Trying to buy a home these days, especially for first-timers, is almost impossible. With the lowest record of properties up for sale, the high demand from buyers keeps home prices skyrocketing. You see, bidding wars play out in an already struggling economy while in the middle of an ongoing global pandemic.
Fortunately, help is on its way. Joe Biden, the president-elect, proposed a housing plan worth $640 billion that details specific actions that could aid homebuyers to realize one of the ultimate American dreams—homeownership. Based on the proposed plan, homebuyers could benefit from the following:
A Sizeable Tax Credit For First-Time Homebuyers
Under Biden, one of the most helpful perks for new homebuyers is a tax credit for a down payment worth as much as $15,000. This tax credit will help people feel less pressured by the down payment requirement when investing in real estate in different states. While this tax credit only offers about 4.3% of the down payment on an average-priced house, it will greatly help many people.
Forgiveness of Student Loan Debt
Although the exact amount that the government will “forgive” when it comes to student loan debt is not indicated in the plan, this could help many aspiring homebuyers.
If these people are not spending a huge chunk of their paychecks on paying off student loan debt each month, they will have more money left over for a home down payment. Additionally, these people won’t have to jump through hoops to qualify for a mortgage because they have less debt.
More Affordable Housing Could Become Available
One of the largest issues with the housing market today is the lack of affordable houses for sale. Under Biden’s plan, state and local governments will be incentivized and mandated to eradicate requirements that perpetuate racial segregation, making it more difficult for builders to build new housing. Likewise, this could restrict state and local government restrictions on new construction.
The president-elect is also looking to raise the supply of houses by allotting $100 billion for upgrading and building more affordable homes. This could have a huge impact on the struggling economy and home ownership issues. The prices of houses appreciate rapidly because of the low supply, so Biden’s plan could essentially alleviate this rapid appreciation.
The Creation of a Public Credit Agency Might Help Homeowners Qualify for Home Loans
Biden likewise proposed forming a public credit agency, potentially helping more people become eligible for home loans. This is because the agency would consider timely utility, rental, and mobile phone bill payments besides monthly credit card and car payments.
This could be a huge deal for people who don’t have sufficient credit and don’t have the means to build up their credit. This especially true for those in the minority and lower-income communities who don’t use the usual banking services.
Keep in mind that good credit is an immensely crucial factor in qualifying for a home loan with a more affordable rate. So people with bad or scant credit histories naturally have a more difficult time securing a mortgage.
In a nutshell, the housing plan proposed by Biden aims to eliminate or reduce discriminatory housing industry practices via expanded funding and legislation, from providing programs that could aid low-income buyers to reinstate fair requirements and rules for mortgages.
However, we have yet to see whether the president-elect will follow through with the housing plan he proposed during his campaign. You can expect the incoming administration to focus on getting the covid-19 pandemic under control first and making necessary repairs to the battered economy.
Whether the plan goes through would be dependent on how the incoming administration prioritizes it over other goals.