Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, announced today at an address to several thousand REALTORS that the Federal Housing Administration is going to allow first time home buyers to use their $8000 federal tax credit as a down payment for the purchase of their home (Woo hoo).
Secretary Donovan said that important changes, which the National Association of Realtors(R) has been calling for, will help consumers purchase a home. "We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment," Donovan said. According to Donovan, the FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
What constitutes a "first time home buyer" for FHA's purposes?
A first-time homebuyer is an individual who meets any one of the following criteria:
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An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time homebuyers. |
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A single parent who has only owned with a former spouse while married. |
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An individual who is a displaced homemaker and has only owned with a spouse. |
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An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations. |
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An individual who has only owned a property that was not in compliance with State, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure. |
If you meet one of these guidelines and thought you were out of the housing market because you lack a down payment, the Department of Housings new policy may get you in the game. Call me for a referral to a lender who is experienced with FHA financing.
There is also a $10,000 tax credit available for NEW HOME purchases in California. You do not have to meet first time home buyer criteria for this tax credit, but you do have to purchase a new home, which is a home that has never been lived in. Consult your tax professional for more information.
Thank you for stopping by. Your comments on this post are welcomed and appreciated.
No one sold more homes in Del Norte County in 2009, 2010 and 2011--*in units sold and volume--than Fran Gatti. Put Fran to work for you!
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Fran: What great news. This is excellent. Just one more way that buyers can take advantage of this great Tax Credit program to both get into a new home... and to help re-start the economy. Thanks so much for sharing...
Fran,
I had not heard this yet. This is great news. Thanks for letting us know.
This is great. Did you hear about this at the D.C. conference?
That is great for the market, and the Buyers. I caught a bit about this late last night.
I think the instant use of the tax credit is great but the devil is in the details just as we have found we some of the presidents new stimulus plans. The government announces a cool idea but forgets to create the legislation and framework for the rest of us to implement the cool idea.
Skeptical but hopeful I remain.
Tim
I work closely with two wonderful lenders who had not heard the news and I was the lucky one to break it to them. They will let me know as soon as they find out how it will be implemented. I know this will help more buyers find a home, but you have to wonder, is it going to have the same affect as sub-prime loans? Sure hope not.
We have passed this on to one of our buyers today.
Has anyone heard any specifics on when lenders are going to be able to offer these bridge loans?
Fran: Watch out for the comment # 9 above me. It is a spam comment. I have seen perhaps ten of them today. Also... I suggest you NOT click on the link... since it is spam... and may lead to some virus or trojan horse. I suggest you DELETE the above comment. Take care...