Great news for first time home buyers that we’ve been hoping for! Today, Shaun Donovan, secretary of the Department of Housing and Urban Development announced that they’ve worked out the details of allowing lenders to make a bridge loan to first time home buyers for the $8,000 tax credit so that it can be used for down payment and closing costs. Mr. Donovan had said several weeks back that they intended to do that, then a couple days later pulled back because of a variety of concerns to insure that it would actually work and not be abused. Looks like they’ve gotten most of those concerns resolved. Now, before you think it’s Christmas, HUD says that a buyer using an FHA backed loan from an FHA approved lender will still have to come up with the minimum 3.5% requirement without assistance from the tax credit. The buyer can use the tax credit for closing costs, a larger down payment or buying down their interest rate.
This tax break was great already, but many people couldn’t take advantage of it because they couldn’t get their hands on it until after a property closed. If they didn’t have the money for a down payment and closing costs, then they were left out of the game. This change will effectively make that situation much better.
This comes none too soon. As I said yesterday, the mortgage interest rates are creeping up. Just got an email from Kim Peschock (704- 500-9087), our Coldwell Banker Mortgage rep, saying that 30 year conventional rates are slightly above 5% and 30 year FHA rates are around 5.4%. If you or someone you know qualifies and has been thinking of buying, now’s a great time to get an excellent price, low interest rate, and a big tax credit (cash) from the feds. Hey, call me!