This is the latest on the subject, hopefully it won’t change again!

Breaking News: Borrowers With FHA Mortgages Can Use Tax Credit at Closing

Buyers must still contribute 3.5% downpayment.

By:

Alison Rice

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First-time buyers using FHA financing will be able to use their $8,000 federal housing tax credit at the closing table, rather than waiting for a tax refund, according to an FHA document released today.

The eagerly-awaited “mortgagee letter” spells out the details of the effort, which was first announced two weeks ago by HUD Secretary Shaun Donovan. This morning, Donovan spoke to the NAHB at its spring board meetings on the topic as well.

"This will assist home buyers at closing, but it will particularly benefit home builders across the country," Donovan said at the NAHB gathering.

Critically for builders, the program will allow all first-time buyers using FHA mortgages to apply their tax credit at settlement, not just FHA borrowers working with a state housing finance agency. (Many such agencies have already established programs that allow borrowers to do just that.)

Lenders, agencies, and others will be allowed to purchase the credit from buyers, who can then use the proceeds for closing costs or to boost their downpayment beyond the 3.5% required for an FHA mortgage. (Buyers cannot use the tax credit as part of that initial 3.5% downpayment.)

Lenders and agencies will then be able to convert the tax credit into a second lien on the property. If a borrower fails to repay the tax-credit advance by the agreed-upon date (i.e., sending a check after their federal tax refund arrives), then the loan will convert to a second mortgage. Lenders and agencies can either require monthly payments on this loan or simply hold it as a “soft” second, receiving the proceeds when the home is next sold.

There are other rules as well. Buyers cannot combine the tax credit advance and an FHA mortgage to get “cash back” on their loan. They also cannot borrow more for the tax-credit-funded second mortgage than the total required for their downpayment, closing costs, and prepaid expenses.

Alison Rice is senior editor, online, at BUILDER magazine.

More info from the Utah Housing Corp.

Hint of the week: There has been some confusion about the sequence of events in obtaining a $6,000 Home Run Grant. The following steps are outlined to clarify the sequence and emphasize the fact that the Home Run Grant Commitment must be received prior to closing.

Steps to obtain a Home Run Grant:
1. Buyer signs contract to purchase a newly-built, never-occupied home.
2. Buyer applies for mortgage loan and obtains written loan underwriting approval.
3. Buyer furnishes Certificate of Occupancy or Municipal Final Inspection to lender.
4. Lender submits a Home Run Grant Request to Utah Housing with the itemized documentation.
5. Lender receives from Utah Housing a written Home Run Grant Commitment authorizing the Grant for the specific Buyer.
6. The purchase closing is scheduled at a title company
7. As soon as closing documents have been signed, the title company faxes required documents to Utah Housing to request that a wire of $6,000 be sent to the closing

$6000 New Home Grant signed

I got this e-mail from the Utah Housing Corporation:
Tip of the Week: As announced late yesterday by Gov. Jon Huntsman, Utah S. B. 260 was signed authorizing a $6,000 grant (Home Run Grant Program) to assist home buyers with the purchase of a newly-constructed, never-occupied home that they will occupy. This cash grant, coupled with low interest rates, stable home prices and the recently-enacted $8,000 Federal Tax Credit will enable many Utahns to achieve the dream of owning a new home. Unlike the Home Run grant, the Federal Tax Credit is only for first-time home buyers.

$6,000 Housing Grant

The Utah State Legislature passed a bill, Senate Bill 260, on
March 12, which provides $6,000 grants to buyers of newly
constructed homes. The bill was approved by two/thirds of
both houses. It will become effective immediately if signed into
law by the governor.

This is the link to the Utah Housing Corporation website to give you up to the date information on the $6000 New Home Housing Grant money.

http://b2b.utahhousingcorp.org/cgi-bin/R?P=uhc_home.html

Web address for First Time Home Buyer Tax Credit Chart

http://realtor.org/government_affairs/gapublic/homebuyer_tax_credit

$8000 First Time Home Buyers

For a great, easy to understand chart on the basics of the $8000 First Time Home Buyer Tax Credit, click on the link above.

Upcoming Information on the $6000 New Home Grant

The Utah Legislature passed a bill yesterday to authorize a $6,000 grant program (Home Run) for buyers of newly-constructed, never-occupied homes. Utah Housing was named as the administrator but must wait for the Governor to sign the bill. We anticipate that could be as early as next week and hope to have the program particulars available before our next weekly interest rate announcement. Because of the importance of this matter to the real estate community, UHC will be issuing a special bulletin to our business partners as soon as details have been finalized.

I got this e-mail on March 3rd from the Utah Housing office. I will update this information as soon as I know more. Please check in as frequently as you want. If you are interested in getting in on this free money, please call me ASAP!!

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