How quickly things change…a couple of weeks ago I wrote about the federal 8,000 dollar tax credit and lamented about the fact that Massachusetts was not one of the states offering to monetize it. I spoke too soon! On July 14th, Governor Patrick announced the creation of the First-Time Homebuyer Tax Credit Loan Program:
The First-Time Homebuyer Tax Credit Loan will allow Massachusetts homebuyers to use the $8,000 tax credit from the federal Housing and Economic Recovery Act (HERA) of 2008 as a funding source at the time of closing to help purchase the home. Under HERA, the maximum available credit is $8,000 and is claimed when homebuyers file their 2009 federal tax return.
So what’s the catch? Well, I don’t know yet if there’s a “catch” but there are certainly some guidelines. The most important thing to know is you must be a first-time homebuyer purchasing your home with a MassHousing loan through a MassHousing-approved lender. This program is not available for FHA or other loans. Sorry…we just report it.
According to the MassHousing website, the basic process is as follows:
- 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 downpayment
- In 2010, the homebuyer claims the $8,000 tax credit on their 2009 federal tax return
- The homebuyer 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).
Yes, you can use the entire $8,000 towards your downpayment through this program but first you have to qualify for a MassHousing loan which includes meeting income limits and purchase price guidelines. Check out the FAQ for more info or the MassHousing website to pre-qualify.
And while you’re here…check out our featured homes for sale in MA or start searching the MLS and see what’s out there!
Related Info:
MassHousing Tax Credit Loan FAQ (29.7 KiB, 268 hits)
He Jake,
Thanks for posting about this. I’m a little upset that only MassHousing mortgages are able to apply for this monetization. Perhaps someday they’ll open it up to everyone else…
Check out this story about the extension of the housing tax credit:
http://abclocal.go.com/wabc/story?section=news/politics&id=7087955
If you want to skip it, here’s the interesting part (which they do not explain in detail):
1,400,000 homebuyers have taken advantage of the tax credit.
The story specifically states that NAR estimates that 350,000 of those wouldn’t have purchased without the tax credit, meaning 1,050,000 would still have purchased without the tax credit.
This means the total cost of the program breaks down like this:
1,400,000 x 8,000 = $11,200,000,000 (11.2 BILLION)
This means the total cost to give the 350,000 people who wouldn’t have purchased a home without the tax credit was the 11.2 Billion; which means:
11,200,000,000 / 350,000 = $32,000 per transaction
So:
It cost $32,000 for each individual who got the $8,000 tax credit, to motivate them to purchase a new home.
Wow.