On July 14, 2009 Governor Deval Patrick announced, as part of the Massachusetts Recovery Plan, that First Time Home Buyers may use the $8,000 Tax Credit towards their down payment. It will be accomplished by utilizing a tax credit loan program through MassHousing. This program allows home buyers to arrange a short term $500 loan to monetize the tax credit so it can be used as money for additional down payment or to pay closing costs.
The loan will allow Massachusetts home buyers to use the $8,000 tax credit as a funding source at the time of closing to help purchase the home for down payment and/or closing costs.
Applicants must meet certain qualifications, including, (1) applicants must be first-time home buyers using a MassHousing mortgage through a MassHousing-approved lender; (2) home buyers must use the home as a principal residence for a minimum of three years; and (3) home buyers must purchase a one, two, three or four-family home from a seller unrelated to the buyer by November 30, 2009.
Home buyers who take advantage of the program will have the principal and interest payments on the tax credit loan deferred from the time of closing until the loan due date of June 1, 2010. If the loan is not repaid in full by June 1, 2010, the loan will be amortized for 10 years at the same interest rate as the borrower’s first mortgage loan.
Please keep in mind that the tax credit is set to expire on Dec. 1, 2009, which means you will have had to find, negotiate, and close on the home by Nov. 30. We are now near August 1st so for practical purposes you have only 60 or so days left to look for a home, which allows for another 60 +/- days to close on the home. Please do not cut the time too short, some sellers need more than 30 days to move out of their home, and most banks at this point are needing 45 days to fully process and close the mortgage loan.