Stan Suther's Real Estate and Stuff

Got this from the North Carolina Association of Realtors Government Update from last Friday (5/15/09):

“HUD Reconsidering Tax Credit Use for Down Payment
HUD is apparently delaying its determination that the $8,000 first time homebuyer tax credit can be used for down payments.  This Tuesday, Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration was going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.  But later in the week this was rescinded and is apparently still being evaluated.

Donovan’s comments came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit: Advancing the U.S. Economy,” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..  The NATIONAL ASSOCIATION OF REALTORS® has been asking that the credit be advanced in the form of down payment assistance.”

I certainly hope they work this out.  The tax credit is a great buying incentive, but as it stands now, you won’t be able to take advantage of it if you don’t have enough cash for a downpayment and closing costs and pre-paid fees (insurance, taxes, etc.) which can be substantial- 2-3% of the price of the house.  It certainly makes sense to me that if the feds are going to give you the money after closing, then provided you qualify, you should be able to get that up front as a bridge loan from the lender which will be paid back when the tax credit check comes in.  They’d just assign that cash to the lender.

Stay tuned!