$8000 Tax Credit Available for Down Payment Assistance - Buyers Responsibility Course a Requirement

I have finally received information on two programs that are being introduced in order to make the $8000 tax credit available for Down Payment and closing cost assistance.  Obviously these programs come with some strings attached.  Basically of the two plans only one is being accepted by a lender thus far.  Logic would tell you that these programs are new and will be accepted more widely in the near future.  The biggest problem I foresee is the backlog of financing that is going to occur as the deadline nears.  Also as many as 60 days will be needed to close which means that if you are going to need the Down Payment Assistance you are going to need to have a contract on a house no later than September 30th.  Below you will find the two programs.  An interesting requirement is that a Buyers Responsibility Class be taken.  I feel this is a great thing to help avoid some of the issues we ran into in the past.  There is no reason people should not be able to buy a home with little or nothing down.  It is easy to understand how a family of 4 or 5 who makes a good income could easily pay the bills but not have $6000 laying around they can use on a house.  However, through reputable financing the goal of responsible home ownership can be obtained.  Pleaes feel free to email me directly or call 214-682-0598 if you have any questions about Real Estate in the Dallas Area.

Also you will find some other options as well.

Plan #1-   Again, there is NO investor at this time that will accept this option- we are still awaiting word

·          Proceeds may be used for down-payment, closing cost or prepaids.

·          Amount of Assistance Available- 5% of the total mortgage (including UFMIP) up to the maximum of $7,000.

·          Borrowers must complete a pre-purchase homebuyer education course.

·          Borrower pays $250 Administrative Fee.

·          First 90 days, 0% interest to encourage borrowers to payoff 2^nd lien with tax credit refund.

·          Thereafter, 2 year term at 10% interest rate.    NOTE that this possible monthly payment will be required to be counted in the income vs expenses ratios regardless if the buyer thinks that they will be paying off the 2^nd lien (for example, $7000 at 10% interest for 24 months would be $323.01 per month).   The buyers must qualify for the additional payment in their ratios.

·          Available only with FHA loans.  

·          Tax credit advance loans may NOT result in any cash back to borrower at closing (i.e. cannot receive back earnest money, option fee, appraisal fee paid up front).

·          Lender MUST submit a complete loan package to TDHCA a minimum of 20 business days prior to closing.   This means that a minimum of total time to close will be approximately 60 days from contract to closing.   Reminder that this could also require a lender to lock for 60 days (which is more expensive than a 30 day lock)

·          Participating lenders must be approved by TDHCA to participate in the program.

 

 

Plan #2-  One investor currently

·          Proceeds may be used for down-payment, closing cost or prepaids.

·          Amount of Assistance Available- 5% of the total mortgage (including UFMIP) up to the maximum of $6,000.

·          Borrowers must complete a pre-purchase homebuyer education course.

·          Borrower pays $275 Administrative Fee plus  1% Participation Fee (i.e., if the sales price is $150,000- the participation fee will be $1500 plus the $275 Admin Fee)

·          Rate is set at 5.75% fixed (so with the cost of the 1% Participation Fee, it would be 5.75 1+1 plus the $275 Admin Fee)

·          First 120 days, 0% interest to encourage borrowers to payoff 2^nd lien with tax credit refund.

·          Thereafter, 5 year term at 7% interest rate.    NOTE that this possible monthly payment will be required to be counted in the income vs expenses ratios regardless if the buyer thinks that they will be paying off the 2^nd lien (for example, $6000 at 7% interest for 24 months would be $118.81 per month).   The buyers must qualify for the additional payment in their ratios.

·          Available with FHA, VA, USDA, Fannie and Freddie 30 year loans

·          TDHCA creates a 2^nd lien that advances the down payment, closing costs and prepaids

·          Income limited

·          Tax credit advance loans may NOT result in any cash back to borrower at closing (i.e. cannot receive back earnest money, option fee, appraisal fee paid up front).

·          Lender MUST submit a complete loan package to TDHCA a minimum of 20 business days prior to closing.   This means that a minimum of total time to close will be approximately 60 days from contract to closing.  

·          Participating lenders must be approved by TDHCA to participate in the program and pay $1000 to participate.

Did You Know?   

Did you know that FHA allows a gift from a blood relative but they also allow a loan from a blood relative?  So… if the buyer has a relative that they can borrow the funds to close up front (and pay them back after they get their Tax Credit after closing), then it would be 1) Less cost- no admin fee or participation fee   2) Close faster (no extra 30 days) 3) Less hassle (We just have to document the gift funds or loan properly) and they would not have to take a pre-purchase homebuyer education course.

 

Also, did you know that FHA allows funds to close from a collateral loan (i.e., against a paid-for vehicle, boat, against 401K, etc).   There are certain limitations but it may be a viable option.    Have the buyer talk with us to make certain that we are in guidelines.  

 

We will continue to keep you updated-  In the meantime, it is an amazing time to purchase, rates are still good, inventory is great and the $8000 Tax Credit for First Time Home Buyers is AWESOME!      HOWEVER…… as of today, there are only 162 days left to take advantage (and close) with the $8000 Tax Credit! 

I would like to thank Ronna Smith for her information on this new program

 972-672-2231 or email me atrsmith@servicefirstmtg.com.

RJ Avery is a Full Time Realtor in the Dallas Tx Area.  We specialize in all your North Texas Real Estate needs. Cover Homes for Sale in Dallas Tx, Homes for Sale in Rockwall Tx, Homes for Sale in Forney Tx, Forney Homes are our specialty as this is where I have called home for over 20 years.  Our team however covers all of Dallas, Rockwall, Kaufman, Henderson, Collin, Tarrant, and Denton counties