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111 Comments on $8,000 First Time Homebuyer Tax Credit - Approved by FHA/HUD 5-29-09 - But buyer BEWARE !!!
Thanks Jeff. I continue to read posts on this topic to try to sort through all the ocnfusion out there. Yours is the 2nd to state the same terms so I'm feeling more confident now.
Hopefully this will go through a lot smoother than the last time.
Kudos for you for hitting the street with this and getting the nuances of the deal out to the public in a timely manner. As all things empowered by the "administration", this one, too, will go through it's interpretations and transmutations... depending on who is doing the reading and executing.
One point, though, and maybe I'm missing something plain in MY interpretation.. the Mortgagee Letter specifically states a list of entities who cannot put money in peoples hands to use as the required 3.5% down payment.. seems to be the major rub of your readers. As I see it, this list did not include the government agencies. They are not in a postition to be construed as someone who would "benefit from the transaction".. so isn't this the part of the program we are all waiting for? A state or regional program taht advance loans the money to use as down payment? The Letter doesn't seem to preclude this to me..
Am I missing something?
Thanks for this series Jeff. I posted links to it from my AR and personal sites, after all, why re-invent the wheel, especially when someone more qualified has done so.
JOSH..... . I agree with you 110%... sure, it can help pay to buy the rate down, or if you couldn't get seller help. But we are talking about the minority. The majority in my opinion would be those that don't have the 3.5% down payment.. or who might have 1% or 2%, but not the whole down payment. And many of these people would be viable buyers, and maybe help pick up the economy... and get many foreclosures off the market. thanks
PAUL..... I think many of us will agree that this will help some, but that we need to focus on those that don't have the down payment. And some of us will agree about not having skin in the game would be the problem. I would rather get the buyer their 3.5% down payment from a source than do a 80/20, to where your total payment would be higher because of that 2nd mortgage rate in today's market. thanks
TOM..... I agree and thanks for your support. And thanks for reblogging this a few days ago.
JO..... don't get me wrong, there was a slight stimulus about this. It did get a few off the fence or help. A few is better than nothing. But as you, I am looking at this from the larger perspective. It won't help the masses as the 'blind' gov't thinks it would. thanks
LORI..... yes, some states have the bond moneys and can supply a second to help with the down payment.. that is legal by HUD's guidelines. Or even assistance, as in monies from non-profits to be used for down payment or closing costs. But not every state has this and I am extremely disappointed that the gov't & HUD didn't think this threw. Hell, the tax credit has been out since like May of 2008. It's not May 2009 and we still can't get this right... that is my opinion and .02. thanks
KEN aka Novation mortgage...... I agree, those that are even part of real estate, such as the NAR, should sometimes just back off and stop trying to be out there, FIRST, and in front of the public. They and HUD have stuck their foot in their mouth on several occasions. Misinformation just scares more people later on. And even if not, when put online, you might never get to read about the correct information, just the bad. thanks
Thanks Jeff! This was getting pretty confusing...Too many people were jumping the gun with the information (mainly NAR).
Your are correct in that it was not the low down payments that started this mess, a big part of it was the short term intro payments and stated income loans.
Hi Jeff, So many comments, so little time! I actually poured over all these comments. The tax credit is better than, well nothing. I have 5 clients who will soon get their rebates. They are all pretty excited about that!
Jeff,
The contradicting information on the tax credit is staggering. Thanks for the up-date.
Jeff, PLease walk us through a scenario, step by step by step exactly so we see hbow the process works. I , too am still confused, as are many other people. PLease take this all part and put it back together again, in a numbered, step by step process so we can all see how the complete transaction works.
Thanks! You rock!
Sarah
CNNMoney via the following link, http://money.cnn.com/2009/05/29/real_estate/tax_credit_as_downpayment/index.htm?postversion=2009060109 says that the $8,000 at closing can be used for downpayment assistance. Wish all parties could get on the same page.
Everyone, I am still trying to get back to all the comments above. But I wanted to clarify something that Bob Mori mentioned above.
BOB MORI...... . thanks for the link. I did read that article just now, yet I am confused on what you are trying to say. In my opinion, CNN is on the same page. This is what they said in the first paragraph... "First-time homebuyers will now have access to quick cash to help them with their down payments."
And then they stated this in the 2nd paragraph... "using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs."
As you can see, they said apply it toward. Sure, it's very easy to assume that they are saying that you can use the tax credit for the down payment, in both sentences mentioned above. But... but if you read further, it's the 6th paragpraph that they mention this.....
"The mechanics of the new program, according to NAHB economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS. Homebuyers must still come up with FHA's mandatory downpayment of 3.5% on their own, but they can use the tax credit to lower their principal balance and save on monthly payments."
So overall, I am not sure what page they should be on. After reading the whole article, they basically stated the same things that I did in my blog. Unless I am missing something else. thanks
Jeff:
In your opening comments yousay, "ML 2009-15, it states that you can't use this tax credit for the required down payment of 3.5%." Yet in the CNNMoney article whose link I included in my previous response and that you quote above, "In my opinion, CNN is on the same page. This is what they said in the first paragraph... "First-time homebuyers will now have access to quick cash to help them with their down payments."
And then they stated this in the 2nd paragraph... "using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs."
My confusion is that in CNNMoney I see nothing that says the $8,000 cannot be used for the 3.5% downpayment for FHA loans.
By the way, I am more inclined to accept what you have said in your opening as opposed to the writer for CNNMoney. I doubt that he has to deal with this stuff everyday as you do.
BOB... . thanks for stopping back.... I guess I would have to assume that there should be no confusion, because this is what they state in the 6 paragraph of the article which I mentioned above...
"Homebuyers must still come up with FHA's mandatory downpayment of 3.5% on their own, but they can use the tax credit to lower their principal balance and save on monthly payments."
The second part of that sentence says that they can use the tax credit to lower their principal balance.... and with the first part of the sentence stating that the borrower must use their own funds to cover the 3.5% of the down payment. It might not be 100% clear, but from how I read it, it's about 98% or more clearer. Thanks
Jeff, I appreciate you keeping us updated on this ever-changing issue. I need to have the correct info as soon as it comes out, so I can be an advocate for my buyers!
Jeff - Great points and clarification ! Is a little confusing but I think I got most of it ! If not, all one has to do is come back and read this post for the answers ! ~ Chris
I have mixed feelings about the past confusion of the tax incentive being offered as a down payment. I was worried, should it have been possible, that folks who really were not prepared to manage a housepayment would get into trouble like the sub-primers of a few years ago. An angle to this credit that many are not aware of is that the borrower can have a co-signer and still qualify. I presently have two deals going where this is the scenerio. Are you seeing much of this?
Does anyone know who or where i can write to in regards to the 2008 "Tax Credit" or interest free loan of $7500. I don't fell that it is fair that in 2009 people would get $8000 "Tax Credit" that they DON'T have to pay back. I feel that we should be allowed to keed the money without paying it back, or that those in 2009 should have to pay thiers back as well. Those of us who purchased a home last year helped the economy as much as those who purchased in 2009. If anyone has info please e-mail me at KJS7654@cox.net Thank you!!!
99 days left for the tax credit in 2010. Most buyers not only don't understand the program details - but are unclear on the specifics, deadlines, etc. Great piece. Worse, right now, inventory in our market in St Louis is low - sellers think that spring here doesn't start for another 60 days and may miss the push of buyer activity. I issued a statement discussing need for sellers to get on the market by early Feb which has fortunately been picked up by the local press.
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