Thursday’s Thoughts – Can you use the tax credit as your down payment?

There’s been a lot of talk about this in the real estate industry.  Let’s face it, most people don’t have a down payment set aside to buy a home.  Everyone’s sick of renting and with home prices and interest rates at an all time low, everyone is considering buying a home.  Almost everyone that is.  There has been a lot of buzz about the 1st Time Homebuyer Tax Credit (10% of sales prices up to $8,000).  It’s true, it’s available but not until after you buy the home and file your taxes.

Can you use this money as a down payment?  Here’s the problem, the rules currently require you to purchase a home before you can get your hands on it so the answer is no.  It was announced a few weeks ago that they would allow bridge loans (second mortgages) to be used as a down payment and then paid off after the tax rebate was received.  This didn’t last long and was retracted a few days later.  HUD just announced that they would allow government agencies to lend the money to be used as down payment but guess what?  Those agencies don’t exist yet.

The morale of the story?  As of the moment, there is no way to get your hands on this tax credit before closing if you live in Indiana.  A few states have this figured out already and are up and running with the program.  Save your pennies, nickles and dollars because you may have to actually use your own money if you want to buy a house this year.  Sign up for our web forums and follow this article.  We’ll release something as soon as it develops and you’ll be notified if anything changes.  Happy house hunting!