So you are you looking to take advantage of the housing market and buy your dream home when the prices are cheap but you are not sure if you have enough cash to afford a down payment. Not to worry; you can use the government's money for some, if not all of your down payment!
By now most everyone looking to buy a home knows something about the $8,000/$6,500 homebuyer tax credit and in order to be able to use the credit for a down payment you have to do a few things. First off, you have to get financing through the Federal Housing Administration (FHA). Secondly, you have to get the FHA loan through a tax credit monetization program, which will allow you to pay your entire down payment, up to your respective amount ($8,000 for first time home buyers and $6,500 for everyone else with certain income limitations - please talk to your real estate agent or mortgage broker for details on the specific amounts). The Tax Credit Monetization Programs work by giving you a short term loan, that has a very small interest rate, if any at all that must be paid when you receive your actual tax credit amount after you file your taxes. So in other words, your down payment isn't directly paid by the government; you are taking out a loan for that amount and once you receive that amount from the government you pay it back. If you fail to repay the amount within the agreed upon time frame it will act as a second mortgage which is something nobody wants! You will be able to use the amount for anything related to the closing of your real estate transaction. Paying discount points, escrow fees, etc. To see if you qualify for this what you need to do is either get pre-approved with a FHA lender or apply for a loan after you've already found a home. There are over 12,000 FHA-approved lenders in the United States so it shouldn't be that difficult; more than likely the bank you've been banking with for years is an FHA-approved lender. In addition to normal paperwork you will most likely be required to complete additional forms for this specific type of program and there are strict guidelines the federal Housing Administration (FHA) have required lenders to do and not to do regarding fees: A Nominal or reasonable interest rate, usually around 2.5% (or $200 if you qualify for $8,000) You will also be required to prove you have no outstanding liens or judgments against you that could reduce your tax credit (such as unpaid taxes, liens contractors have placed on your previous home, law suits, etc.) Following these simple guidelines you will be able to eliminate any down payment worries or afford a little bit more house then you originally thought. For best results I would highly recommend consulting with your real estate agent, bank, as well as your accountant to see if you qualify for the homebuyer tax credit or to see if there are any other programs out there that can help you in this huge financial decision. Source: https://www.neonbeginner.com/2018/04/20/what-is-nex-platform-neon-exchange/
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