In part 1&2 of our three part series on the hosing bill HR 3221 we discuss some of the ramifications and limitations contained in the new law. You can subscribe to our Podcast by clicking in the above left column and click here to start at part I.

Part III-Housing Refrom Bill HR3221

This could be the best part of the housing reform Bill for new homebuyers!

Due to the high cost of homes in th Bay Area, the housing reform bills $7,500 (max) tax credit for first-time home buyers on the surface my seem to do little to spur home buying in California, let alone on the Peninsula. The details have yet to be ironed out as far as how the buyer can actually receive the credit. In other words, will the buyer be able to use it as part of their down payment, or for closing costs and if so will it be eligible for recurring closing costs such as property taxes as well as non-recurring costs such as escrow fees? It’s important to remember that this is actually a loan, not a gift, and must be repaid in 15 years in equal installments. However it is interest free and anytime someone is loaning you money at no interest it’s a done deal as far as whether you should accept it or not.


Sure you could pay all or most of your closing costs but what about buying down your loan? On a conforming loan of $729,750 using this free government loan of $7,500 you could buy down the loan rate with $7,290 in points (1 point) and save over $37,000 in 15 years in interest payments! Not bad for investing someone else’s money.

This has been updated with new information.

*The information contained in this blog is educational and intended for informational purposes only. It does not constitute real estate tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

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