After much “to do” then “Indian giving,” the powers that be have finally decided that first time home buyers (defined as anyone who has not owned a home in the last 3 years) can now get an advance on the $8000 tax credit.  They can now use it for their down payment and closing costs through the use of a temporary or “bridge” loan.  Opponents say that this is going back to the old days of 105% financing and will get us back into the mess we are trying to stop.

On the surface it may look like that, but there are some major differences now.  This advance is only good on FHA (and other government underwritten) loans where there is a minimum credit score of 620 required to even be considered for a loan.  FHA loans also require full written documentation and verification of employment, credit and assets.  It also requires a 3^rd party appraisal with no communication between the lender and appraiser.  In other words, a whole different set of rules from the mid 2000’s when they were giving out what my husband refers to as “Pulse Loans” - you have a pulse? Well, here’s some money - go buy a house!

 Many of today’s families are credit worthy but have difficulty saving the money required for the minimum 3.5% down payment PLUS the $4000-$5000 closing costs and pre-paid expenses.  Currently, the Buyers who don’t have all the money needed can have the Seller pay the closing costs and pre-paid items.  The Seller is interested in their bottom line, so as long as the buyer offers high enough (and yes, sometimes even in excess of the asking price) to cover the added expense, the Seller is usually okay with paying it.

 The real estate industry is one of the pillars of our Nation’s economic health.  Many economists go so far as to say it is the foundation of our economy.  Though we are blessed in East Texas (and especially Tyler!) and have not been impacted by drastically falling real estate values, nationwide something had to be done.  Allowing the $8000 tax credit to be used for the down payment and closing costs will definitely be a stimulus package from which we will all benefit!

This entry was posted on Monday, June 8th, 2009 at 4:06 pm and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.