Included in the budget passed by the Washington State Legislature is a $25 million dollar fund to implement a Tax Credit Advance Loan Program for First Time Home Buyers. (The definition of a First Time Home Buyer is basically if you have not owned a home in the past Three years.) Introduced by Washington State Treasurer James McIntire, this program will allow qualified borrowers to get immediate access to the $8,000 Federal Tax Credit for use at closing as a home down payment. Like the Federal Credit, this loan program expires November 30, 2009.
When does it start?
The Tax Credit Advance Loan Program is part of the 2009 Washington State budget which has not yet been signed off by Governor Gregoire. Though the Legislature adjourned on April 26th, there is apparently going to be a need for a special session before the budget can be implemented. The special session is expected to convene sometime within the next couple of weeks and is expected to be very short, possibly held to one day. Since this proposal is not a bill, which can be signed into law separately, but part of the budget ... it can not be implemented until the budget is approved and signed by Governor Gregoire.
The Washington State Tax Credit Advance Loan Program is in essence a bridge loan that will be administered by the Washington State Housing Finance Commission (WSHFC). The $25 million of state funds would be deposited into an FDIC-insured bank. The bank would then provide revolving lines of credit to the WSHFC expand its current down payment bridge-loan program.
To help offset concern of any unexpected losses, The Washington Association of Realtors (NAR) has pledged $400,000 to cover the credit advance transactions.
State Treasurer McIntire is also trying to convince the Obama administration to allow the state to tap into bridge-loan-assisted homebuyers' amended 2008 tax returns and be directly assigned the repayment of the lien. Under current IRS rules, tax-refund checks are sent only to the taxpayer's address. To ensure prompt repayment of bridge loans, the state would like to have refunds mailed directly to the Washington State Housing Finance Commission where repayment of a bridge loan is due.
Research by the NAR has shown that fully half of all would-be first-time home buyers in the State of Washington"cannot save enough money for the down payment and closing costs" - even though they could afford the monthly payments.
Once implemented, the Washington State Tax Credit Advance Loan Program will help First Time Home Buyers to take advantage of the current low mortgage rates and house prices, and the Federal $8,000 tax Credit.
Steve Swanson teaches First Time Home Buyer classes in Redmond Kirkland Bellevue Bothell and Sammamish sponsored by the Washington State Housing Finance Commission. To Register for an upcoming class go to www.hellorealestate.net or view the class schedule for your area at http://wshfc.org/buyers/schedule.asp
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