HUD has revised their $8000 first-time home buyer tax credit, and Arizona may not qualify at all!
Earlier last week ML 09-15 was re-released with SUBSTANTIAL changes. The major points are:
- The borrower can monetize the tax credit, but it CANNOT be used towards the 3.5% down payment requirement.
- A company/individual charging for the service cannot charge more than 2.5% of the credit amount.
- You will have to document the file (and the due diligence) for the tax credit purchase – VERY CAREFULLY. HUD will be watching these closely!
- IRS Form 5405 has to be completed, and RETAINED in the case binder!
- NO cash back to the borrower!
From what my Lender is also telling me, Arizona may not qualify at all for the tax credit. I would highly suggest talking to an accountant if you are relying on that tax credit before you start the homebuying process. Buying a home is still a good investment so just because you may not get the credit, doesn’t mean you shouldn’t buy a house. Look at it this way, if you end up qualifying for the tax credit that is icing on the cake but if not at least you have a house to call your own.