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Many people are now aware that there is an 8000 tax credit available from the US government for first time home buyers. There are also quite a few people that are aware of FHA’s announcement that you can now “monetize” the 8000 tax credit at closing with the help of a lender or another approved organization who will “loan” you the money and get paid back when you get the tax credit from the IRS.
What many people don’t know is that it can be somewhat tricky to find a lender who is actually helping people monetize the tax credit to use at closing.
Notice that I didn’t say impossible — just tricky.
So tricky, in fact — that I am actually not aware of a lender in Arizona who is currently helping people monetize the 8000 tax credit. That doesn’t mean that someone isn’t doing it — just that I am not aware of any.
But there are many people who need help monetizing the 8000 tax credit, so if you are a lender and happen to be reading this — now is your time to shine! Simply drop a comment with your contact information here and we will be sure to spread the word.
And if you are a person who is interested in how to monetize the 8000 tax credit, be sure to check back here to find out who is doing it and can help you!
Friday it was announced that HUD will now allow people to “monetize” their $8000 tax credit rather than have to wait to get the tax credit from the IRS.
This is big news!
Early in May, HUD Secretary Shaun Donovan made a comment when speaking to a National Association of Realtors meeting about how HUD was considering this change to happen. Until Friday, everyone suspected that something was forthcoming, but no one new for sure until Friday when HUD issued their official Mortgagee Letter 2009-15 which outlined the rules of the program.
Being able to “monetize” the tax credit essentially means that you can use the money that you are going to receive for the credit when buying a home here in Arizona. It is expected that as a result of this tax credit, but to 160,000 families will be able to buy homes.
According to Reuters:
The National Association of Home Builders estimates that the $8,000 first-time homebuyer credit will stimulate 160,000 home sales across the United States — 101,000 purchases from first-time buyers and another 59,000 purchases by existing homeowners who sold dwellings to first-time buyers.
For people who are planning on “monetizing” the tax credit, the most popular question about HUD’s guidance is “can I use the tax credit for my down payment?” and the answer to that question is “yes — but you must have your initial 3.5% down payment first. You cannot use the monetization of the tax credit for the 3.5% down payment.”
Another popular question is “how much does it cost to monetize the tax credit?” The answer to this question is best addressed by HUD in their Mortgagee Letter — they hit the topic head on:
Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer. In FHA’s view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)
While many people were hoping that the “monetization program” would allow people to use the tax credit for their down payment, it is difficult to say that HUD did a “bad job” thinking this program through. All in all, I give them high marks for doing whatever they can to help as many people as possible in buying a home without putting loan quality at risk because borrowers don’t have enough vested interest in the transaction.
If you have questions about the monetization plan, be sure to speak with a loan officer at a FHA approved lender – and here are a few other resources as well:
Official Mortgagee Letter 2009-15
New Home Buyer 8000 Tax Credit Down Payment: Answers To Questions
3 beds, 2 full 2 part baths
Size: 1,724 sq ft
Lot Size: 7,500 sq ft
Added: 06/02/09, Last Updated: 06/02/09
Property Type: Single Family - Detached, Residential
MLS Number: 4183277
Tract: Power Ranch
This is a great bank owned property located directly across the street from a huge community park* Home has a gas range, gas fireplace and a nice play pool* This home is being sold ''as-is''* The seller has never occupied the property* No ''CLUE'' report or ''SPDS'' will be provided* All appliances convey ''as-is''* Allow 2-3 days for seller response*READ COMMENTS BEFORE CALLING!Listed with Century 21 Arizona Foothills
Brought to you by Candace Robinson, Home Smart Real Estate. Call me today at 480-202-3558, or visit my website at PhoenixArizonaRealEstateHomes.com!
