Happy First Time Buyer Family
If you have not heard by now, first time home buyers are eligible for a $8000 home purchase tax credit from the IRS if they buy a home in 2009 between January 1 and November 30, 2009. The Obama Administration authorized the home purchase tax credit with the American Recovery and Reinvestment Act of 2009. While this is a great incentive for first time home buyers to buy their first home, the incentive has been heavily criticized.
Biggest Hurdle For First Time Home Buyers – Down Payment
Criticism comes from the fact that the $8000 tax credit is only paid to the first time buyer with their IRS tax filing in 2010 of their 2009 return, yet the home buyer is only eligible for the tax credit if they buy a home in 2009. With this being the case, home buyers still have to come up with their down payment and closing costs to buy in 2009. While the tax credit was designed to help stimulate getting new home buyers to buy homes, it does not help first time buyers overcome the biggest hurdle most have which is coming up with their down payment and closing costs.
HUD and FHA Solution: The Short Term Tax Credit Bridge Loan
To assist first time home buyers overcome the hurdle of coming up with their down payment, the Federal Housing Administration – FHA – is rolling out a short term tax credit bridge loan. The short term bridge loan will lend the first time home buyer who qualifies money against their tax credit with the intention of the home buyer to pay back the bridge loan when they get their tax refund in 2010. Specifics of the plan are due out shortly from HUD and FHA.
Stay tuned for further updates.
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