Tag Archives: 8000 tax credit

No Loan = No Credit … Or Not?

You hear it all over the news and on advertisements how important your credit score is. I agree … your score is absolutely important and has become the first go-to thing lenders look for.  Lenders want to know what your score is, how long you’ve had credit and how well you pay your bills on time.

But what if you’re one of those people who doesn’t have a credit score? It happens, even to some people who have some credit established.  Maybe the history isn’t enough for a FICO (Fair Isaac) score to be generated or there are just too few items on the report.

As an experienced loan originator, I’m here to give you some hope. Not all loan programs require a credit score.  The main criteria – you must meet the eligibility requirements of a MN first time homebuyer program.  In conjunction with this, we will use FHA financing which allows us to create credit.

Really, what it all comes down to is WHAT you have for debt obligations outside of a traditional credit report. It’s imperative that we create credit for the lending process.  This means we’re looking for accounts that you pay on a monthly basis, ON TIME and over the last 12 months.  Our goal is to verify three established accounts.  You need at least one account from either rent, telephone service, internet, TV service or utility company (a utility not included in your rent).

So, what do we look at? Are you renting?  Are you on time?  If it’s a management company or apartment complex you pay, we can verify directly with them your timeliness.  If you pay a private party, we want to see the last 12 months cleared checks from you to demonstrate you’ve paid on time.  As a tip, if you’re living at home, it makes sense to pay something to your parents, same amount EVERY month, for 12 months, always due the same time (say the 1st of the month) and via a check or direct transfer to their account.  This way, regardless of the amount, we can look at your history as a source of good credit.

What about other sources? Here are some quick reference items that you may pay monthly that can be used to create your credit history.  These items must be in your name.  This list isn’t inclusive, but a way to get you thinking about what you have out there and how it can help you get your first home!

Utilities, cell phone, car insurance, weight loss plans, lot rent on a mobile home, renters insurance, health club payments, child support/alimony you pay outside of your work paycheck, Netflix, gaming sites, internet or iPad-type services, lay-away, outside health insurance or monthly payments to a doctor.

It’s important to note that not only are we looking at your off-report debts, but we also look at any debts you have on the report. There are certain guidelines we follow to determine credit worthiness, such as seeing no more than TWO 30-day lates on any installment payments in the last 24 months and there is no major derogatory credit on credit cards in the last 12 months – that means, no more than 90 days late.  Truthfully, having NO lates on anything is the best way to work toward a loan approval.

There are certainly other guidelines that your situation must meet in order to get an approval on a loan. These are things above and beyond credit.  Your lender will go through these items with you and hopefully prepare you for what you need in order to be ready to buy.

Not all lenders allow the creation of credit, so you’ll want to check. The main idea I want to get across is that having no credit doesn’t necessarily mean no loan.  It’s best to find a lender you’re comfortable with, and one that has the ability to walk alongside you to make your dreams become reality!  I am here to help if you so desire!

Would You Like to Save $2000 Each Year?

Kind of a general title.  So how do you save the money?  Do you have to clip coupons, cancel your Netflix or DirectTV or sign up at save-2000-a-year.com?   The simple answer … you need to buy a home.  And, well, you need to use a MN first time home buyer program with the MCC.

Pretty easy, right?  What is MCC?  It stands for Mortgage Credit Certificate.  This is available to MN first time home buyers.  Both MN Housing offers this credit, as does the Dakota County program, for homebuyers buying in Dakota County.

courtesy ddpavumba | freedigitalphotos.net
courtesy ddpavumba | freedigitalphotos.net

So what is it?  It’s not cash paid to you or a big fat check you get yearly, but it’s almost as good.  It’s a credit you can use AGAINST your federal tax liability.  Yes, I said liability.  That means, you need to actually OWE the IRS money.

Pretty scary especially if you’re accustomed to getting money back.  Some words of advice — you should plan your exemptions to break even.  This way you get more money in your paychecks to use throughout the year and not let the government hold it like an unaccessible piggy bank, paying no interest.  That’s my soap-box.

