Our good friend David Bolton over at Prospect Mortgage (one of Boston’s best mortgage brokers) just sent me an advisory memorandum from MassHousing explaining the new $8000 tax credit loan program. I’ve posted it below and will explain some of the quick details in bullet points afterwards:
“Governor Patrick announced today the establishment of a Tax Credit Loan Program for
eligible first-time home buyers to be utilized in conjunction with MassHousing’s first
mortgage programs. The homebuyer credit is a new tax credit included in the recently
enacted federal Housing and Economic Recovery Act of 2008 (“HERA”) for homes
purchased in 2008 and 2009. The maximum available credit is $8,000 and it is claimed
when the homeowner files their 2009 tax return. To be eligible, the homeowner must
purchase the property before December 1, 2009. All other first time requirements
associated with MassHousing first mortgages will remain in place.
In an effort to stimulate home sales, several states have initiated programs that make this
tax credit available up-front in the form of cash by “monetizing” the tax credit. The
funding of this tax credit is through the state housing finance agencies and is used for
downpayment, closing costs, and other closing related expenses and is available at the
time of loan closing. The terms of this MassHousing program are similar to those offered
by other states.
Due to the complexity of this tax credit loan program, MassHousing has selected a small
number of our most active lenders to participate in the pilot phase of the program
implementation. Those lenders must be trained by MassHousing staff on the guidelines of
the program and the operational issues that differ from those usually associated with
registering and funding MassHousing loans. The training agenda will be announced next
week and new required documents, i.e., note and disclosure forms, will be available
shortly and distributed to the selected lenders.
MassHousing will be expanding the network of lenders to additional MassHousing
lenders in the near future.
Additional information will be sent to all “pilot” lenders in the next few weeks. If you
have any questions, please contact your Business Development representative.
A FAQ document will be available on the MassHousing website in the next few days.”
In case you didn’t understand what was said in the above memorandum or if you just don’t have the attention span to read the entire thing, here are some quick facts:
- Homebuyers who are using a MassHousing first mortgage loan to purchase their first home apply for the Tax Credit Loan program through their lender
- The Tax Credit Loan is used to cover closing costs or as part of the down payment
- In 2010, the home buyer claims the $8,000 tax credit on their 2009 federal tax return
- The home buyer then repays the MassHousing tax credit loan (No interest is charged if the Tax Credit Loan is repaid by June 1, 2010. Otherwise, the Tax Credit Loan is amortized over the next 10 years, at the same interest rate as the first mortgage).
So basically, MassHousing is allowing you to take a no-interest loan for your down payment which you then repay with your tax credit once you receive it.
Please feel free to contact me directly on my cell at 617-933-9776 or via email at nwarren@warrenre.com for more information or questions.
