What is Equity Now?

Equity Now is a new product of Utah Housing Corporation ('UHC') that enables first-time homebuyers ('Buyer(s)') to use the $8,000 Federal Tax Credit ('the Credit') to assist them in purchasing a home and building almost-immediate equity.

Normally, the Credit is obtained only after the home is purchased and all financing arrangements are completed. But for most Buyer(s), the time they most urgently need the financial help of the Credit is when they are trying to put together the down payment and closing costs for the purchase of their home. Equity Now not only overcomes that problem (as explained below), but also provides Buyer(s) a $100 incentive when they use the Credit to quickly build equity in their home.

How does Equity Now work?

UHC offers a first mortgage loan and a modest second mortgage to assist Buyer(s) with their down payment and closing costs. Buyer(s) need very little cash of their own to purchase their home because the Equity Now second mortgage can be as large as 6% of the amount of their first mortgage. That amount generally covers all but a small amount of the cash needed to close. As soon as the home purchase is completed, Buyer(s) must file an amended 2008 tax return and claim the Credit (lesser of 10% of purchase price or $8,000). IRS will pay Buyer(s) the entire amount of the Credit in cash (if no other funds are owing to IRS)-. Buyer(s) can then immediately increase their equity in the newly-acquired home by using that cash to pay off the second mortgage entirely (or to reduce its balance considerably).

* Use of the Equity Now program does not confirm qualification for the Federal Tax Credit. That determination must be made by the United States Internal Revenue Service. To qualify for the Federal Tax Credit, the closing for the newly-acquired home must occur on or before November 30, 2009.Who qualifies for an Equity Now loan?

• Those who are first-time Buyer(s) (have not lived in a property they owned in the past three years).
• Those who have already filed their 2008 Federal Tax return.
• Those who have a middle FICO credit score of at least 660.
• Those who meet UHC Income Limits and purchase a home within UHC Acquisition Cost Limits.
• Those who meet FHA or VA (as applicable) guidelines.

How do I get an Equity Now loan?

Equity Now loans are obtained through UHC Participating Lenders. Contact one of them today to begin the process outlined in the section below under the question: 'What are the Steps to obtain an Equity Now loan?'

What are the steps to obtain an Equity Now loan?

• Buyer(s) contact a UHC Participating Lenders and pre-qualify for a mortgage loan.
• Buyer(s) find a suitable home and sign a purchase contract.
• Buyer(s) return to Participating Lenders and complete the qualifying process.
• Lender contacts UHC and obtains a written commitment for Buyer(s) for that specific home.
• A real estate closing is arranged by Participating Lenders and the purchase transaction is completed.
• Lender sells both the first mortgage and the second mortgage to UHC and Buyer(s) make their future monthly payments to UHC.

What are the terms of the Equity Now loans?

• Both the first and the second mortgages are 30-year, fixed-rate loans.
• The interest rate for the first mortgage will be UHC's best-available rate at the time the commitment request is received from the Participating Lenders. First-mortgage rates are posted each Friday on the UHC web site at  www.utahhousingcorp.org. The interest rate for the second mortgage will be 7%.
• Buyer(s) can borrow up to 6% of the first mortgage to apply toward the down payment and closing costs associated with their home purchase even though the tax credit is limited to the lesser of 10% of the purchase price or $8,000.
• $100 will be credited by UHC to the second mortgage balance for Buyer(s) if, no later than six months after closing, the full $8,000 tax credit is paid toward the second mortgage balance.

What are the advantages of paying off my second mortgage loan early?

• Build immediate equity in your home.
• $100 will be credited by UHC to the second mortgage balance for Buyer(s) if, no later than six months after closing, the full $8,000 tax credit is paid toward the second mortgage balance.
• Eliminate second mortgage monthly mortgage payment altogether or substantially reduce its principal balance (monthly payment will not be decreased).
• No prepayment penalty.

For more information on this program please contact us immediately.