When HUD Secretary Shaun Donovan announced at a recent National Association of Realtors (NAR) Midyear Legislative Meeting and Trade Expo in mid-May that the $8,000 first time homebuyers credit could be used a down payment, the crowd went crazy.  The NAR has$8000 long called for a credit that could be used at the down payment stage a spur to home sales.  According to Donovan, buyers could in effect get their credit when they needed their down payment through a short-term bridge loan.  Almost as soon as the word hit the street, it became apparent that Donovan was announcing a not-ready-for prime time program still in the development stage.

By May 29, the actual details of the program were unveiled.  Buyers can still only get their tax credit by filing a tax return with the IRS, but state housing agencies and non-profits can "monetize" the credit so it can be applied to the down payment or closing costs.  The money for the down payment would be in the form of a secondary loan.  ML 0915 outlines the details of the program. 

To assure that buyers have a personal stake in their home, they still must come up with a 3.5% downpayment on FHA deals, which can be  supplemented with funds from parents, friends or employers,. Lenders can monetize amounts over the 3.5% so buyers can get a lower interest rate.  With this transaction, the buyer can not receive any cash back from the transaction.

Will this new program help homeowners?  The National Association of Home Builders is optimistic that the tax credit will spur 160,000 home sales - 101,000 from actual first buyers and 59,000 from existing homeowners who were able to buy another home because of the a first time buyer bought their home.  Changes in the plan will help better plan their purchase since they know the funds from the credit will be available sooner.  This should encourage prospective homeowners who are madly saving to buy that now is the time to make a move.

The problem, of course, is that buyers still have to come up with the first 3.5% - a substantial amount for some first time buyers.  On a $230,000 home, 3.5% is still $8,050.  If the program was written so HUD standards were been set aside for the time the credit will be in effect, it would be more helpful to buyers who were planning on putting down the minimum.  For buyers who want to put more down, the program will be more helpful.

In this blog, we will keep you posted about Las Vegas agencies and non-profits who can help you get downpayment help within Federal guidelines.  There are rules to this new program - don't let anyone convince you otherwise!  It's important that you work through an approved funding source - not a scammer who will extract a big fee to help you. 

Be assured that we will help you with your financing questions.  For the best in Las Vegas housing and the news on short sale and bank owned home opportunities, contact:

N & Y Team

Nebi Adhanom Direct: (702) 277-9922

Yonas Woldu Direct: (702) 236-8997

Fax: 702-898-9738

www.VegasRealProperty.com

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