FHA to Use Tax Credit for Downpayment
UPDATED!
Please read the article posted at http://carolinamortgageconnection.foundbydesign.net/2009/06/01/update-tax-credit-as-downpayment-for-fha/ for updated important information about this tax credit!
Original Article:
The $8,000 First Time Home Buyer federal tax credit passed by the Obama Administration may be useful after all! The FHA is going to permit that tax credit to be “monetized” and used as a downpayment on an FHA mortgage loan. So if you do the numbers, you could possibly purchase a $228,500 home with no money down! After all, FHA requires 3.5% of the purchase price to be committed to the deal by the buyer, and 3.5% of $228,500 is just shy of $8,000! Of course, you’d still have closing costs and points to worry about, but with the right negotiations, they could be covered by the seller.
You may not want to buy a home quite that size, but the good news is that with this new option to use the First Time Home Buyer tax credit as a downpayment for Charlotte FHA mortgages, many new home buyers in Charlotte will have access to a tremendous home buying program!
Shaun Donovan, secretary of the US Department of Housing and Urban Development (HUD) was quoted as saying:
We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment.
Regarding the housing market, Donovan said:
I do think we have some early signs hat the market overall is stabilizing. Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.
The National Association of REALTORS has been lobbying for the use of the tax credit for first time home buyers as a downpayment for some time now and it looks as though it will pay off. Some question if using the tax credit for first time home buyers as a downpayment will rekindle a “zero down” / “no money down” marketplace and risk further issues in the future, but in the mean time this should definitely help many Charlotte first time home buyers find another reason to get off the fence!
UPDATED: TAX CREDIT CAN NOT BE USED FOR THE MINIMUM 3.5% DOWNPAYMENT AS REQUIRED BY FHA. READ MORE AT http://carolinamortgageconnection.foundbydesign.net/2009/06/01/update-tax-credit-as-downpayment-for-fha/
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