Back and forth, back and forth goes HUD and the negotiations with participating FHA lenders on the monetization of the $8,000 tax credit approved in 2009. The latest (May 29^th) word is that the FHA guidelines have been changed in order to make these funds available at closing to first time home buyers eligible for this tax credit. The good news is up to $8,000 WILL be made available by participating FHA lenders to eligible first time home buyers to use these funds to help pay for their closing costs/prepaid expenses. The bad news is it may not be used to meet the minimum 3.5% down payment requirement.           

Investigating how the $8,000 tax credit may come in to play for Southern Oregon home buyers, I was trying to find ways to meet matching fund requirements for down payment assistance programs with these tax credit monies, but alas, it is not to be. The down payment assistance programs will match the 3.5% minimum down payment on an FHA loan transaction, but the tax credit monetization may not be used to meet this 3.5%.

So, what does this translate to for Southern Oregon home buyers?

• Eligible buyers may use the Neighborhood Stabilization Program to purchase foreclosed homes in eligible areas of Jackson County. (direct from lender who foreclosed, not from "flippers")
• Eligible first time buyers may amend their 2008 federal tax return (prior to October), and/or obtain the tax credit monies they are eligible to receive on their 2009 federal income tax return after closing escrow.
• USDA Guaranteed Rural Housing program will finance up to 102% of the purchase price for qualified buyers who are purchasing property in eligible rural areas with this great fixed rate loan with no mortgage insurance.
• Eligible Veterans with no money down may use their entitlement and get a great no money down loan with no mortgage insurance.

Keep in mind, any back taxes, defaulted federal loans, garnishments, etc. owed will come out of these refunds. Also keep in mind, this program is scheduled to sunset November 30, 2009.

So what does this mean to YOU if you are a first time home buyer wanting to buy a home in this hot Southern Oregon market for entry-level homes? As confusing as all this stuff is, you need to choose experience, professionals to help you work through these many programs - and you need to do so soon, with rising interest rates, shrinking inventory and expiring programs.

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans