Maureen Megowan's Blog

head_left_image

HUD takes step to "Monetize" $8,000 First Time Home Buyers Federal Tax Credit

The Federal Department of Housing and Urban Development has indicated that the Federal Housing Administration will allow homebuyers utilizing FHA insured loans to obtain short term bridge loans in the amount of their expected Federal Tax Credit of up to $8,000 for first time home buyers. These loans are an attempt to "monetize" the federal tax credits so that first time home buyers have the funds immediately to utilize to purchase a home.  The funds, however, can not be used to meet the minimum 3.5% down payment requirement of the FHA, but may be used to fund closing costs or to make a larger down payment.

The borrower must use FHA approved lendeers or State and Local governemntal agencies and non-profit organizations for the loans. Loans made by private FHA approved lenders may only be secured by the tax credit itself, while loans made by State and local agencies and non-profit organizations may be secured by second mortgages.

The main advantage of these bridge loans would be to provide funds to pay for buyer funded closing costs such as loan points, property tax pro rations, etc. Although the new bridge loans may be used to make a larger down payment, it would not make sense to use a bridge loan to do so, as the FHA approved mortgage interest on the larger loan amount would be tax deductible, while the interest on the bridge loan would not be if it is not secured by the property. You could always use the tax credit refund to pay down the FHA mortgage at a later date when the credit was received.

It is not yet clear what, if any, private lenders may agree to participate in this program. It will take several weeks for this program to become generally available.  The $8,000 first time home buyers tax credit expires November 31, 2009 unless extended by Congress.

For more information about the $8,000 first time home buyers Federal Tax Credit and other Income Tax Issues   as well as Financing your home purchase of Palos Verdes Peninsula Real Estate, visit my website at http://www.maureenmegowan.com

For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

Comment balloon 3 commentsMaureen Megowan • May 30 2009 06:24PM
HUD takes step to "Monetize" $8, 000 First Time Home Buyers…
share
The Federal Department of Housing and Urban Development has indicated that the Federal Housing Administration will allow homebuyers utilizing FHA insured loans to obtain short term bridge loans in the amount of their expected Federal Tax Credit of… more
Marymount College Removes Dorms from Expansion Plans
share
At the Tuesday meeting of the Rancho Palos Verdes Planning Commission, Marymount College made a surprise decision to remove its contentious plans for 2 new dorms from their proposed expansion plans. The rremaining plans include a new athletic… more
Rancho Palos Verdes Approves Aid to Terranea Resort
share
Tuesday night, the Rancho Palos Verdes City Council, on a 4 to 0 vote approved a plan to loan back up to $8 million in hotel tax fees due to the City over the next 27 months, to be repaid to the City with interest by the end of 2013, with the… more
Family Feud: The Sepulvedas vs. the Dominquez's
share
The History of the South Bay of Los Angeles is fascinating, and includes one of the longest running family feuds in Los Angeles County history. the Sepulveda Family versus the Dominquez Family. The land which includes the entire Palos Verdes… more
What Happens when the Federal Reserve stops Buying?
share
Something that I really worry about is what will happen to interest rates once the Federal Reserve stops buying mortgage backed securities and Treasury Bills. These Federal Reserve purchases are the main thing keeeping interest rates on conventional… more
Memorial Day, Thanking Our Fathers
share
This Memorial Day, we need to all take a moment and call our fathers, many of which served in World War II, the Korean War, and even possilby the Vietnam War (for the younger realtors out there ), and thank them for their sacrifice and service to… more
Palos Verdes Peninsula Dog Park Update
share
My husband Bruce and I are making some great headway towards building support for the construction of a dog park somewhere on the Palos Verdes Peninsula. We are currently promoting the idea of the construction of a dog park on the former Palos… more
Abalone Diving off of Palos Verdes a Look Back
share
My husband Bruce is providing this look back at Abalone Diving off of the Palos Verdes coast. The most obvious landmark that harkens back to the 60''s and '70's when scuba diving really took off is Abalone Cove located along Palos Verdes Drive South… more
Remember the Helms Bakery Trucks in Southern California?
share
One of the fondest memories I have growing up in the West Los Angeles area was of the Helms Bakery Truck stopping at our house. My mom would buy fresh bread, but what I remember most was the great donuts and other pastry treats that they sold. It… more
Knoll Hill San Pedro Park Plans Back to Square One?
share
The State Lands Agency of California, which administers Port Lands within the State of California, has recently ruled that the proposed plans for a park on the top of Knoll Hill in San Pedro are not consistent with the State Tidelands Trust which… more