Back to the topic at hand.  The MCC credit … how does it work?  As you may know, when you’re a homeowner, you have a tax deduction of the interest you pay annually, along with the property taxes.  In order to take advantage of this, the deductions need to EXCEED the standard deduction you are allowed by the government.  Sometimes, the loan amount isn’t high enough to accomplish this.  Wouldn’t it be great if you could still get a benefit or get one in addition to the allowed deductions?

Before I go on, let me say, I am not an accountant, so this is where you should consult one to determine if the MCC is right for you.  As I mentioned, you need a liability.   If you break even or get money back, you won’t get the MCC advantage.

The MCC is equal to 35% of the mortgage interest you paid, NOT to exceed $2000.  Let’s say your loan amount was $150,000 with a rate of 4.25%.  That means, you had $6375 in interest paid for the year.  35% of this is $2231.  As you may recall, you’re capped at $2000, so in this scenario, you can use the FULL $2000.  This credit is something you can use EVERY year  you have your mortgage, so you can see this credit can totally add up!

To take the example further, let’s say you owe the IRS $1000.  That credit will wipe out what you owe the IRS.  The other unused $1000 you can carry over for up to 3 years to use, but in each year, you’re still maxed at the $2000.  On the other hand, let’s say you owe the IRS $2500.  In this case, you can wipe out $2000 and you only need to write a $500 check.  Yup, it’s that awesome!

A few things to note.  You had a full $6375 in interest.  If you use the full $2000, then you can only use the remaining $4375 as a tax deduction on your taxes.  Still not too shabby to literally get FREE money to offset what you owe the IRS.  Here is where the accountant comes in.

You need to work with them to determine what you should claim as your federal exemptions in order to create a tax liability.  Not only is getting FREE money so cool, BUT, each paycheck you realize MORE money because less is going to the IRS.  It’s a win-win all around.  Oh, and if this isn’t enough, if you qualify, you can get down payment assistance WITH the MCC!

Not all lenders offer the MCC program, even if they do handle the MN Housing or Dakota County programs.  I do, of course, and would love to help you make the most of buying your first home!  Yea tax liability!!

Tax Credit CLOSING Deadline Extended!!

Can you say “whoopee?”

Late Wednesday night (June 30th), the Senate took the lead of the House of Representatives and passed the Homebuyer Assistance and Improvement Act which extends the CLOSING date for those eligible to receive the federal tax credit under the American Recovery and Reinvestment Act.  This is part of the bill that was presented.  You can see other details of this bill here.

signing registerFirst time buyers, those who haven’t owned a home in the last three years, as well as current owners who have owned a primary residency 5 of the last 8 years, were eligible for a tax credit if they purchased a primary residence — up to $8000 or $6500 respectively.  The guidelines required buyers to have a signed purchase by April 30th and CLOSE on the home by June 3oth.

The problem was that many of these home purchases were being held up buy a multitude of things — the banks that own the homes, the banks that are considering a short sale for the sellers and even title and mortgage companies.  The argument was that the buyer was not at fault for this delay if they had the signed agreement by April 30th so they shouldn’t be penalized.  Low and behold, buyers now have until September 30th to close on their house to still get the federal tax credit!!

So, if you are one of those people that thought you missed out on the credit because something was preventing you from closing on your home prior to June 30th, yesterday, then you can breathe a sigh of relief!  Good luck with your process and enjoy this awesome gift from the government!

