Just the word "monetization" intrigued me as I opened an email from one of my lenders last week. And the first time home buyers tax credit has been all the talk in the industry lately, encouraging young adults and other real estate consumers to be homeowners for the first time, and diminish some of the inventory currently inundating the market. So, what does this "monetization mean" in simple terms?
In short, this monetization is great news for first time buyers. The Federal Housing Administration is now going to allow lenders to permit new home owners to utilize their tax credit for their downpayment. Consumers will be able to access their $8,000 tax credit immediately at the closing table, as lenders "monetize" the tax credit through short-term bridge loans.
Although these recent changes seem small, their impacts are great throughout the industry. We are seeing home prices finally start to stabalize instead of the sharp decline we recently experienced, and inventory is not nearly as great as it was just a few months ago. Understanding these changes and taking advantage of some of the new programs out there will only further help us out of our current economic state.
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