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First and foremost, the Tax Credit from the Housing and Economic Recovery Act is money LOANED to a 1st time buyer (1st buyer means nobody in house has owned a home in 3 years) in the form of cash at the time you get your tax refund. This money must be repaid...aaaaaaaaaaaanT!!! Yeah, that's the kicker. After two years, the buyer will start repaying that money like a 15 year interest FREE loan and if they sell the home before it's paid off, they'll just take that money from the proceeds of the home. The amount will be either $7,500 if you are buying a home for $75k or LESS and 10% of the price of the home for homes priced over $75k. Trust me, that is much easier to understand that way, than the way they write it...yuck, it's like they don't want people to read their stuff when the government writes stuff. Back on track here now.
The second part of this Housing and Recovery Act is about Down Payment Assistance. Plainly said, IT's gone. There was non profit organizations and charities and so forth that offered down payment assistance in the past for low to moderate families, and some didn't even target low to moderate...but they are prohibited now and thats that. Moving on.
On October 1st the minimum cash investment a buyer must have in an FHA loan will be 3.5% now.
Hope this was an easy read and touched the important parts. As far as the Tax credit goes, there are some further details and guidelines, but we can't remember ALL the details by memory with all the other changes we are seeing from our industry right now, so just let me know what else you need and I'll hunt it down myself.
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