However, I am back on track...
This update is really important so I wanted to make sure I got this posted ASAP.
The news is related to the $8000 First Time Homebuyer Tax Credit. Originally, you'd have to close on the property before you could fill out the tax form and receive the tax credit. This meant that you could not use it directly toward your downpayment.
The new guidelines - which are still being developed - say that you can use the $8000 tax credit for your downpayment on FHA loans. FHA loans allow you to put down a minimum of 3.5% downpayment.
How would this work? The $8000 would be lent to you as an advance - so that you could use it at the closing table. It would come from certain eligible lending agencies - not from the IRS. This $8000 advance would act as a loan that you then repay from the $8000 tax credit you'd receive from the IRS when you file for it after closing.
If you bought a $200,000 home with an FHA loan, your minimum downpayment would be $7,000 which would be more than covered if you qualify for the $8000 tax credit. This means NO OUT OF POCKET COSTS TO COVER YOUR DOWNPAYMENT. This is only good through the end of November of 2009 so WHY WAIT? Even if you have to break a lease to buy a home, why not consider it - what's cheaper - breaking your lease, or losing out on $8000? You may even be able to get a seller to buy out your lease in this market filled with motivated sellers.
Honestly, I can't imagine that it's going to get better than this. When they announed that the previous $7500 credit was increased to $8000 and didn't have to be repaid anymore, we thought it was too good to be true. NOW, you can use that $8000 directly at the closing table and you might not even have to come up with a downpayment.
Terry
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