The American Moral Dilemma, as I See It

Where have ethics and morals gone in America?  This is certainly a generalization as I know most of you reading this DO have ethics and a good moral compass.  But then there are those people who don’t.  Those people who “stated” income to get into a loan WAY above their means.  Those people who falsified bank statements or W2s or even took another person’s social security number to get a loan.  Those LOAN OFFICERS that suggested these things, suggested doing a 2-year ARM because they can sell in a few  years, suggested the amount of income the borrower “needs” to qualify or suggested a way around the system.  Now, due to this, we’re required to be licensed.   Woohoo … I am sure that will stop people from advising inappropriately.  And speaking of licenses, I officially passed the national exam — so be assured, I am “allowed” to originate loans.  Gosh, I hope so after 16 years of doing this 🙂  By the way, this is a long time coming and something I have supported.  Stock brokers are licensed, as are Realtors.  Why we haven’t been is beyond me.

dilemma guyDid I do stated income loans?  Sure, I did a handful of them — literally less than five.  That’s a very small amount.  Did the people I work with falsify anything?  I have no idea and don’t care to know.  In the instances I can remember, I dealt with self-employed people who made WAY more than what they did on paper, ie federal taxes.  The nice benefit of being self-employed is the write-offs.  As lenders, we appear to penalize them for this.  To some extent we do, but if you tell the IRS you’re making $40K after expenses, but you brought in $100K, then that’s the income — $40K.  It’s a catch-22 for people who are self-employed.  That’s why a stated income program worked.  They’re now illegal in Minnesota and I would be hard-pressed to find a lender willing to do one.  And I get it.  Too many loan officers “coached” their clients.  It’s wrong and it’s caused a world of hurt for the rest of us.

So here we are, in a huge financial crisis and the government is helping people in the above situations “modify” their loans so they can stay in their home.  Don’t get me wrong.  There are thousands of people who were “duped” into certain loan programs with the promise that their credit will improve in 2 years and they could refinance.  This would have been sound advice if the market didn’t tank and values of homes hadn’t dropped.  Now, these people can’t refi AND now can’t make a payment that has possibly doubled.  How can you blame them?  They were told about the best case scenario.  This bugs me, as you can see.

I am a worry wart — don’t want people upset at me or to come back and say “you told me” and have them in a tizzy over advice I gave.  A few years ago it was practically a requirement to buy a new home NOT contingent on the sale of your old home.  As lenders, we had to count the debt of the OLD house and the NEW house for qualifying.  This makes sense.  But, reality is, how long can someone make 2 house payments?  At some point, just giving up on the old house is easier to do if times get tough.  Heck, it’s not the roof over their heads now.  They still have a place to call home.  I was very upfront with buyers about the potential hazards of doing this.  Ultimately, it’s the buyer’s decision, but I lay it out there — the good, bad and ugly.  And speaking of ugly … in “those” days, if you had a signed lease agreement, you had income we could use to offset the old house payment.  I did a loan where I was given 2 leases for a duplex the borrower owned.  We followed guidelines and used 75% of the rent for qualifying so he and his fiance could move into their new home.  These kids were referred to me by a friend — a loan officer friend that had knowledge of their intent to let the house go.  I found this out about a year later.  To this day, I have no idea if the leases were legit and the renters finally decided to move.  Not a clue.  And I just don’t want to know.

It’s disturbing to me that I had a part in a loan like that.  I didn’t have the knowledge of the end result, but it makes me feel icky inside that I trusted.  And as my husband will tell you, I trust a little too easy.  It’s my nature to assume you’re being honest unless I see or suspect differently.  Had I known their intention for letting the house go … I would not have done the loan.  My conscience would not have let me.  It’s funny, but we have a disclosure, required by the federal government, that states mortgage fraud is bad, prosecutable to the tune of 30 years in jail and/or one million dollars.  So, what’s funny about that?  The fact we have to “tell” people fraud is bad and not only that, people will still commit it — doesn’t matter if they sign a piece of paper warning them of the consequences.  Unbelievable.

So the moral dilemma as I see it — should we pay our mortgages on time, like we’re supposed to or do we get help from the government for NOT paying them on time?  Hmmmm, reinforcing  and going as far as rewarding bad behavior.  I don’t get it.  Here’s an article that speaks to this too.  I’m not the only one in this conundrum.  And here’s what’s really sad.  Over 50% of those people that modified their loans have already defaulted.  Oh yippee.  That means the government helped subsidize the rate to make the numbers work, paid the lenders a fee to do these types of loans and offer the client a cherry rate.  And what for?

