Using the $8,000 Tax Credit to Cover FHA Loan Costs

Recently the FHA revised some of its guidelines and announced that they would allow first time home buyers to apply the $8,000 tax credit to offset the costs associated with obtaining FHA mortgage financing.

Heather Barr over at The Phoenix Agent blog has a great blog post detailing all aspects of this provision. For one thing you can use the $8,000 to cover closing costs, include additional cash down payment and any mortgage interest rate buy-down costs. Notice you can’t use these funds to cover the required 3.5% down payment. Read Heather’s post for additional details.

Here is a portion of the HUD announcement for those interested:

WASHINGTON – Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration’s new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today’s action will help stabilize the nation’s housing market by stimulating home sales across the country.

30 Year Fixed Mortgage Rates Fall

The New Year has been good to mortgage interest rates so far. Rates are hovering at 5.00% these days. This is just the beginning because the Fed just started buying mortgage papers from Fannie, Freddie. Today the Feds bought $10.2 billion worth and they have a target of buying up to $500 billion by the middle of 2009.

Here is a chart showing how far rates have fallen since last September:

30 Year Mortgage Rates Fall, January 2009It may be a good time to refinance your loan, but be aware that you must have some equity in your home. We’re turning away a lot of people due to lack of equity. However, the exception is for those who qualify for a FHA streamline refinance, which doesn’t require an appraisal.

Video In Support of Down Payment Assistance

Hat tip: Arizona Mortgage Team

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