One of the biggest frustrations with the government’s $8,000 first-time home buyer tax credit is that a first-time buyer must purchase a property and THEN wait for the tax credit to come. Saving the money for a down payment and for closing costs is difficult and many first-time home buyers really could benefit from receiving the credit to actually contribute towards the big chunk of change they need up front at the closing table.
A handful of non-profit organizations are paying close attention and have created assistance programs to get those first-time buyers that are eligible for the $8,000 tax credit the money at closing to help pay for the costs to close. Enter CHAF JumpStart. CHAF (Colorado Housing and Finance Authority) offers first-time home buyers a fixed interest rate first mortgage loan combined with a second mortgage loan in the amount of $6,000 or 3.5% of the purchase price (whichever is less) for buyers to use to assist in paying for down payment and closing costs. The second loan is at 0% interest and no payments are due until June, 30th 2010. The ‘grace’ period of no interest and no payments is to allow first-time buyers time to get the tax credit on their 2008 or 2009 tax returns and then use the tax credit to pay off the second loan.
Now this CHAF program is a great way for first-time buyers to have enough money to get into their first house but it may not be a perfect fit for every buyer. For first-time buyers that already have other plans for their $8,000 tax credit it’s not a good option. If a buyer uses the CHFA second and doesn’t pay off the loan before the June 30, 2010 deadline then the loan will adjust to 8% interest with a 10 year term.
If this program sounds like it may work for you or a first-time home buyer that you may know then Kim and I are happy to fill you in on the details on this great program and also get you started looking at houses. Don’t forget that to receive the first-time buyer $8,00 tax credit you must find and close on your home before the deadline of November 30, 2009. Contact Kim or me (Vali) to get on track to find the house that could be your next home!
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great article. Of course we’ll have to wait and see how some of it pans out. I’m sure that many lenders will be looking at the implications of a 2nd lien that is collaterized only by the good intentions of filing an amended tax return! But I think that some good things will come of this.