My soapbox is getting slippery and I know views like this shouldn’t be put in blogs, but I feel so strongly about this, about the way the government has handled the misguided, misrepresented and possibly fraudulent buyers that are getting a pat on the back for going against what’s right — disregarding their debts.  As a landlord of a rental unit (used to have two), I am amazed and shocked how many of our tenants pay late or not at all and expected us to deal with it.  How dare us assess a late fee, blatantly addressed in the lease.  When I rented, I paid my rent.  If I didn’t, I was kicked out.  It was that simple.  I was taught that paying what you owe is honorable, ethical and the right thing to do.  It’s how I was raised.  It’s how I will raise my children and how I will continue to advise my clients.  Because these are the right things to do — no moral dilemma on this front.

Why are You Buying a Home?

Do you know the answer to this?  Have you thought about the responsibility that comes with homeownership?  It is nothing like renting.  You can’t just call the supe to come over and fix the clogged sink or make a call when your neighbors are too loud.  It’s a really big deal this thing called homeownership.

In a recent survey, the main reason first time buyers bought was an affordable market.  The two reasons that followed were the tax credit and the low interest rates.  Now, today is the last day you can take advantage of the tax credit.   As you have heard over and over, you need a signed and accepted purchase agreement  by today AND must close on your new home by June 30th.

Honestly, how did you answer the question above “Why are You Buying a Home”?  Was it because you could get an $8000 tax credit?  As much as I hate to say this, if your answer to this was yes, you’re not alone.  I have talked to so many people in the last 12 months that decided to buy because of the money the government was giving away.  My advice to them — great incentive to get out and start looking, but only purchase if you’re ready AND completely understand what you’re getting into.  I just tweeted that it’s better to have “lost” $8000 vs. $80,000 or more due to a bad judgment on buying a home just to get the credit.

Here’s the thing.  Yes, the money will be gone and that’s a bummer.  I can’t help you there.  BUT, what I can do is offer up the other two reasons people bought this year — affordability and low rates.  Seriously, this couldn’t be a better time to buy.  As we discuss weekly on our radio show, MN Real Estate Show on KTLK 100.3, this market is going to be here a little while — at least another 2-3 years.  Home prices are not going to rebound fast because we have more foreclosures to get through.  With that said, homes under $250,000 are still being gobbled up fast if they’re decent homes.  Regardless of that, you have the lowest prices to purchase at in record years.

And what about low rates?  I don’t have a crystal ball — wait, I DO have a bouncy crystal ball, but it doesn’t help me predict the future.  I wish it did and I wish I had that ability.  What I do know is that there are PLENTY of first time buyer programs out there with down payment assistance and lower-than-market interest rates.  I have access to them all, PLUS, we do a few other things that most lenders don’t.  For instance, in one of my blogs I talk about the 203K loan with FHA.  I noted in the paragraph above that homes are gobbled up if they’re decent.  What about the less-than-perfect homes?  As a first time buyer, it’s tough to afford a home and then on top of it have money to do work.  This is your BEST opportunity to make the house “yours”.

These are all great reasons to buy a home.  And there are more, such as no longer paying another person’s mortgage by renting.  May as well put your money into something that will appreciate — though that will take a little time, it’s still a better investment.  There is something to be said about having your own place.  Downside is you will have more expenses, maintenance, including furnishing and decorating.  These are all things to consider.  But, it’s yours.  Not someone elses.  You can do whatever you want to the house.  You don’t have to answer to anyone.  It’s the pride of ownership and that alone is one of the best reasons to buy in my opinion!

Then there’s the “tax credit” you get.  No, not speaking of the one that expires today.  That would be silly.  I am talking about the tax benefit of owning a home.  Most of you probably don’t get to write off any expenses, like the donations you give of stuff or money.  Wouldn’t it be nice to get a benefit from that?  As a homeowner, each year you can itemize all of the interest you pay on the loan and all the property taxes you paid that year.  Did you know, you can also itemize the state income tax that you pay?  Nice benefit there.  I don’t want to mislead you.  Not everyone will get this tax benefit, or I should say, be able to utilize it.  If the loan size is smaller, along with lower rates, you may not have enough itemized deductions to EXCEED the standard tax deduction listed on page 2 of the 1040’s.  And that’s okay.  Sometimes not paying a lot for a home loan is a really good thing!  There’s more to this and I am happy to explain further your benefits based on your situation.

