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Pretty smart move by the government. If you want to stimulate the economy, you know people want their wallets stimulated now...not just before April 15th of the following year at tax time.

Friday the Fed's announced that they would allow the tax credit to be used at the closing table for first time homebuyers (or those who haven't bought or sold within the past 3 years). You still need the minimum 3.5% contribution (downpayment) for the FHA loan but that's not much and then you can put the $8,000 on top of your 3.5% and lower your loan and thus your montly payment. Another option, which would be smart for those who know they're going to stay put in the house for a longer period of time, would be to use some of that money to buy down the interest rate on the mortgage. So...there are options. Some more information from CNN.com money is below.

$8,000 HOMEBUYER INCENTIVE AVAILABLE IN ADVANCE

NEW YORK (CNNMoney.com) – The U.S. Department of Housing and Urban Development (HUD) announced Friday that its $8,000 incentive for first-time homebuyers has been tweaked from a refund at tax time to cash made available for assistance on down payments or closing costs.

The mechanics of the new program, according to National Association of Home Builders economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS.

Homebuyers must still come up with the Federal Housing Administration's mandatory down payment of 3.5 percent on their own, but they can use the tax credit to lower their principal balance and save on monthly payments.

"Families will now be able to apply their anticipated tax credit toward their home purchase right away,” said HUD secretary Shaun Donovan. “What we're doing will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.