Anyone with student loans knows the toll they take on your finances. Often times leaving these families out of the wealth building opportunities of homeownership. But that could all change if the new program created by the state of Maryland catches on.
In November 2016, the state rolled out Maryland SmartBuy. This $10 million program that lets people with education loans purchase a home and wipe out college debt at the same time.
“Traditionally, people in their 20s and 30s would account for a substantial share of Maryland’s first-time homebuyers, but we’ve seen a little difference in that demographic over the years, and it’s believed that student loan debt is a part of the challenge,” Lt. Gov. Boyd Rutherford said at an event to kick off the program.
The program allows home buyers with more that $1,000 in student loan debt to purchase a home from the Maryland Department of Housing and Community Development.
“If a buyer has at least 5 percent for a down payment, the state will provide up to 15 percent of the purchase price toward outstanding student loans. Any remaining balance must be paid in full by the closing date.” According to this Washington Post Article.
The article continues “To qualify, buyers must be in good standing on their student loans and have at least $1,000 in debt. The purchase also must be financed through the Maryland Mortgage Program, which arranges home loans for first-time buyers in the state. Homeowners must remain in the house for at least five years to have the student debt forgiven.”
Here’s the hidden bonus!
The program also requires buyers to remain in the home for a minimum of 5 years.
The IRS allows homeowners to avoid capital gains taxes on the sale of a home that has been lived in for more than 2 years as a primary residence.
If the buyer practices Home Value Optimization they could be mortgage free and student free in short order.For decades homeownership has been the pathway for wealth building, and a strong U.S. economy.
For decades homeownership has been the pathway for wealth building, and a strong U.S. economy.
If this type of program catches on perhaps other states will follow Marylands’ lead.
