In trying to rescue America from the economic destruction that resulted largely from a tsunami of questionable home loans, the government is tossing a familiar life preserver to the real estate market: more loans. See, the Economic Recovery Plan of 2009 tried to reach out to the one segment of home-buyers that still had the stomach for real estate: first time buyers. The plan said that anyone who hadn't owned a home in three years could take a $8,000 tax credit at the end of the year. But like all tax credits, you had to be eligible for this one - and that meant your income had to be low enough and the home had to be cheap enough. The problem, of course, was that for who qualified, the $8,000 would have been nice really to have at the closing table. You know, when you were actually paying for the house. Rather than months and months and months afterward. HEY FIRST-TIME HOME-BUYERS - WANT THE $8,000? HERE'S HOW. Income limits: $75,000 for single people and $150,000 for married people. Price limits: You can claim up to 10 percent of the purchase price, but not more than $8,000. Down-payment: You have to put up 3.5 percent, but can get help from your parents or your employer. The guidelines: 1) Ask your lender if its FHA approved. If your lender or another non-profit forks over the cash, you can use it for closing costs only. 2) If you get the money from your state housing agency - every state has one, just call up yours and ask - you can use it to suppliment your down-payment. |
So, this week the federal government stood up and told its state housing agencies (and FHA approved banks and a select group of non-profits) to just please lend these first-timers the money so they could use it for down-payments and closing costs. Don't worry, the government said. They'll pay it back when they get their tax refunds. But if you're a buyer - you're going to have to know whether you're entitled to a refund. If instead you actually - for example - owe $10,000 on your taxes and this credit brings the amount you owe down to $2,000 - well, borrowing this $8,000 could eventually turn into a lien on your home. True, the down-payment and closing costs are the biggest obstacles for first-time home-buyers. Most people can make a mortgage payment as easily as they can a rent payment. But if the past has proved anything, it's that buyers will line up for free money without worrying much about what happens next.
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