Tax Credit for Your Down-Payment!
June 5, 2009 by Matt Freeman
Filed under Buying a Home, Mortgage News
HUD has released information on the ability for First Time Home-buyers to monetize the tax credit. I encourage all buyers that this is a good thing but also encourage you to read further. Below is a link to the information posted on HUD’s Site. The News Release published on the Hud site gives insight on how this will be done.
“Housing Finance Agencies and certain non-profits will be able to use the tax credit for their down-payments via secondary financing provided by the HFA or non-profit.”
The way that I read this is that corporations like Nehemiah was in the past for seller funded down payment assistance will provide Bridge Financing via a second lien for the down-payment. Upon the filing of the tax return with the IRS your debt will be paid in full with your Credit. If it is not a Non-profit like Nehemiah it may be the Housing Finance Agencies.
I am left with the following questions:
- How much will the fee be to set up the secondary financing through the non-profits?
- Who will pay the fee?
- How will wholesalers factor this into the underwriting decision?
- What is the actual process from A-Z to make this as seamless for the borrower as we can?
- “HFA and certain non-profits” lead me to the question, Which ones?
I have several other questions that I hope will be answered in the coming days. If I have questions I am most certain that you do as well. I will work diligently to get the answers for you so that I may make this very simple and easy to understand. Have a great weekend.
Mari Medina on Fri, 5th Jun 2009 7:26 pm
Thanks for sharing this update Matt! And keep it coming on the subject – a lot of buyers need to know the ins and out of how this will work!
Jon Hodgkin on Wed, 10th Jun 2009 4:52 pm
I have a hard time seeing how this is a good thing in the end. It creates an artificial floor, hoping the market will take things higher once there is ’stability’.
I see two probable outcomes. 1) It will put in a false bottom that eventually gives way to market forces. If people can’t afford a house without being subsidized by the Gov, what will happen if the economy does not improve and the Gov can no longer afford to subsidize, which it can’t afford to do even now. 2) Prices will at best be flat for quite a while as improved economics is balanced by removal of subsidies.
What Gov social net has ever been removed or even reduced because it was no longer needed?
Matt Freeman on Wed, 10th Jun 2009 5:02 pm
Hey Jon,
Thanks for the comment. I appreciate your feedback. I agree with you in many ways. We are creating future problems and I do believe the loss of value in the dollar is going to have a large effect. We have seen rates shoot up for the time being and the printed money that we are using as bailout is a big concern as well.