OfflineDONOVAN ANNOUNCES RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME
FHA plan will stimulate new home sales and help stabilize housing market
WASHINGTON - Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country.
The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.
"We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."
Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.
According to estimates by the National Association of Home Builders, the Administration's homebuyer tax credit will stimulate 160,000 home sales across the nation - 101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home. Given FHA's current market share, it's estimated that thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage.
Homebuyers should beware of mortgage scams and carefully compare benefits and costs when seeking out tax credit monetization services. Programs will vary from organization to organization and borrowers should consider whether the services make sense for them, as well as what company offers the most suitable and affordable option.
For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.
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HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.
HUD No. 09-072
Lemar Wooley
(202) 708-0685
www.hud.gov/news/index.cfm For Release
Friday May 29, 2009
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
awesome news!!!Thanks for sharing...That may help me actually with what I am currently working on...Thanks for posting...
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Thanks for posting this information. It is great to know that each day there is more opportunity for all of us to make money and help people get into a home. It is nice to hear the pie is getting larger. Good luck with all your deals. Believe and Achieve!
Indiana-Joe
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Thanks for the info. Being informed is so important. Thanks again for taking the time to post in detail. Continued success.............Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
For the DG Investors purchasing their first home, more help is available. This could not have come at a better time than now. We have to make good use of this opportunity. Hint, every DG member having their own home is the beginning of success and one more point to the pool. Great post, well done.
Sandra
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I agree. When you are able to witness things for yourself and know the system applies to you also. It becomes a sense of confidence, self assurance. Continued success........Luberha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
Thank u so much for this info. I have someone looking to move and I have
been trying to convince her to seek out lease option. Hopefully this will move her in the best direction for her situation.
Thanks again
Dannette Sanders
Thank you for this info, I'm new at this and I can now utilize this infomation towards my new journey in Real Estate.
Thank you for the post but I have one question: is this saying that if a person has already filed there tax return for this year, they will be able to get the $8k down payment assistance or will they have to wait to get the money when they file for next years taxes?
If it is to be, then it's up to me!!
Tanya
Tanya
If you could call this person who is with HUD and ask them this question I am sure they could give you all the correct answers.
Lemar Wooley
(202) 708-0685
Sissy
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
As usual you are on top of the good news in the REI world. Great news for people who don't have the downpayment. It's about time our goverment started thinking about the middle class and everyone else. Good news Sissy....Jan
I just read this on CNNmoney.com
Update: FHA backs away from no down payment loans
After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts.
Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment. Seems there was plenty of push back that allowing borrowers to land a mortgage without any “skin in the game” was not exactly a great idea. What’s amazing is that the proposal even got floated in the first place; the notion that taxpayer dollars would have been on the line for mortgages that required no down payment was a bit of a head spinner.
What HUD finally settled on was that lenders can essentially advance qualified home buyers the value of their tax credit today to reduce their mortgage costs, but only if the borrower can bring a minimum 3.5% down payment to the table. Approved uses of the tax credit include paying for closing costs, making a larger down payment (to thereby reduce the monthly mortgage cost) or buying down the interest rate by paying points. The real value of the new rule is that eligible homebuyers can now “use” their tax credit today, rather than having to wait to recoup the value of the credit when they file their 2009 federal tax return in early 2010.
Basically, if you meet the eligibility rules you can now get a maximum of $8,000 advanced to you to buy a home. Single homebuyers with income below $75,000 and married couples who file a joint return with income below $150,000 are eligible for the max tax credit. (A limited credit is available for individuals with income between $75,000-$95,000 and joint filers with income between $150,000 and $170,000; the credit completely phases out above those income levels.) Anyone who has not owned a primary residence for three years is considered a first-timer but to grab the tax credit you must close on an FHA-insured loan before December 1 of this year.
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8K credit for first time buyer...that's good. I am not sure if I heard it right but I guess there is also a credit for those homeowners who would like to buy a second house. Could anyone enlighten me on this. Thanks
Thanks for sharing this information. I will share this wth my clients. As far as the tax question goes you can call an H & R Block office and they can clarify it for you.
After this news came out, it was nice to see that real estate agents in the Midwest had something I have not seen for a while....a smile. I spoke to several real estate agents during the past few days and they all are very excited about this. Thus, it will be interesting to see how this effects each of the local area markets where I live and I would be curious to see how it effects other markets where other DG students live. Good luck on all your deals. Believe and Achieve!
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As long as they haven't purchased a home for at least three years as their primary residence. Continued success........Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
Just read in the most recent Spidels CA Taxletter:
"Any taxpayer who purchases a qualified principal residence on or after March 1, 2009, and before March 1, 2010, is allowed a credit equal to the lesser of 5% of the purchase price or $10,000 under R&TC§17059. Buyers must apply for credit allocation from the FTB, and the FTB will review the applications and allocate $100 milion on a first-come, first-served basis. Once the fTB allocates the $100, million, the tax credit will no longer be available."
For more information go to http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
Sometimes it's nice to work in an accounting office!
"Faith is taking the first step even when you can't see the whole staircase."
~ Martin Luther King, Jr. (1929-1968)
www.beaconinvestorsgroup.com
Thanks for the info. This will be a great reason to buy now. Continued success.....Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
If there are any basic accounting questions, I would be happy to ask the experts at work. I'm no accountant but have about 30 I see every day. Some I value their advice more than others. I used to "just do my job" now I'm taking every opportunity to gather information about real estate AND watching what the "big guys" are doing and how it is working for them.
"Faith is taking the first step even when you can't see the whole staircase."
~ Martin Luther King, Jr. (1929-1968)
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wow, over 8,000 applications for the month of June ! Looks like the market is going to pick up again. Hopefully we all will be busy for the year of 2009 and 2010 ! Yay
God Bless !
Paul T. La Moy
Hudson Valley, ny
so i have money in an ira. it says i can possibly take out 10K toward the purchase of a home. i am also considered 'low income' right now so i get the EIC (which makes no sense to me at all) and i would qualify for the first time buyer. if i take out cash from the ira for a home of about 50K would i still be in the lower tax bracket because of the first time buyer discount and my low ira deduction? terrible, aren't i?
If is the tax break that Pres. Obama has. You can earn up to 75,000 in order to recieve the 8k and I think itis based on 3.5% down, which if your putting 10,000 you should be ok. from my understanding you can use the 8k towards your down payment. So it is less out of your pocket. Continue success...........Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
Hi there,
I am working on this deal with the seller and it's going to be an attractive to the buyers with $5,000 down from the seller toward the closing cost and plus the $8,000 from the gov to down payment for the first time buyer. Hopefully there will be a big catch when I do the advertising on the net.
Paul T. La Moy
Hudson Valley, N.Y.
In the orignal program, the tax credit was for $8000 or 10% of the purchase price. That would be $5000 on a purchase of $50K. Has this changed?
Al
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I just checked with my mortgage broker on this issue (I'm in SF Bay Area) and he said while it is true, now the lenders are not cooperating. Frustrating, since I'm competing with all-cash buyers and/or investors around here.