So, the question still stands — “Why are You Buying a Home?”  I’ve given you plenty of reasons that still make sense even though the tax credit is expiring.  My hope is you have other reasons for owning.  But as I said earlier, it’s NOT something to enter into lightly.  As a matter of fact, the best advice I can give you, short of coming to one of my seminars 😉 , is to go to a Homestretch Course.  This will not only teach you most of what you need to know when buying, but also what it takes to maintain your home after it’s yours.  Also, this will meet the pre-requisite to be eligible for most of the first time buyer programs.  Look at that — kill 2 birds with one stone — learn about homeownership AND qualify for down payment assistance.  And who doesn’t want interest-free money and lower rates?  Sign me up 😀

Is it too Late to Get $8000?

That all depends on who you ask. The first time buyer tax credit ends on April 30th. What exactly does that mean? Do you have to close  on a home by that time — because that’s only 2 weeks away and you’d be hard-pressed to do that. 

The reality is you just need an accepted purchase agreement by the 30th of April. So, that gives you 2 weeks to look at houses and make offers like homes are going out of style. Houses are moving quickly, especially in the first time buyer price point — under $250,000.

So what do you need to get that offer accepted? Most importantly, a SOLID pre-approval. These are tough to find. Many lenders aren’t able to stand behind their pre-approval letters. We can and we do. If you haven’t given your lender your W2s, federal taxes, paystubs and bank statements, you haven’t been fully pre-approved. Your lender is just “assuming” the information you provided is accurate. Proof of these things is crucial to make a backable decision — as is running your loan through an automated system.

Okay, so you have the pre-approval.  Have you been informed of all the first time buyer programs that are available to you or is your lender just brushing off their importance?  Lately, I have had so many people ask how they can get down payment assistance, but they’re pre-approved.  Weird, since their lender should be telling them about ALL their options.  Have you had this happen yet?  I hope not.  These programs may be able to help you get into a home sooner than later too.

The other important date … June 30th.  This is the date you need to close by.  Another important reason to make sure you’re working with a reputable lender.  Seems like this isn’t a problem, it’s over 2 months away, right?  Some lenders aren’t getting things done in a timely manner.  If you have your pre-approval figured out ahead of time, then it’s a quicker process once you’ve found the home.

Long and short, you’re not too late.  You just need to make sure you start looking now.  Oh, and not only is your pre-approval important, but so is the Realtor you choose.  Realtors play a huge part in whether this $8000 can become a reality.  Are they looking for homes every day within your search parameters?  Are they having you act immediately on homes that interst you?

There’s a lot to this puzzle.  It can easily be put together if you have the right corner foundations — reputable lender, knowledgable Realtor, backable pre-approval and desire to be a homeowner!  All the other stuff will fall into place.  As long as you make the efforts to be open to looking daily, willing to take the advice of your Realtor and are willing to supply all paperwork required by the lender in a timely manner. 

So, let me know what I can do to help you reach that pot of gold at the end of the home-buying rainbow — more importantly, give you all the pieces you need to complete your home purchase!  And if we’re lucky, we can help you get that $8000 just for “showing up” to buy a home.

B’ Bye or Should I Say Buy, Buy?

Last weekend on the radio show we co-host with the MN Real Estate Team and WE Teams of Re/Max, I hosted a fun and informative segment.  Our regular hosts, Ryan O’Neill and Scott Wollmering, were in Florida winning awards from Re/Max.  It was my normal week to be on the air, but I got a bonus … running the show.  Kelly and I presented a busy segment.  Luckily, we had you, the public, call in and make our show way more interesting than we ever could have on our own.

