HUD: Tax Credit Can Be Used on Closing Costs

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning. Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today. The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.

Source: Robert Freedman, REALTOR® Magazine Online

First Time HomeBuyers need help with your Down Payment!!

HUD Action Allows Home Buyers To Use $8,000 Tax Credit For Downpayments On FHA-Insured Loans.

Here is an article from the National Association of Home Builders about the HUD program. http://www.nahb.org/news_details.aspx?sectionID=0&newsID=9233

This is truely an opportunity of a lifetime. If you are thinking it is time you buy your first home, give us a call and we will be happy to help.

When it Comes to Buying a Home, Two Points Can Make a World of Difference

Whether now is the precise time to purchase your dream home or not, there are certainly more than just a few good reasons to purchase – especially for first time buyers.
In May, 30-year mortgage rates of 5 percent were widely available and down from January's already low 5.8 percent. And rates are down a full two percentage points from August of last year.
What many consumers are not hearing is that despite a turbulent real estate market, mortgages are at historic lows. Compared to just last summer, 30-year fixed rate mortgages are about a point and a half lower. So what does this mean – especially for a first time buyer? Buying power. A lot more buying power.For instance, with the lower rates, a home buyer could save $257 per month ($3,084 per year) on their payment toward a $200,000 mortgage versus if they had recently obtained a 30-year fixed interest rates compared with August of last year.

On a $200,000, 30-year fixed rate mortgage at 5 percent, the monthly payment would be $1,073 – compared with $1,330 for a 7 percent mortgage, the national average for a 30-year fixed rate last summer.

According to national mortgage statistics, here's a breakdown of how much further a home buyer’s dollar goes on a $200,000 mortgage as rates continue to hover at historically low levels:

7 percent mortgage: $1,330 monthly payment (rates in August 2008)
6 percent mortgage: $1,199 monthly payment (rates in December 2008)
5 percent mortgage: $1,073 monthly payment (rates in May 2009)

When you combine record low interest rates, low prices and the federal government's tax credit for first time home buyers, and the mortgage interest deduction, there are certainly a lot of positive reasons to make the case for buying versus renting right now.

Another home buyer myth is that lenders are not loaning money right now due to the credit crises. "Home buyers can qualify for FHA loans with as little as 3.5 percent down payment.

Home buyers can go online to find information on homes for sale and mortgage rates at http://www.GreaterMontanaRE.com. Renters can determine for themselves if now’s the time to buy using a rent versus own calculator: http://www.greatermontanare.com/calculators/rent_vs_own.htm

This article is curtesy of GrassRootsPR and GMAC Real Estate.