First Time Home Buyer’s Tax Credit – Now Available for Down Payment!

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn’t receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit: Advancing the U.S. Economy,” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Other Solutions for Today’s Market

During his address at the summit, Donovan went on to say that the Obama administration plans to further stabilize the housing market. “I do think we have some early signs that the market overall is stabilizing,” Donovan says. “Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.”

The morning session included a panel discussion that was moderated by CNBC’s Ron Insana. Panelists examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation’s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.

“Right now the Federal Reserve is the market,” said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. “What will be the effect when the Fed stops buying?” Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

“We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,” said NAR President Charles McMillan. “We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.”

The real estate summit is part of the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo. During the week ending May 16, more than 8,500 REALTORS® will attend meetings, visit lawmakers and inspire action on Capitol Hill.

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3 Responses to First Time Home Buyer’s Tax Credit – Now Available for Down Payment!

  1. Mortgage says:

    I think the tax rate must be decreased. Thanks.

  2. christiborden says:

    I agree. Any chance of that happening? At this point, it is the first time home buyer who will be the saving grace of the real estate industry and this is a boost to getting us on the road to recovery. Granted, the Houston Real Estate market has remained healthy and strong but this will assist those areas in distress. I only hope that the powers that be will realize they need to make it retroactive to the buyers last year who qualified for the $ 7500 tax credit that must be repaid. Not fair, is it? Thanks for posting on my blog and I welcome your comments at anytime.
    Christi

  3. Susan says:

    I came across your comment re $7500 tax credit and I was wondering if there is any progress getting this credit changed to be similar to the $8000 credt. We who bought a home in 2008 really started the real estate recovery ball rolling. I have sent messages to my congressmen and the president to no avail. Can you help?

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