New York State will offer cash advances of up to $8,000 on the federal homebuyer tax credit for borrowers using a State on New York Mortgage Agency (SONYMA) mortgage to purchase a home.
SONYMA’s new Tax Credit Advance Loan (TCAL) can be used toward the down payment or closing costs and can be repaid without interest when the homeowner receives their federal homebuyer tax credit. The program will launch on January 1, 2010.
“Today, New York’s REALTORS applaud Governor Paterson for his leadership in helping to ease the path to homeownership for our fellow New Yorkers who are striving to achieve the American Dream,” said Daniel J. Hartnett, President of the New York State Association of REALTORS. “The Tax Credit Advance Loan will particularly help first-time homebuyers who struggle to save enough money to cover all of New York’s highest in the nation up-front costs of purchasing a home. Many will now be able to close that gap by utilizing the federal homebuyer tax credit at the closing table. This is a win for all New Yorkers as a healthy housing market will help lead our economic recovery.”
Borrowers can apply for a TCAL advance loan when they apply for a SONYMA mortgage at a participating lender. After the loan application is approved, SONYMA will advance the loan to borrowers on the home closing date. The borrower will receive the tax credit in the spring of 2011, at which time they can repay the TCAL loan without interest.
If the TCAL loan is not fully repaid by June 30, 2011, it will be amortized over 10 years at 1 percent above the interest rate on the borrowers SONYMA first mortgage, making the TCAL loan a 10-year second mortgage.
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