Needless to say, we still needed a topic so we weren’t just babbling away for an hour live on air!  I invited a couple of awesome Realtor partners to join in our fun to help educate our audience.  My partner in crime with the first time buyer seminars, Steve Howe, was there to enlighten the audience on first time buyer topics.  We also had Zach Skattum “in the house” talking about the ever-so-popular REO sales — real estate owed, aka foreclosures. 

On Saturday, our topic was “B’ Bye or Buy Buy”.  It was all about what was going away, or going Ba Bye in the near future making it so you should Buy Buy.  The tax credit is going away the end of April.  As a first time buyer or repeat buyer, you need to have a signed and accepted purchase agreement.  Here’s a cool thing.  If you’re brave and make an offer on a short sale, you only need to have the seller sign off on the offer.  You do not need the bank to sign off in order to meet the April deadline.  The main caveat is that short sales still take awhile, so there is no guarantee that you will get your sale closed by the second part of the credit requirement — closing by the end of June.

Another thing that is going “B’ Bye” — low interest rates.  Back in January of 2009, the Federal Reserve began a plan to purchase $1.25 trillion dollars of mortgage backed securities (MBS) in an effort to keep the housing market afloat.   Trillion?  How much is trillion?  That is such an incomprehendable number to me.  Anyway, MBS’s are bonds backed by mortgages.  Who knew?  If the bonds sell low, then rates go up.  Invertly, if bonds sell high, rates go down.  So, with the Federal Reserve buying bonds, they’re selling high, keeping the rates artificially low.  During the first week in March, the Fed had already purchased $1.2 Trillion.  At the end of March, they are supposed to be tapered down to zero — no more buying of MBS’s.  With that said, rates are anticipated to rise — to what level, we don’t know.  The guess is somewhere between .5%-1%.  And no one really knows when that will happen.  Will it be immediate or lag a little?  A lot of uncertainty. 

So, with these to LARGE ticket items waving B’ Bye, it’s definitely time to ” Buy Buy” a home.  You don’t want to miss out on free money from the government for the tax credit and for sure you’ll want to take advantage of the low interest rates.  Remember, these are at an all-time 40 year low.  It’s just not going to get better than this.  Now, partner these up with some incredible first time buyer programs and low home prices … and you’ve got the recipe to “Buy Buy”.  Don’t miss out!

Federal Tax Credit — Things You Need to Know

The last few years have been plagued with first time buyer programs.  This is a very good thing.  In 2008, the first time buyer tax credit was first introduced.  It was quite a bit different than the tax credit now.  “Back then” the program wouldn’t let the buyer take advantage of the federal tax credit AND a first time home buyer program, such as one with a lower rate or down payment assistance. 

Then the second credit was introduced in 2009.  Every year, it’s been getting better.  In 2009, the two programs could be combined which gave buyers the best of both worlds.  Money for purchasing and money to help after the fact.  Thousands of people took advantage of this credit and quite a few of them “took advantage” of the credit — meaning, people cheated the system — there weren’t enough stop guards in the system.  I even heard someone had their child apply for the credit.  Hmmm, think you need to be 18 to buy a home.  In any case, people scrambled to take advantage of the credit by closing on their home prior to December 1.  First time buyers were coming out of the woodwork.  It was a mad rush to buy, close and amend the 2008 taxes to get the money. 

Psych!  Guess you really didn’t have to buy and close by the end of November.  Hail to the government; they extended the credit.  Not only that, they made it current homeowner “friendly”.  The new rule, as you probably know, is you must have a signed/accepted purchase agreement by April 30th and must close on the house by June 30th.  The credit is equal to 10% of the sale price or $8000, whichever is less, for a first time buyer.  The current homeowner can qualify as long as they have owned their primary residence for a consecutive five of the last eight years.  Similar situation — 10% of the sale price or $6500, lesser of the two. 

