Good for Closing Costs, Rate Buy Down, But Not Minimum Down Payment
The first-time homebuyer tax credit, worth up to $8,000, is available to households that haven’t owned a home in at least three years. The credit is a true credit, not a loan, and does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment. It was enacted last year to help encourage households to enter the housing market while interest rates are low and affordability is high.
FHA-approved lenders received the go-ahead this week to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according the U.S. Department of Housing and Urban Development May 29. Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent. However, the loans can’t be used to cover the minimum 3.5 percent down payment.
Buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.
Source: Daily Real Estate News, May 29, 2009
Hill Slowinski, licensed in DC, MD, and VA
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