Virginia Offers Savings Plan For First Time Buyers

First Time Buyer Issues and Saving

Real estate professionals and brokers have noticed a continuous drop in the number of young homebuyers and other first-timers. Generally, Millennials on the house hunt find it hard to come up with sizable down payments, especially when they are still struggling with huge debt accumulated from student loans.

Virginia is setting up a program called the First-time Homebuyer Savings Plans to help families set aside funds.  Over time this would take care of the down payment as well as closing costs for first-time home buyers. This program allows future homeowners to allocate up to $50,000 in cash, insurance policies or investment that is exempted from state taxes for the purpose of buying their first home.

New Programs being Developed

This innovative platform lets parents and grandparents assign savings or investments for a child’s future home purchase. Just as they would in the age-old “college fund” concept. Investments into the plan can grow up to $150,000—a pretty nice nest egg to start house hunting with. The program allows parents and other relatives to set money aside. These funds will grow without being taxed.

First-time Homebuyer Savings Plans in Virginia are similar to a likeminded program in Montana. But unlike its counterpart, the Virginia plans do not require applicants to open any special account at financial institutions. Those interested in First-time Homebuyer Savings Plans need to complete a form every year when they file their state taxes. Using the account for anything other than buying your first home will be fined and subject to back taxes.

The program is still new and will soon be promoted to homebuyers and financial organizations across the final summer months and fall of 2014. While this is excellent news, it won’t help people who are already in the market now for a home today, as it is a financial instrument for future home investments. Again, as a parent or grandparent you wouldn’t know if the child you’re saving for would be interested in buying a home in Virginia versus a different state in the long run—this could cause an issue, but it’s one that will have a resolution once the program comes a little further out of its “beta testing” phase.

The First-time Homebuyer Savings Plans is a progressive tool. This is likely to inspire other states and lenders to hop on board. Making home buying enticing to the next generation.

Source Material: Washington Post

Fabian Blank