FHA ANNOUNCES CONSUMERS CAN USE THE $8000 TAX CREDIT FOR DOWN PAYMENT
Consumers across the country are now being told they can take advantage of a Federal Housing Administration program to allow qualified home buyers to apply the $8,000 tax credit when purchasing a home.
FHA has said it will now permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger down payment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate.
BUT WAIT: Don't get too excited, as nothing from Washington is this easy!
FIRST: if you read the actual Mortgagee letter from HUD, it says "AFTER you contribute your normal and required 3.50% down payment, you can use the $8,000 for a BIGGER down payment." WOW... What a joke Washington! This will have little effect for most buyers.
SECOND: You CAN use the money for closing costs - but most people already just "roll it in", so this option is of little significant help
THIRD: We still need to see how the lenders and banks respond and roll this out to actual Main Street home buyers. We also have to see how the ‘bridge loan' companies respond to this and how they will implement this.
Who is going to lend this short-term money, where is it coming from, how much are they going to charge, how to do you get approved? These and more questions all need to get answered before anyone gets too excited about this news.
We also suspect that the $8000 "loan" minus any fees to get this early from the bridge company won't come cheap!
I think this is a good idea, but clearly Washington has misses the mark (AGAIN), and this deal stinks. We only need the recent examples of FHASecure and Hope For Homeowners to see that what sounds good in Washington doesn't usually play out so good for Main Street.
So while this is good news, it is NOT the homerun that some of us were hoping for - at least not yet.