The biggest problem that most first time home buyers have is coming up with the down payment. I have posted several times in the past various ways to get the down payment together, but it has still been out of the reach of some people. Now, that could change. The First Time Home Buyer Tax Credit is going to be available for the down payment on FHA loans in the near future, according the the Secretary of HUD.
Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a down payment. According to Secretary Donovan, the FHA's approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. For the first time, eligible home buyers will be able to access the funds immediately at the closing table.
Needless to say, there are no procedures in place at this moment to take care of the “bridge” loan, but this should be done in a fairly short fashion since HUD wants this to be the new way of doing things. My suggestion is that those that qualify for the First Time Home Buyer Tax Credit on an FHA loan start looking for a home now. The procedures should be in effect by the time the purchase is ready to close…..at least I hope that is the case. This should be a boon to the Real Estate purchase market and start using up some of the excess inventory. That may also mean rising home prices in a short period of time.
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