Here is what you NEED to know.  We all like to get our refunds as quickly as possible!  Who wouldn’t?   So, e-filing is the way to go.  And many people have done that.  First, you can amend your 2009 taxes anytime after you close on the home.  You’ll need to file a 1040x (form for amending) and the 5405 (form for the credit).  The urgent piece of information is you CANNOT e-file.  Here is information from the Minnesota Homeownership Center:

“Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit”

So, thanks to people falsifying taxes and taking advantage of free money, you’ll have to do the lengthy step of filing by paper.  And timing on these refunds?  I have heard anywhere from 14-16 weeks.  It doesn’t help that it’s tax time.  Oh and thoughts about whether they’ll extend the tax credit.  I really don’t think so.  But, hey, I could be wrong.  If they do extend it, you can count on a new blog!

Get Paid to Buy a Home with the First Time Buyer Tax Credit

Okay, so this isn’t new news.  This is the third go-round with the first time buyer tax credit.  The subsequent tax credits have been “bigger and better” with new additions, making the most recent credit the “best”.  Remember last year — the tax credit that would expire at the end of November?  Wow were people hustling to get their home loans closed by that date. There was a call to action, an actual deadline.  Buy your first home now or lose money!  Let’s get real — you can’t lose money you don’t have, so that wasn’t a great way to get people off the fence and buy.  It was funny how first time buyers were coming out of the woodwork last fall to “cash-in”.  Many of those buyers are still waiting for their “check in the mail”.   It will come and that’s the good news.

But here’s the better news.  The government is willing, yet again, to pay you to buy your first home.  Oh, and if you’re not a first time buyer, no problem.  You get to reap the benefits too if you meet a few qualifications — you must have lived in your home for at least 5 consecutive years out of the last 8 years.  For the non-first time home buyer, you can get up to a $6500 tax credit!  For the first time buyer, you could pocket up to 10% of the sale price with a maximum amount of $8000.  Seriously, I wish I was in the market to buy a home.  There are income restrictions, which most people will fall under, so it’s a mute point.  There has been some talk out there that you can use this tax credit as down payment for your home.  Hmmmm, wouldn’t that be nice … getting money for buying a home prior to actually buying it.  Essentially, this was ixnayed by most, if not all, non-profits because it was too risky to be fronting that kind of money.  Makes sense to me.

The current tax credit is the last tax credit, so they say.  When it’s done, it’s done.  No more Mr. Nice Government.  So what do you have to do to qualify?  Buy a house.  Yep, for the most part, it’s that simple.  Get an offer accepted on your first home, or subsequent home, by April 30th, 2010 and close by June 30th.  My guess is you would have already filed your taxes by the time you close.  Well, I hope so since taxes are due April 15th.  No worries.  You can complete a few forms, the 1040x amendment to your personal taxes and the 5405 which is the specific form for the home buyer tax credit.  This way, you won’t have to wait to file your 2011 tax returns.  Oh, the stuff you can buy to fix up your first home!  Not that you have to use it this way, but the government’s philosophy behind all this is that you will go out and “stimulate” the economy by buying goods and services.  It would sure help me if you did, but there is nothing wrong with using that money to pay off some debt or set aside savings — all are good uses of FREE money!!

But wait; there’s more — can you hear the infomercial music?  If you are a first time buyer, you can use a down payment assistance program and STILL get this credit.  There is plenty of money out there just waiting for you to use.  Best part about this money … it’s totally forgiven if you live in your home for three years as your primary residence.   That’s another blog on it’s own.

So, assuming the government keeps their word and doesn’t extend this tax credit, you do need to act NOW.  I mean, come on, houses at all time lows, rates at all time historic lows and money to help you fund your down payment.  Wowsers, can you say “incentive”?  I think I have beaten this topic a bit too much.  My advice is to ONLY buy if the time is right for you.  Sure, the call to action couldn’t be stronger.  But, if you’re not financial willing or able or have commitment issues, then wait.  There is no reason buying your first home or buying another home if your conscience is saying “don’t”.  I would hate that the pressure to “act now” pressures you to buy.

Feel free to give me a call or email if you want more information on this.  And please, only “act” on this if you won’t regret it later.