Friday, March 6, 2009

Free Money.......get it while you can!!!'s true! And all you have to do is buy a house between now and December 1, 2009!!! Well, it's not quite that simple, but almost. As with anything the government does, there is criteria that has to be met! Here's how it works.

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified "first-time home buyers" purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. A "qualified" first time home buyer is one that has not owned a home within the last three years. In the case of a married couple, neither can have owned a home within the last three years. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

The tax credit is 10% of the purchase price of the home, up to a maximum credit of $8000.00.....and it's FREE repayment required! The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
More important points:
  • You must use the property you purchased as your primary residence for three years.
  • The tax credit is a dollar for dollar reduction in the amount of taxes you owe....if you owe less than $8000, the IRS will actually cut you a check in the amount over and above what you owe!
  • If you have already bought a home and you have already filed your taxes taking advantage of the previous tax credit guidelines, you can file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.
  • If you buy a home in 2009, you can decide whether to take advantage of the tax credit on your 2008 return or your 2009 return. I recommend consulting a tax advisor to determine which way is best.
  • If you decide to take the credit on your 2009 return, keep in mind that you can always reduce your tax withholding by the amount of the credit, hence taking advantage of a great take home pay. If you decide to go this route, you may want to consider using that increase in income to save up for the downpayment! Great, great idea!
  • If you purchased your home between April 9, 2008 and January 1, 2009 you may qualify for a different tax credit.

I know that there are alot of potential home buyers that are just afraid that the market hasn't hit bottom. Well, let me offer you some advice......first of all, it's not possible to predict where the bottom is. Secondly, you won't know we've hit "bottom" until the market is going back up and then it's too'll join the millions of others scrambling to buy a home, rates will go up (it's that "supply and demand" thing)....and you may find yourself in the same situation we were in just a few years ago: bidding wars on homes!

I know there are some great buys out there right now. Mortgage lenders and servicers with foreclosure properties in their portfolios are doing everything they can to make repairs to these homes and get them in the condition required for prime financing. At the very least, you owe it to yourself to get out there and check out the mortgage financing guidelines and rates and to see what is available in the price range your price range. If you could stop paying your landlord's mortgage payment AND make money off the deal, why not!?

Finally.....we are all in this economic mess together. The only way to get out of it is if we do exactly what we're afraid to in our future and our country's future. And we can be thankful that this great nation is doing all it can to make it more affordable and rewarding for us to do so.

Oh wait.....I forgot.....if any of you decide to "take the leap", I am always here to help! I have over 35 years of mortgage banking experience and I can lend in ALL 50 states!!!

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