Down Payment assistance from the Fed’s…..Well, sort of
For first time home buyers or folks who haven’t owned a home in the last three years and who may be a bit down payment challenged, there may be a solution for you if you act before November 30th 2009. States are finding ways to turn the $8,000 home purchase tax credit which normally should not be “spendable” in to immediate, hard cash so borrowers will have assistance with a down payment and closing costs.
Sounds like risky business to us given the creative financing schemes targeted towards unqualified borrowers which ended up blowing up in the face of Banks and Mortgage companies in the past year. Readers please comment if I am wrong, but shouldn’t a home buyer have to come to the table with some “skin in the game” in the form of cash when buying a home?
More than ten states have gone ahead with programs to assist borrowers purchase homes. As reported in the Los Angeles Times, the programs might work as follows: “(The States) have created innovative bridge-loan programs that advance credit-eligible buyers the cash they need for their closings. Generally the advances take the form of second mortgages — with or without interest charges — that become due and payable whenever buyers receive their credits in the form of refunds from the Internal Revenue Service”. Most of these bridge loan programs are payable by June 2010 and if the buyer does not pay off the loan in time then the loan morphs in to a second mortgage on the home payable in 10 years in most cases.
States known to have such programs in place include Colorado, Missouri, Tennessee, Delaware, New Jersey, Washington State, Ohio, Pennsylvania, and New Mexico. If such programs sound appealing to you then contact your local housing agency to learn if your area offers any such down payment assistance through the home purchase tax credit program.
