The state of New York will offer cash advances of up to $8,000 on the federal home buyer tax credit for borrowers using a State of New York Mortgage Agency (SONYMA) mortgage to purchase a home, Gov. David Paterson has announced.
Buyers will be able to use SONYMA's new Tax Credit Advance Loan (TCAL) toward their down payment or closing costs. The advance can be repaid without interest when homeowners receive their federal home buyer tax credit after filing their annual tax return. SONYMA, a state agency that provides mortgages to low- and moderate-income home buyers, will launch the TCAL program Jan. 1.
‘This new program will encourage homeownership throughout New York State and provide an important boost to our economy," Paterson says. "Reviving the housing market is vital to generating economic activity and the tax revenues the state and local governments need to provide vital services."
A TCAL advance loan will be available to potential homeowners using any currently available SONYMA mortgage program. Borrowers can apply for a TCAL loan when they apply for a SONYMA mortgage at a participating lender. After approval of the loan application, SONYMA will advance a TCAL loan (based on their maximum Federal tax credit) to borrowers on the home closing date. Homeowners will receive their tax credit from the Federal government in the spring of 2011, at which time they can repay the SONYMA TCAL loan without interest.
"The Tax Credit Advance Loan will particularly help first-time home buyers who struggle to save enough money to cover all of New York's highest-in-the-nation up-front costs of purchasing a home," says Daniel Hartnett, president of the New York State Association of Realtors. "Many will now be able to close that gap by utilizing the federal home buyer tax credit at the closing table."
If the TCAL loan is not fully repaid by June 30, 2011, it will be amortized over 10 years at 1% above the interest rate on the borrower's SONYMA first mortgage. Monthly payments on the TCAL loan will be due starting August 2011. In effect, the TCAL loan will become a 10-year second mortgage if it is not repaid by June 30, 2011.
As with all SONYMA programs, income and purchase price limits will apply to participants of the TCAL program. However, SONYMA's first-time homeowner requirement will not apply to U.S. military veterans or borrowers purchasing a home in a federally designated "target" area, which is a census tract that is economically distressed.
SOURCE: Office of Gov. David Paterson