Friday, May 29, 2009

Now we're talking REAL money

Saw this news report a few minutes ago. It addresses the key weakness I saw with the $8000 first time home buyer credit, which was that it provided no immediate help to potential home buyers - you couldn't use it for a down payment or closing costs.

The Federal Housing Administration will allow the new $8,000 first-time homebuyer tax credit to be applied directly toward home purchase costs when using an FHA-insured mortgage, the Department of Housing and Urban Development said on Friday.

1 comment:

Sweth said...

Note, however, that the credit can't be monetized in a way that violates any of HUD's other rules; specifically, only section 528 agencies (like local housing authorities) can monetize the tax credit in a way that lets it be used towards the minimum downpayment for an FHA loan--if the buyer is going through anyone else for the loan, then the monetized credit can only be used for closing costs and the borrower still has to pay out-of-pocket for the down payment.

Also, note that there will probably be a cost associated with monetizing the credit (as there are with any other tax refund advances).