$8,000 Available for Down Payment

What's the biggest hurdle stopping first time home buyers from taking advantage of the perfect storm of low prices and low interest rates? Lack of a down payment, of course.

Homebuyers who have not owned a home in the last three years can receive a $8,000 federal income tax credit if they buy before December 1. For about 12 hours a few weeks ago, the U. S. Department of Housing and Urban Development said the $8,000 could be received at closing instead of after closing. Then the backed off. Now it seems they are going to revive the idea. The following is just in from REALTOR® Magazine Online.

HUD: Homebuyer Tax Credit Loans Still on Track
News reports that the federal government is backing away from its plan to permit eligible borrowers to monetize the first-time homebuyer tax credit are off the mark, a spokesperson for the U.S. Department of Housing and Urban Development says.

"The technical details are still being finalized and will soon be published in a mortgagee letter and posted on our Web site," Lemar Wooley, a HUD spokesperson, told REALTOR® magazine Wednesday afternoon.

Under the guidance that's under development, state agencies and other HUD-approved entities would be able to provide short-term bridge loans that households could use to help with their downpayment. The loans would be repaid with the proceeds from the households' federal tax credit.

The loans were announced on the opening day of NAR's 2009 Midyear Legislative Meetings in Washington, D.C., last week. In his announcement, HUD Secretary Shaun Donovan said guidance would be issued shortly.

When the guidance is released, it is expected to cover eligible lenders and set parameters for loan terms and repayment.