Keep in mind you receive annual tax benefits owning a home !
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Unfortunately in California there is no current method established for lenders to allow using the tax credit as a down payment towards certain loans.
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As for using the credit for down payment a buyer must still use their own funds for the 3.5% down and the $8,000 may be used to increase the down payment.
The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an $8000 tax credit to qualified first-time homebuyers. FHA now supports the use of this tax credit to help with a Buyerâ€™s â€œdown paymentâ€. In reality, as I currently understand, the $8K cannot be used for a down payment; but rather, only to pay for settlement costs. HUD Mortgagee Letter 2009-15 provides the guidelines for using the $8K tax credit (see link below).
Here is the â€œtop 10â€ list of things you need to know about the FHAâ€™s view on this subject:
1. The IRS tax credit refund can be made only to the taxpayer and not a third party.
2. Government agencies may offer tax credit advances with second liens.
3. The buyer cannot get cash back through the tax credit advance.
4. The 2nd lien may not exceed the down payment, closing costs, and prepaid expenses.
5. The 2nd lien may be "soft" or require payments.
6. Payments on 2nd liens must be included in ratios unless deferred for at least 36 months.
7. Balloon payments on 2nd liens may not be before 10 years.
8. FHA approved lenders and FHA approved non-profits may purchase the tax credit.
9. Tax credit purchaser may not charge more than 2.5% of the tax credit as a fee.
10. IRS may deduct unpaid student loans, tax liens and garnishments from the tax credit.
The credit is not automatically deducted from closing costs although there is a brand new development, just last week, that allows some lenders to arrange this for you, so that you can apply the credit to your closing costs. Basically it equates to the lender "loaning" you the additional $8,000 in exchange for the right to receive your claim at tax time. The original method was that you file for the $8,000 tax credit with your 2009 tax return. I have more information on this on our website http://(www.villagrealty.com) - just click on the tab that says $8000 tax credit.
I just finished speaking with the listing agent about the property on SW 70th Terrace. Call me.
Villa G Realty, Inc.