By: Tim McLaughlin, Weichert Financial
A few weeks back, HUD made good on a promise to provide guidance to lenders regarding how they can enable buyers to use the $8,000 tax credit to effectively buy down their mortgage rate by giving them a larger down payment.
Here’s how the program will work: The option is available on specific loan products. Buyers must provide a down payment of at least 3.5%, which can be a gift from a family member, employer or nonprofit, charitable organization. Lenders may then offer the monetized tax credit to supplement the initial down payment and to pay for closing costs and interest rate buy downs.
As an example, the NJ HMFA is offering a zero interest Second Lien for qualified FTHB who expect to receive a FTHB Tax Credit when they file their 2009 Federal Taxes. Upon receipt of their tax credit, the borrowers are expected to pay off this Second Lien. If the Second Lien is not paid-in-full by 6/30/10, the loan begins accruing interest at the same rate and term as the First Lien. There will be no monthly payments and payment-in-full is due upon sale of property, refinance or pay-off of the 1st lien.
NJ TCLP (Tax Credit Loan Program) provides a loan to pay down payment and/or closing costs to any Agency Home Buyer Program FTHB who meets the requirements of the Home Buyer First Mortgage Program and who is eligible for a tax credit as permitted by the federal law.
The NJ TCLP loan will not exceed $8,000 ($4,000 in the case of married filing separately) and will be secured by a second mortgage. All loans must close by November 30, 2009. The borrower will pledge to apply the refunds received in 2010 from the first-time home buyer tax credit toward the repayment of the TCLP loan.
Again, the NJ TCLP loan requires no monthly payment. The full principal amount together with any accrued interest shall be due and payable upon the sale or refinance of the property or until the applicant ceases to occupy the property as their primary residence, whichever occurs first.
Not many originators that we see are currently offering this Tax Credit Loan Program, but in states where it is available, Weichert Financial is once again out in front, offering this along with a full slate of financing options to get the house of your dreams…we can help! Ask us how!
