First-Time Buyers Tax Credit , Home Loans, get a home loan

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(Free-Press-Release.com) August 11, 2009 -- First-Time Buyers Tax Credit
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Use the First-Time Buyer Tax Credit
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Regarding “monetizing” the 8000 tax credit for eligible home buyers.

According to National Mortgage News Online:

The Department of Housing and Urban Development issued guidance that opens the door for FHA-approved lenders to provide short-term loans — with restrictions — to borrowers who are eligible for the $8,000 first-time home buyer tax credit. Borrowers must still come up with the required minimum 3.5% down payment using their own funds. But after that, they can use the short-term liens to increase their down payments, cover their closing costs or buy-down their mortgage rate. Calling the tax credit advance “another step towards accelerating the housing market,” HUD secretary Shaun Donovan told the National Association of Home Builders’ annual spring board meeting in Washington that the initiative is a “real win for everyone.”

Tax credit loans made by state and local housing finance agencies, government agencies and certain nonprofit groups can be used to cover the minimum 3.5%. However, non-profits that receive fees from sellers cannot provide down payment assistance under this program. HUD didn’t want to do anything that would allow “these seller-funded schemes back in,” a senior HUD official said. The department has issued a mortgagee letter (2009-15) with guidance on acceptable interest rates and fees. “We are putting in place the necessary safeguards and consumer protections, and if monitored the right way, tax credit loans can be used efficiently and safely,” secretary Donovan said.

I think that the most popular question that people have about the ability to monetize the 8000 tax credit is whether or not they can use it for their down payment. The direct answer to the question is Yes*** and don’t forget the *** - it means that new home buyers still have to come up with the initial 3.5% down, but if they want to use the tax credit for more of a down payment on top of the required 3.5%, they are free to do so.

One other item that I had questioned was “just exactly how much is this going to cost the borrower to get this short term bridge loan?” and HUD did a nice job of addressing that too. According to the Mortgagee Letter:

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