, analysts felt the program could not be limited to first-time buyers.
The Home Run grant is $6,000 regardless of the home's purchase price, while the federal housing tax credit is 10 percent of the home's purchase price up to $8,000. The federal tax credit is available to anyone who purchases a home before Dec. 1, 2009, while Home Run grants are only available until they are gone, which could be much quicker. Some experts familiar with the bill are predicting all the grants could be given out in just a few months, which makes it imperative for anyone interested in the program to act quickly.
While both the Home Run grant and the federal home-buying tax credit have income limits (a single buyer's income cannot exceed $75,000 and a married couple's cannot exceed $150,000 to qualify for the full amounts), the federal program offers a partial tax credit that may be available to those who make more. A partial Home Run grant is not available to individuals and couples making more than $75,000 and $150,000, respectively.
The way in which the money is given varies as well. A Home Run applicant will make a reservation request through their mortgage lender who will contact Utah Housing Corporation, the program administrator. Buyers will then have 90 days to close the deal, with the money being credited to the buyer's down payment or closings costs at closing. In contrast, those seeking the federal home-buying tax credit will claim the credit on their federal income tax return.
A final difference is that Home Run applicants must buy their home using a 30-year fixed-rate mortgage. Buyers can use any number of loan programs, including conventional, FHA, VA or USDA to name a few. Buyers can also use a Utah Housing loan, but this is not a requirement; any traditional 30-year fixed mortgage will qualify. Any lender authorized to make loans in Utah can help buyers apply for the grant.
Combined with the market's other buying incentives, the Home Run program is expected to have a significant impact. The University of Utah's Bureau of Economic and Business Research estimates Home Run will eliminate a large number of the 2,903 complete, unoccupied homes along the Wasatch Front, thereby creating 8,823 jobs and $27.7 million in projected tax revenue.
The money for the grants comes from funding Utah is slated to receive under the American Recovery and Reinvestment Act of 2009, which President Barack Obama signed into law last month. Utah Housing Corporation is expected to provide more information on their Web site, www.UtahHousingCorp.org, as details are finalized.