Dean Rizzi

Money to Spare
July 19, 2009 ·  

All that talk about TARP recipients withholding their bailout funds appears to be just that – talk. Lending among the top 21 recipients of bailout funds through the Capital Purchase Program within the Treasury Department’s Troubled Asset Relief Program posted growth in May, with mortgage originations rising by 7% over April’s figures.

Furthermore, there is more money available to lend to more people. A few weeks ago we mentioned Fannie Mae’s and Freddie Mac’s home affordable refinance program. It’s worth plugging again. The HARP affects millions of homeowners currently in Fannie Mae or Freddie Mac loans and permits first-mortgage loan amounts up to 125% of the home’s current appraised value, with and without a second mortgage already attached. In addition, closing costs and as many as two payments can be rolled into the loan and up to $2,000 can be taken out of the mortgage.

More funds are available through use of the highly promoted $8,000 first-time home buyer’s credit, though confusion among the public remains high, according to a recent RE/MAX survey. A leading confusion is what happens to the full $8,000 if a qualified individual or couple pays less than $8,000 in federal taxes? The answer is straightforward: They get a refund check for the difference. Another confusing aspect to many potential home buyers is the possibility of repayment. An earlier version of the first-time buyer tax credit did have to be repaid, meaning that it functioned like an interest-free loan. The updated version, approved this year, eliminates the need for repayment unless the home is sold within three years.

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Comments

3 Responses to “Money to Spare”

  1. Larry Franzella on July 20th, 2009 12:33 pm

    Hi Dean,

    Your posts really clears up some confusion, it is amazing how all that talk can create confusion.

    Larry

  2. Shokoofeh Nowbakht on July 20th, 2009 8:07 pm

    Dean,
    Thanks for the clarification of the first time home buyer’s credit. I heard one buyer was stating that he gets $8,000 at the close of escrow as a credit to him, just automatically. And, I don’t think many knew about the repayment either.
    Shokoofeh

  3. Brian Boisson on July 21st, 2009 9:04 am

    Dean,

    Thanks again for making the confusing understandable.

    Brian

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