FHA $7500 tax credit in advance?

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We have found a wonderful home at an awesome price that we can afford, however, the home needs cosmetic repairs where the previous owner left off on renovating both of the bedrooms (No floor covering or doors) and the only bathroom (No doors, floor covering, or tile…however, one working toilet, working sink, and tub).

This home is a short sale and the bank(seller) will NOT pay the repairs or include money in the sale price for the repairs.

The now required 3% down by FHA will take nearly all of our savings. We are trying to find the best option for getting money to finish the renovation to make the home at least comfortable in the bedrooms/bathroom area.

If anyone has any ideas, our ears are so very open because we are signing the offer contract today (The offer has already been worked out between the bank(seller), our mortgage broker(through FHA), and our Realtor and pre-approved so I don’t think there’s any chance of altering it if we want it accepted. The Realtor already proposed that the bank pay some of the repair cost but they won’t.)

We’re pretty frightened about living in a home (as great as it is) with no flooring or doors and exposed wall board(tile foundation) everywhere in the bathroom.

We are specifically wondering if maybe there is a way to get an advance on, or a loan against the $ 7500 tax credit that we will receive next year at tax time?

We are open to any suggestions that will help us with this dilemma however!

We are even wondering about Federal Grants, but there is so much hype and scamming surrounding them it seems like and we don’t know the best way to approach one without getting taken for a ride.

Thanks in advance for your help, any help šŸ™‚
We don’t need the $ 7500 before closing, just way before April 2009 which is when we will be due to receive it. (Like within a month after closing)

This house is very much within our price range and one of the lowest in the market for our boy’s school district with 2 bedrooms which is the bare minimum we can live in as a family of 4. This home is selling to us about 60% of the appraisal after the repairs are done. We have lived in a tiny 2 bedroom apartment for 4 years saving what we have to put down on the house and the boys are too big to have any room to study effectively, have friends over, etc. so moving is definitely a must and buying is a much better option than putting this money toward a bigger apartment that is going to cost more than this mortgage.

Hope these added details help. Thank you so much for the suggestions so far!!! šŸ™‚
Edit “April 2009” in details above = “April 2010”

Thank you so much for your answer to my question is Yahoo Answers regarding the $ 7500 tax credit as follows:

“You cannot get the $ 7500 tax credit in advance. It is payable only AFTER you close on the house.Source(s):http://www.federalhousingtaxcredit.com”

I followed the link and found the following information in the FAQ:

“If Iā€™m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return? …Yes…” (followed by more information)

Do you know if this means we can amend our return after settlement and receive the money for the credit at that time???

Sincere Thanks!

  1. Reply
    Prophet 1102
    February 13, 2011 at 7:21 pm

    You receive the $ 7,500 this year when you file your taxes.

  2. Reply
    February 13, 2011 at 7:33 pm

    You cannot get the $ 7500 tax credit in advance. It is payable only AFTER you close on the house.

  3. Reply
    John C
    February 13, 2011 at 7:35 pm

    If 3% down will wipe out your savings you should not buy this house. You should be able to comfortably put down 10%. Also, FHA loans in the long run are more expensive than conventional loans.

    I have a friend who bought a house FHA, before they would allow her to purchase it repairs had to be made that the seller (a bank) would not do. She had to fund the repairs herself before closing on the house. They may decide the same thing on this home.

    The only way to get an advance on the $ 7500 credit is to change your withholdings at work to give you more cash flow.

    I know its exciting to find a home you like and to be a homeowner, but there are more houses that will come along and you really need to build up a cash reserve.

  4. Reply
    Jose V
    February 13, 2011 at 8:06 pm

    no the $ 7500 tax credit is a loan itself. You can take it but you will get less back on your taxes every year after until its repaid

  5. Reply
    February 13, 2011 at 8:36 pm

    You need an FHA 203K loan

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