May 13, 2009 7:54 pm US/Eastern
Tax Credit May Be Used As Home Sale Down Payment
WASHINGTON (CBS4) ―
If you're thinking about making a home purchase to take advantage of the depressed South Florida real estate market, the federal government might be able to help you get started with your purchase. On Tuesday, Shaun Donovan, Secretary of Housing And Urban Development, said that the Federal Housing Administration (FHA) informed lenders to allow first-time home buyers to use an $8,000 tax credit as a down payment on their purchase.
As part of the Federal stimulus package, a tax credit of up to $8,000 is available to qualified first-time home buyers purchasing a principal residence before December 1, 2009. To up the ante, HUD has announced that FHA consumers will be able to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment.
FHA will allow approved lenders and nonprofits to issue short-term bridge loans buyers can use for the down payment. Buyers would repay the loans after getting their tax refunds in 2010.
Mike Mogerman is getting married soon, and he and his fiancé are looking for a house in Cooper City. It's where Mogerman grew up, and he says many of his friends have returned. Mogerman was happy to hear about the new government incentive.
"A lot of the homes we're looking at are in foreclosure, so the extra money would be used for what needs to be done to the property," he told
CBS4 News Reporter Joan Murray.
"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 down payment," said Shaun Donovan.
Prior to this announcement, the tax credit wouldn't appear until after the home buyer filed their tax return. The National Association of Realtors fought for the change saying the old policy might have prevented some people from taking advantage of the credit.
"With the tax credit, it makes it more affordable than it's been in two generations," Andy Rogow says.
Rogow is a mortgage broker in Hollywood. He believes this incentive will have a ripple effect for the ailing economy.
"As more people re-finance, there is more cash available to go out and buy that car or durable goods," he says.
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