OC Realty Blog

Since May 29^th, when this program was announced, there have been changes with the way the program can be utilized. The biggest issue is the ability to receive the advanced tax credit and use it for the down payment.If you have not been made aware, FHA has announced a first time homebuyer may now amend their 2008 federal tax filing and apply for the $8,000 tax credit. They go to www.irs.gov and fill out Form 5405 to request the refund. A check will be sent and these funds may be used in conjunction with the purchase of a property. The borrower needs to use FHA financing for the new financing. This program would not make sense for a borrower with a down payment of 20% or more. FHA is basically mortgage insurance for borrowers with less than 20% down payment.  

The minimum down payment is 3.5%. Here’s the change. It was first reported the tax credit could be used for the down payment but FHA changed the initial release now saying the credit cannot be used for the 3.5% down payment. If the borrower wants to use it as additional down payment, that’s fine. However, the down payment may be a gift from relatives. The tax credit may be used for closing costs and buying the interest rate down. Note, there is a section that says a non-profit agency or a state housing program can advance the credit in the form of a second.  California’s budget problem precludes funds from being available.

An important fact to keep in mind is the deadline to receive the tax credit is 11-30-2009. The close of escrow must be on or before this date for the first time buyer to be eligible to have the tax deduction of $8,000. Plan accordingly.

If you’re looking for a home in the following cities, please give me a call - Laguna Niguel, Aliso Viejo, Laguna Hills, Mission Viejo. Rancho Santa Margarita, Coto De Caza, Dana Point, San Clemente, San Juan Capistrano, Laguna Beach, Corona Del Mar, Newport Beach, Newport Coast.