I wrote a blog yesterday detailing my concerns about the "new" monetized $8,000 first time home buyer tax credit and how not only will it not have any meaningful impact on demand, but it is likely to cause a lot of confusion as well, understandably.
And while we may need to wait several weeks to see if this is actually going to impact demand for real estate, it is safe to say that the confusion has already begun.
According to the letter from HUD detailing this provision, "Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person that financially benefits from the transaction, may not be used to meet the 3.5% minimum down-payment, but may be used as an additional down-payment, buying down of interest rate, or other closing costs."
And yet here on CNNMoney.com, Les Christie is writing the headline, "HUD tweaked stimulus tax incentive so first-time home buyers get instant assistance with down payment and closing costs". The headline is a half-truth.
The first line of their article goes on to say, "First-time homebuyers will now have access to quick cash to help them with their down payments." Another half-truth.
However, nowhere in the article does it say that the $8,000 tax credit can not be used for the 3.5% required down-payment.
Let the confusion begin.