I was hoping to hold of on writing about this until the details of how this is going to work are official, but I keep getting questions about it, so I thought I would let you know where things stand right now.

The $8,000 tax credit is designed to stimulate home buying for first time home buyers.  First time home buyers typically make up about a quarter to a third of home purchases and represent the segment of home buyers that typically have the least cash to put down on a home.  Because of this the tax credit was introduced to make first time home ownership more affordable for people. 

One of the things that stalled the housing market in recent years is the fact that zero down home loans went away.  Banks were no longer willing to take that risk when they started to see increases in default rates especially among those who used the more risky loan products. 

What Washington State along with many other states are recognizing, is that the more readily available that $8,000 is to first time home buyers, the more it is likely to get used.  Ways to access the credit already include waiting until next year and or having your withholding adjusted this year. 

Now the governor and state senate have agreed that making the tax credit available to help pay for your down payment, is a good idea.  It makes perfect sense.  FHA loans offer the lowest down payment option.  Still you are required to come up with 3.5% of the purchase price to qualify for an FHA loan.  Not many first time home owners can come up with that kind of money.  $8,000 would go a long way to easing that burden. 

As of right now we are not sure how the money will be made available.  The most talked about solution is that banks lending on the home will grant the borrower an additional loan and then  be reimbursed from the government.  The details are still vague, but one thing is clear.  All sides are working hard to make home loans more flexible and affordable for people.  In particular first time home buyers.

Stay tuned.  As the details of this program become clearer, I’ll keep you posed.

Let me know if you need help.  Summer is a great time for home buying.

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Rob Graham, Accredited Buyers Representative

Windermere Real Estate

206-321-6349

robgraham@windermere.com

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