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$7500 To Pay Mom Back

Many first time homebuyers are looking at past generations for help coming up with a downpayment. FHA now requires a 3.5% downpayment (effective October 1, 2008) and the downpayment assistance programs (as of today) will disappear. Fortunately, FHA allows for gift money! single mom The gift needs to come with a letter from the person "gifting" and we will need to verify that they actually have the ability to give the money.

At the same time, Uncle Sam is paying First Time Homebuyers with a $7500 Tax Credit (for more info click here). Of course, the gift has to be just that - a gift with no strings of repayment attached... but as a child or grandchild, if you WANTED to pay that money back (because that's just who you are) - GOOD NEWS! You know you will have a credit with your tax refund!

Of course - we are not in the tax preparation business, so you would need to double check with one... but if I was a first time homebuyer - I'd probably pay my folks back this way!... or maybe I would start a college fund for my daughter... or maybe I'd pay some of my other bills off...

If you are purchasing a home in Raleigh, or need to get pre-qualified for a mortgage in Cary, please call Steve and Eleanor Thorne,

Posted by Eleanor Thorne 919-649-5057 Cary Mortgage Loans on 08/25/2008 04:13 PM

Comments (10)

first time homebuyer cary, fha loans, downpayment, gift letters, tax credit, mortgage, mortgage rates cary

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10 Comments on $7500 To Pay Mom Back

AUG

2008

We have been trying to get the word out there for the tax credit! Have you had many people contact you about it?

AUG

2008

George - we're going to be at the Raleigh Chamber Business Expo today (4 to 7) to talk to folks about this - we have not had a ton of interest...

As I'm sure you already know, the tax credit is actually a loan. It has to be paid back over time.

Always nice to pay peter and rob paul or something like that. Uncle Sam should be nice and just let the buyer have the money.

Don't forget FHA also allows reasonable "Friends" too that you can pay back with the tax credit ;)

AUG

2008

Yes Bob - it does have to be paid back - but it's at a rate of $500 a year, no interest.... so still a deal!

Justin! GREAT POINT! LOTS of people could be helping with that gift!

SEP

2008

so Gifting is still allowed? Can the Real Estate Broker pay this gift? Can it come from the commissions? We offer a rebate program to our clients when they buy, but do not know if this can be used as an official gift or not? Do you know??

SEP

2008

Brian - Gifts are definately allowed from a known familial party... as an agent, you are an "interested" party in the transaction and as such it would be considered an "inducement to purchase" much like DAPs (or DPAs depending on which part of the country you're in). We did confirm with several people that commission rebates can be used for closing costs. The money can not be used for downpayment - meaning you must make your downpayment without the rebate dollars. Here's where we got conflicting news from our Investors. We have investors who said they would reduce the sales price by the amount of the rebate. We had other investors who said they would allow it to be ADDITIONAL downpayment... meaning if the buyer is putting 5% into the transaction of their own money, and you are rebating $700 - then that money could go as an additional $700 "principal curtailment." It's a GREAT question! With the Disclosure of Commissions changing October 1 - I think we'll have more folks asking about this. Thanks!

SEP

2008

Thank you so much for the detailed response. I agree with the Oct 1st changes, I am interested to see how this will be handled going forward. We always disclose on our own form to the lender and attorney what we are giving back to our clients. this way it is in writting.

NOV

2008

Here is the actual website for the Federal Tax Credit....FYI. Take it and spread it around if it cant help. It pretty much has everything you could ever want to know on here.

http://www.federalhousingtaxcredit.com/

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