Over at the Seattle PI, Aubrey Cohen posted on April 17th that Washington State may begin giving first time home buyers a loan based on the $8,000 credit they will be receiving from the federal government.
The Washington Senate Ways and Means Committee approved the measure Wednesday, April 15th. The amendment, which still needs to be approved in both the state Senate and House as part of the state’s buget, and then signed by Governor Chris Gregoire, would create a $25 million fund to provide first time buyers a short term loan of up to $8,000. That short term loan could then be used as a down payment or help with closing costs.
Washington Realtors, who sent a letter to its members after Wednesday’s approval of the measure, is quoted as saying, “Lack of down payment is the only barrier to home ownership for up to 50 percent of qualified first time home buyers. The Washington State Treasurer’s Office, Housing Finance Commission and Washington Realtors are proposing a Tax Credit Advance Loan program that would advance the $8,000 tax credit at closing of a home sale and be repaid when the credit is received by the IRS.”
Washington Realtors bring up a good point. The $8,000 loan would help some buyers have a little more of a down payment. It could help reduce closing costs that first time buyers may not want to wrap into their home loans. This additional boost has the potential to help increase starter home sales across the state .
Will the Tax Credit Advance Loan Program amendment help more first time buyers get into homes or will it cause a problem for the state? Is there potential for people to default on their loans? Where will the $25 million come from? As the budget winds its way through both the Senate and the House, this amendment will definitely be one to watch.