Tax credit may come early for some

05.04.09
By Timothy Jones

When Congress passed the economic stimulus bill earlier this year, it was hoped that an $8,000 tax credit for first-time buyers would help lure prospective homebuyers into the market.

But with the economy in poor shape and so many Americans short on cash, the prospect of waiting until after filing 2009 taxes to claim your money may seem too late to be worth it.

Writing in the Los Angeles Times, columnist Kenneth R. Harney says that some states are looking at ways to get some of this money to buyers earlier, when they may need it to help afford a down payment.

At least 10 states have implemented bridge-loan programs to help first-time homebuyers access some of this cash as soon as possible.

For example, in Missouri people can obtain an interest-free advance on their tax credit worth up to 6 percent of the home's price. Buyers have to repay the money by June 2010, after they have received their tax credit.

The state also offers a back-up plan, in case a borrower cannot repay the money by the deadline. In that case, the debt becomes a second mortgage with an interest rate that is slightly higher than their first mortgage and must be paid back within 10 years.

Colorado, New Jersey, Tennessee, Idaho, Washington, Ohio, Pennsylvania, New Mexico have also introduced versions of a similar plan, according to Harney.

Meanwhile, the latest figures reveal that average interest rates for a 30-year fixed-rate mortgage are still hovering around record lows and house prices are continuing to fall in most major metropolitan areas.

First-time buyers with the highest credit scores are in the best position to take advantage of great deals on a home loan.

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Some states are creating bridge-loan programs for first-time buyers