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According to the IRS, taxpayers are not allowed to claim the credit until they file a tax return in a following year after the home purchase. However, the U.S Department of Housing and Urban Development (HUD) provides state assistant programs to help out first-time homebuyers by allowing certain lenders to offer bridge loan on the expected amount of credit to use as a downpayment or closing costs. The taxpayers are still required to file the tax return to claim the credit as the IRS will only refund the credit directly to the qualified taxpayers instead of other third parties, including lenders.
Before considering the bridge loans, taxpayers should find out more about the loans. There are some advantages and drawbacks. It provides immediate cash flow to taxpayers. The taxpayers can apply the amount of credit immediately on home purchase, and pay it back when receiving the refund after filing the return. Some bridge loans may not require monthly payment for the first few months. However, it may cost more than other financing options. Taxpayers should shop around and find out more detail on the website of the HUD which offers Assistance Programs by States. It includes information on home buying, selling, foreclosure and other legal advice.