Certain first-time home buyers in Massachusetts will be eligible for an advance on the $8,000 tax credit, giving them much needed closing costs up front, under a new program recently unveiled by Governor Deval Patrick.
According to the new plan, the state will loan the $8,000 to eligible borrowers who buy a home before Dec. 1 and finance it through the state’s affordable housing bank, MassHousing. The interest free loans need to be repaid by June 1, 2010.
MassHousing estimates it will be able to help between 650 to 1,000 peo ple by the end of November, using $5 million set aside for the program.
“These loans will both help prospective home buyers achieve the comfort and stability of homeownership for their families and also stimulate the Commonwealth’s economy through increased home sales,’’ Patrick said.
Massachusetts joins more than a dozen states nationwide that have developed their own bridge loans under a plan announced by the US Department of Housing and Urban Development in late May.
At that time, federal officials said home buyers could apply their tax credit toward new home purchases when financing through the Federal Housing Administration or through state and local housing finance agencies.
Borrowers with an FHA-insured loan are still required to provide a 3.5 percent down payment before they can use the tax credit for any additional payment or closing costs.
Under the Massachusetts program, the $8,000 can be used to cover an entire down payment. Borrowers can purchase a one- to four-family home and must use it as a primary residence.
“This article adopted from the Bosto Globe, written by Jenifer B. McKim”