Maybe you have heard lately about using the $8,000 first time homebuyer's credit as a downpayment.  This sounds great at first hearing, but when the details were announced by HUD on May 29, it's clear there are a few string attached

Critics of the program, including the national Association of Realtors® (NAR) have always wished that the credit could be more, wished it could be available to all homeowners, and wished it was applicable on downpayments.  Earlier in May, the NAR thought it was getting one wish granted when Secretary Shaun Donovan announced the credit could be applied at closing.  It sounded like banks would issue bridge loans to cover the $8,000 until it was received from the IRS.  On a $230,000 home, $8,000 would represent the entire FHA-required 3.5%

When the final mortgage letter was issued in late May, HUD cleared up a few misunderstandings:

•     FHA buyers still have to have their minimum deposit in hand, though HUD is not opposed to creative financing to get it. A buyer can mortgage their car or pawn their grandmother's heirloom jewelry to get the money -in addition to the old favorite tactics of borrowing from parents or employers.

•     Any part of the down payment after the minimum can be "monetized" so that non-profits and Housing Finance Agencies will issue temporary low cost loans to cover the down payment and closing costs.

•     The actual credit will come the normal way, after the homeowner has filed a return with the IRS.

The new plan doesn't do much for a buyer who is struggling to make the minimum downpayment.  For those who want to pay more to lower their monthly payments, $8,000 more to put down will double their equity.  

The original program is a great plan to offer new homebuyers a credit of 10% of the value of their home, up to $8,000 off their taxes as an incentive to buy a home.  Since it is a tax credit rather than a deduction, people see their tax bills reduced and more money in their hands.  Once someone buys a home, they can see more money in their check each time if they reduce their withholding but the only way to see the whole $8,000 at once is to file the paperwork for the credit with a tax return.

Having the credit available upfront to apply toward any part of the downpayment would have been an greater help to many.  As it is, the tax credit will help many new homeowners get off to a stable start.  Most people want to make a few improvements when they move into a new place.  Eight thousand dollars can buy a new deck or some carpeting or new appliances.  The money can also help a former apartment dweller transition into the higher expenses of a home.

Unless the credit is extended, it expires December 1.  There is still plenty of time to take advantage of it.  Sandy Ogburn Sandlin and her team can a help you find your new Ascension Parish home and show how the credit works.  This could help you own a place in one our new Ascension or Baton Rouge area developments or a beautiful pre-owned Louisiana homes