What's Better Than Free Money For Buying a House? How About Help With Closing Costs

Just when you thought buying a home couldn't be any easier, better, cooler or free-er, the FHA comes back with arguably the best first time home buyer incentive in the history of, well, home buying.

The $8,000 federal tax credit for first-time home buyers is about to get better. To the tune of an $8,000 cash advance that can be used toward closing costs on a house. Many issues in this plan are being worked out and not all lenders will offer it, however.

According to a news release provided by Housing and Urban Development (HUD) today, HUD Secretary Shaun Donovan announced that first-time buyers who qualify for the tax credit and get an FHA loan will be able to get a "bridge loan" for the original amount of the tax credit they would qualify for. They can use this money toward their down payment, after covering the minimum 3.5% required for FHA loans, closing costs or other loan expenses.

The technical term being used to describe the early liquidation of the tax credit is "monetize," meaning to turn it into immediately spendable cash. This is likely in response to the realization that, while housing prices are low, a down payment of at least 3.5% is still required to buy a home. And in this economy particularly, it's getting tougher to put a substantial amount of money in savings at a rapid pace before the $8,000 tax credit time limit expires. By advancing a down payment to these first-time buyers, a home purchase becomes much more feasible.

"We believe this is a real win for everyone," said HUD Secretary Shaun Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing." Posted by Moishe Alexander. Read more HERE