RealTown's RealTalk

Hello Everyone -
I am trying to figure out a way to enable a buyer to use the $8,000 tax credit when purchasing a home with an FHA loan. My understanding (which I think is correct but not 100% certain) is that a borrower can actually borrow money for down payment and closing costs provided that the loan is secured with an asset and the ratios remain in good standing.

If a borrower was able to secure a loan from some type of lender that would loan against the $8,000, could it be used for an FHA loan?

Any other ideas that could make it work?

Thanks

Richard Park
John Hall & Associates
Tempe, AZ
85282

Rick If there is FHA loans that go up to 97% of the home value. If the person needs the $8,000 for closing, Do you really think you should be showing them homes? Don't add to the mess.

Michael Murray

Murray 4 Mortgages

908-334-1158

Hi Rick: The new tax credit allows the buyer to utilize the pending credit several ways: Below is some information for you that I hope will help. Also, I have a buyer who has an accepted offer on a home that is closing on the 16th - He filed his return immediately after the offer was accepted, filed for the credit (on the advice of his accountant), received the credit and refund and is using the funds for his FHA downpayment.

1. Is there any way for a home buyer to access the money allocatable to the credit sooner than waiting to file their 2009 tax return?
   Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down-payment.
   
   Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.
   
   Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission (Rick - Arizona may have something similiar), have introduced programs that provide short-term credit acceleration loans that may be used to fund a down-payment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.
   
2. With regards to obtaining a loan (secured or not) for the down payment, below is information from FHA detailing specific guidelines:
   
   Funds obtained from unsecured loans cannot be used toward the downpayment. Unacceptable borrowed funds include signature loans, cash advances on credit cards, borrowing against household goods and furniture and other similar unsecured financing. Funds can be borrowed for the required downpayment as long as satisfactory evidence is provided that the funds are fully secured by investment accounts or real property.
   
   

   Gwenn Tanvas is a Certified Mortgage Planning Specialists who specializes in Government Programs such as FHA, State and Federal VA and USDA Rural Housing Loans. Visit her website for more information, on-line calculators and a secure on-line application. She is able to assist with transaction throughout the state of Wisconsin. Her offices are located in Appleton, Oshkosh and Green Bay and offers the convenience of one-stop shopping. http://www.WisconsinLoanTips.com or http://www.MortgageProsOfWisconsin.com she can also be reached for comment or to answer questions via email at gwennt@centurytel.net

   
   
   
   

Who will lend money on the $8000 that MIGHT be received next year when taxes
are submitted? Remember there are conditions to receive and KEEP the
$8000???

Good idea, but I don't see how it will work? You'd be lending money against
some possible future benefit.

Jim Clauser
Your Real Estate Consultant For Life
RE/MAX Associates Athens, Inc.
706-714-1181 Direct
706-433-0542 Fax
http://www.JimClauser.com to view over 3000 homes!
mailto:Jim@JimClauser.com
Check out my Blog at
http://www.VisitJimsBlog.com

Perhaps, FHA itself could best address this question; but, it seems that if there was a loan provided against this future credit, and that is allowed under FHA guidelines, then it may work.

Hi neighbor... FHA still allows gift funds from qualified relatives... as a previous mortgage lender and underwriter we used gift funds with a stipulation of no pay back but we knew they were getting a gift from Mom and Dad and paying them back with tax return money, wedding gifts of $, whatever.

Also, I thought some time ago that the stimulus money should be allowed as down payment. Considering the govt' now "owns" FNMA and Freddie and has steak in numerous banks with TARP money, why couldn't, with prudent underwriting, they allow the $8K as downpayment to help move some of our homes?? Yes, it does smell like a 0 down loan, but lets face it, 0 down loans weren't the only issue. The DPA loan programs like Niehemia had very low default rates and they proved it right before they were eliiminated. Ridiculous NINA ( liar loans) along with loan programs that should never have been thought of let alone given were the main problems. And I am sure many of you will agree that many of our foreclosures are coming from people just discouraged that they owe twice what the home is worth and are just walking away, but that is another issue so will leave it at that..:) What if the partnership between the banks, FNMA/FHA would allow the $8k as downpayment IF the home was a bank owned property? Or what if the buyer could use the $8K if certain other underwritting criteria were met? Like lower DTI or higher credit scores... ? It is possible to reduce risk for these kinds of loans.

My office is in Chandler AZ and these days people can get a great little home for $200K and less. Let them use their $8K incentive for their down.. All the people I am working with are young first time homebuyers, some with families that simply want to take advantage of more realistic home prices.

And Mr. Murphy, I don't know where your comment came from or even what it means... Our jobs are to educate and help homebuyers who qualify find a solution to whatever their circumstances are.... If I weren't working with FHA buyers or taking listings that qualify for FHA financing I wouldn't be working.

Gloria

I asked a friend of mine, who is VP for Glacier Bank (named number 1 bank in the country), and he said the hard part will be finding a lender who is willing to use the tax credit as collateral. Lenders are very nervous and had tightened their lending guidlines. If a buyer is stretched so much that they need to borrow against the $8,000.00 for their down payment, they probably will not get a loan. His bank is still lending, but only to people who have a lenghty credit history of being a good to great borrower, 720 credit rating or higher. This is going to vary with every mortgage company. One of the reasons his bank is rated number one is that they have "always" had strict lending practices. You may have better luck looking at a private mortgage company than a large bank. Hope this helps.

Terry Pietron GRI, Century 21 Glacier Gateway, 738 9th St W, Columbia Falls, MT 59901

cell 406-270-7894, office 406-892-6585, Fax 406-892-6588, tpietron@hotmail.com