My wife and I bought our house in Dec 2010 using the U.S. Federal Government's Neighborhood Stabilization Program, which essentially resulted in our city (Phoenix) giving us a $15,000 loan to cover closing costs and down payment on the purchase of a home, provided the home was to be our primary residence, in the city limits, and in foreclosure.
The loan is interest-free, and is payable when we move, refinance, or after 45 years.
We bought a house for 1/3 of what it sold for in 2006. It has needed few repairs, came will all the appliances we needed which are top-of-the-line, and generally is serving us well. We both regard it as, on the whole, a good purchase.
The thought was we would make back the $15,000 when we sold this house, sometime 5-7 years from now. We are bolstered by the understanding that Phoenix is an especially depressed market, and we expect prices to rebound in that timeframe. Ideally we though the house could go back to 2/3 of its 2006 sale price.
- I understand, from a purely financial standpoint, it is not a good idea to pay for a loan with another loan. However, is our goal of recovering the $15,000 loan by selling the house in 5-7 years reasonable?
- Given the opportunity, would you do this? Is this a good decision (from a purely financial standpoint)?