FHA Tax Credit Monetization Helps Home Buyers With Upfront Cost
Washington, DC - June 9, 2009 - (RealEstateRama) — First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.
The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.
“This is great news for thousands of families who want to take advantage of today’s low interest rates, competitive prices, great selection and the federal tax credit that is only available until Nov. 30, but could not save enough money for a down payment and closing costs,” said National Association of Home Builders Chairman Joe Robson, a home builder from Tulsa, Okla.
HUD also announced that FHA-approved lenders may purchase the tax credit from the home buyer in advance, so that the home buyer can use the funds for closing costs or to make a down payment in addition to the 3.5 percent minimum. Home buyers who go directly to FHA-approved lenders will still need to come up with the 3.5 percent minimum down payment that is required for an FHA-insured loan.
Home buyers previously would be able to use the funds from the tax credit only after filing their federal tax returns and had to come up with the pre-purchase costs on their own.
NAHB estimates that 40,000 more homes will be purchased due to the new FHA monetization program, in addition to the 160,000 sales already expected as a result of the tax credit.
The National Council of State Housing Agencies has a list of states offering first time home buyer tax credit loan programs on their Web site, www.ncsha.org. For information on the $8,000 first-time home buyer tax credit, go to www.federalhousingtaxcredit.com.
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Is anyone here in Oklahoma just as frustrated as I am on waiting for this monetization to take place with our lenders before the deadline? I see others are searching for some input but no-one seems to be commenting on the SLOW process here. If there is a credit in motion for this specific use, they why are they taking their sweet time too update the system… are they just waiting for the interest to rise so new home buyers can get caught in the crises again? What is the deal with this Government? They act as if they’re doing everyone a favor but on the other hand they are preparing lives to live miserably. My earnest money just sits and sits and sits until someone gets off their fat, lazy butts to push a button. This is pathetic!