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The new down payment initiative helps first time homebuyers in the Mount Pleasant and the Charleston SC area buy homes sooner than later. A lot of first time home buyers have been struggling to raise money for the 3.5% down payment and to improve their credit scores. The details of how the down payment initiative can be used have not been released. The cons of using the tax credit as down payment, will require a bridge loan to be used initially as the down payment. Typically a bridge loan is a short term loan at a high interest rate. Who ever decides to do the tax credit as a down payment via bridge loan, will need to be diligent on amending their 2008 returns so they can repay the bridge loan as soon as possible. Otherwise the cost to use the bridge loan will become very costly.
First-time homeowners to get tax credits via FHA loans
HOLDEN LEWIS / bankrate.com, Monday, May 18, 2009 - This year, some first-time home buyers will charge their down payments to the taxpayer.
Buyers will be allowed to use their first-time homeowner tax credits as down payments when they get FHA-insured loans, Secretary of Housing and Urban Development Shaun Donovan announced. The National Association of Realtors hailed the announcement, and asked taxpayers to subsidize all home purchases, and not just for first-time buyers.
The down payment initiative is built onto this year's first-time homebuyers' tax credit , in which qualified buyers can get an income tax credit of 10 percent of the home's price, or $8,000, whichever is less. The credit is half that for spouses filing separately, and the credit phases out for higher-income filers.
Under the plan announced by Donovan, buyers can get a piggyback mortgage or an unsecured bridge loan for the amount of the tax credit when they get a Federal Housing Administration-insured mortgage. The piggyback or bridge loan can take the place of a down payment. Typically, FHA-insured loans require a down payment of at least 3.5 percent.
Borrowers will be expected to pay off the piggyback or bridge loans when they claim the tax credit on their 2009 returns next year or their amended 2008 returns this year. To claim the tax credit, buyers have to buy by the end of 2009.
To read the rest of this article, http://www.detnews.com/article/20090518/BIZ01/905180316/1010/First-time-homeowners-to-get-tax-credits-via-FHA-loans
Charleston, Mount Pleasant, & Hanahan Real Estate For Sale
Matt Naumann – Charleston & Mount Pleasant, SC Real Estate Agent & Entrepreneur
"Taking Real Estate Home Buying, Investing and Selling to the Next Level" is my personal goal. I specialize in using creative strategies to help my clients buy, invest, or sell real estate in the Charleston & Mount Pleasant, SC Real Estate Market. My motto is “There is always a way!” Google or Call me (843) 818-9898 and let’s discuss how I can help you in save $1,000s when you buy, invest, or sell real estate.
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