The IHDA Recapture Agreement: What It Is and How It Works
Are you a first-time homebuyer in Illinois looking for affordable financing options? If so, you may have come across a program called the IHDA (Illinois Housing Development Authority) Recapture Agreement. But what exactly is this program, and how does it work? In this article, we’ll explain everything you need to know.
What Is the IHDA Recapture Agreement?
The IHDA Recapture Agreement is a program offered by the Illinois Housing Development Authority that helps low- to moderate-income first-time homebuyers purchase homes with more affordable financing options. The program is designed specifically for those who may not qualify for conventional financing, but who still have steady incomes and can afford to make monthly mortgage payments.
The program works by providing qualified homebuyers with reduced interest rates and down payment assistance. However, in exchange for these benefits, participants in the program are required to sign an agreement that states that if they sell their home within the first nine years of ownership, they will have to pay back a portion of the benefits they received.
How Does the IHDA Recapture Agreement Work?
When a homebuyer participates in the IHDA Recapture Agreement program, they are eligible for several benefits:
• Reduced interest rates: The IHDA offers reduced interest rates on mortgages to program participants. This means that the overall cost of the mortgage is lower than it would be with conventional financing.
• Down payment assistance: Program participants can also receive up to $10,000 in down payment assistance, which can be used to help cover the costs of purchasing a home.
• Forgivable loans: In some cases, the IHDA may offer forgivable loans to program participants. These loans do not have to be repaid, as long as the homebuyer stays in the home for a certain period of time (usually five years).
However, as mentioned earlier, there is a catch to these benefits. Participants in the program are required to sign a recapture agreement, which states that if they sell their home within the first nine years of ownership, they will have to pay back a portion of the benefits they received. The amount that must be repaid is based on a formula that takes into account the amount of benefits received, the length of time the home was owned, and the sale price of the home.
It’s important to note that the recapture agreement only applies if the home is sold within the first nine years of ownership. After that time period has passed, program participants are free to sell their home without having to repay any of the benefits they received.
Is the IHDA Recapture Agreement Right for You?
If you’re a low- to moderate-income first-time homebuyer in Illinois, the IHDA Recapture Agreement program may be a great option for you. However, it’s important to consider whether the benefits of the program outweigh the potential drawbacks. While reduced interest rates and down payment assistance can be helpful, the recapture agreement means that you may have to give back some of those benefits if you sell your home within the first nine years of ownership.
Before participating in the program, it’s important to speak with a qualified mortgage lender or financial advisor to fully understand the terms and conditions of the IHDA Recapture Agreement. With the right information and guidance, you can make an informed decision about whether this program is the right choice for you.