Home Buying in 92509>Question Details

Mrs Really W…, Home Buyer in 92509

i was wondering if we purchase a home & qualify for the $8,000 tax credit can we use that as a down payment?

Asked by Mrs Really Wanna House, 92509 Mon Dec 21, 2009

and another concern is how is an average Joe suppose to purchase their very first home with all these investors competing with all these cash offers, shouldnt there be a limit of homes they can purchase?the banks just want that cash rather then help a family out!

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Hi Mrs Really wanna house,

You cannot use the tax credit to buy a house. http://www.southern-california-home.com/buyingahome/html
However there may be a lender out there that may consider lending you the money upfront. The tax credit is after you close escrow, file or refile your tax return and approx 60 - 75 days later, if all goes well with the IRS, you may get your tax credit.
0 votes Thank Flag Link Tue Jan 26, 2010
As far as I know, there are no programs in California that allow you to use the tax credit as a down payment.

As for your problems finding a home, I completely understand. It is a very frustrating time for home buyers in the market today. Here are a couple of thoughts that may help you. First, when anyone, bank or homeowner, sells a home, they get cash. Your loan funds and the seller gets the cash. The big benefit of a cash offer to a bank is that it is much more likely to close escrow than an offer that includes a loan. In many cases, a bank will accept a lower cash offer even if they have higher loan offers, simply because they will close.

Second, if this is the case, you need to make your offer as strong as possible. Have your lender do a complete application, not just a pre-qualification. If possible, get all the underwriters requirements up front. Be able to demonstrate to the bank that you can in fact close escrow. Check into local county down-payment assistance programs. These programs are starting to get funding again, and could free up your cash on hand for other costs.

Third, if you are using an FHA loan with 3.5% down and asking for closing costs, your offer is like one fish in a school of very similar fish. Figure out a way to come up with some or all of your closing costs. Ask relatives to help if they can. Don't ask for any repairs. The idea here is to make your offer stand out from all the others, and in most cases there will be plenty of other offers.

Finally, keep this in mind. The process right now is long and frustrating for most buyers. You can buy a home; but you are most likely going to lose a few first. The only way you won't get a home is if you quit now. Best of luck to you!
0 votes Thank Flag Link Tue Dec 22, 2009
Deborah and Cindy are correct, you cannot use the tax credit as a down payment. You don't get the tax credit until after you close. There are no agencies in California making loans for the credit before you get it.

I feel your pain on getting an offer accepted. The U.S. Government is artificially propping up the housing market right now by massively encouraging loan mods and delaying foreclosures through HAMP and artificially keeping mortgage interest rates down by buying billions in mortgage backed securities. They are keeping inventory OFF THE MARKET through the HAMP program and preventing new home buyers like you from buying and instead keeping others who are not paying their mortgage payments in their homes. It is terrible what they are doing. Hopefully more inventory can come on the market so normal deserving families in California can buy homes!

I personally think the Government should just let the free market do it's thing and let prices correct so normal families can afford homes for their families at normal prices in California. Artificially propping up prices doesn't seem like the solution.
0 votes Thank Flag Link Mon Dec 21, 2009
You would have to check with local or state housing agencies because in some states there are programs that would lend you part of the grant money for use towards your downpayment or closing costs-to be repaid as soon as you get the grant.

In NJ we have a program by the state called the "prefund" program. I have provided a link below so you can see what I am referring to.

You would have to call local Realtors or lenders to see if they've heard of such a program in your area.

Hope this was helpful.

Good luck.
0 votes Thank Flag Link Mon Dec 21, 2009
IF YOU DONT OWN AND FEDERAL TAXES YOUR CREDIT WILL BE YOURS TO DO WHAT YOU LIKE ,OTHERWISE IT WILL BE DEDUCTED FROM YOUR BILL AND YOU KEEP THE DIFFERENCE
0 votes Thank Flag Link Mon Dec 21, 2009
Hi,

No, you cannot use the 8K as the down payment.

There may be down payment assistance programs available to you. Contact an agent who specializes in first time homebuyers, or your county offices.

If you will consider traveling further outside of Riverside, you may find a property that qualifies for a USDA loan without a down payment.
http://eligibility.sc.egov.usda.gov/eligibility/welcomeActio…

FHA loans currently require 3.5% down payment, and you can ask for seller contributions for the closing costs. Keep in mind the property appraisal must support the purchase price.

FHA also provides a streamlined loan that allows you to finance renovations and your purchase mortgage all at once. Known as the 203K loan, the process is streamlined when the renovations/repairs are 35K or less. This option allows you to consider “fixers” which you might not otherwise be able to pursue.

You can use Trulia’s “Find a Pro” to read profiles. Look for indicators in these profiles that the Realtor has specific knowledge to help you based upon your needs. Contact a few, have lengthy phone discussions, and choose a Realtor who will work hard for you.

Best of luck....
Regards,
Deborah Madey - Broker
Peninsula Realty Group
732 530 7755 Main
732 530 6350 Direct
0 votes Thank Flag Link Mon Dec 21, 2009
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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At this point, the tax credit acannot nbe used for a downpayment. New guidelines will make it easier for you to find a home and not have to compete with investors...hang in there.
0 votes Thank Flag Link Mon Dec 21, 2009
Cindi Hagley,…, Real Estate Pro in San Ramon, CA
MVP'08
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