The Home Buyer’s Tax Credit has undergone another change for the better. It started out as a $7500 interest free loan for the Home Buyer, repaid at a rate of $502 a year for 15 years. That is the simplified explanation; there were other conditions to that tax credit. Then it morphed into an $8000 Home Buyer Tax Credit, with no repayment. Buy a home, file an amended tax return and you would receive your $8000 credit to do with whatever you wanted. Most of my clients were planning on using the money to do the repairs and upgrades that they would like to do, but did not have the money for.
The latest version enables 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. According to Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, 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.
In this declining market, where home buyers are being asked to put more money down on a home, this is a use of our monies that will have an immediate effect. Some people will be able to buy a home NOW. Others will be able to use the money to upgrade and repair their new home.This tax credit is for home buyers that have not owned a home in the last 3 years.
So, if you’ve been thinking about buying a home, but don’t have the required downpayment, this new and improved tax credit is for you. Find that home that you’ve been wanting and use the tax credit as your downpayment.
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