The $8,000 federal tax credit for first-time home buyers is about to get better. To the tune of an $8,000 cash advance to use toward a down payment on a house.
Buyers who qualify for the tax credit and get an FHA loan will be able to get a bridge loan or a cash advance for the original amount of the tax credit they would qualify for. They can use this money toward their down payment, closing costs or other loan expenses. The technical term being used to describe the early liquidation of the tax credit is “monetize,” meaning to turn it into immediately spendable cash.
This is likely in response to the realization that, while housing prices are low, a down payment of at least 3.5% is still required to buy a home. And in this economy particularly, it’s getting tougher to put a substantial amount of money in savings at a rapid pace before the $8,000 tax credit time limit expires. By advancing a down payment to these first-time buyers, a home purchase becomes much more feasable.
What could this mean for the home buying market? It could double the total number of home purchases propelled by the credit program to more than 300,000.
All lenders providing FHA loans will be authorized and implored to offer bridge loans at closing — with simply their supposed tax return to offer in exchange.
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