I just read that the below information may be changed by the upcoming congressional session. Congress might actually be on the verge of transforming this tax credit into a true credit, no repayment! :) Also National Association of Realtors is pushing to change the deadline from July 1 to Dec 31, 2009. Just FYI
We have been hearing and know that it is coming to pass that mortgage loans are going to be harder to get. They are going to go back to old school, where you had to prove income, show your finances and put a hefty 20% down. Buyers are going to be held accountable for their actions and as realtors we are going to have to be part of that process.
But it is not all bad news (really). Here is one thing that I have found that can help those first time homebuyers get into a home of their own. The Housing & Economic Recovery Act of 2008 has made a tax credit of $7500.00 available to qualified first time home buyers. This is available until July 1, 2009.
First Time Home Buyers are elgible by purchasing any kind of home as long as they close before July 1, 2009. You are considered a first time home buyer if you have not owned a principal residence in the last 3 years. The home must be your primary residence. If you are married this means both of you. Also there are income limits that you have to meet. (Be sure and check with your favorite mortgage person to figure out what those limits are).
To get the tax credit all you will have to do is claim it on you next years federal income tax. Now here is the kicker part. It does have to be repaid. The buyer will have 15 years without interest to repay or at the time of the sale of the house. Repayment starts 2 years after the buyer received the credit. The buyer will be giving the government a payment of $500.00 per year or pay the remainder due upon sale of the home. If the home is sold at a loss, the the balance is forgiven.
Since it is a tax credit and not a zero interest loan it does give you the benefit of reduction of tax liability the year it is claimed. If you want more information on the tax credit or just general information on mortgages let me recommend two people. Jay Gilmore at WR Starkey, jgilmore@wrstarkey.com or Tiffany Cloud at Realty Mortgage, tcloud@boernehomeloans.com. Great People that you should get to know if you are thinking about buying or know someone who is.
I am sure that all of the Realtors will have ran into this problem with clients. The Clients are ready to start looking, go to the mortgage company to find out what they can afford only to find out that their credit rating is not good enough. Well I found out from one of our lenders that there are some sneaky little things that could be hurting your credit rating and you don't even know it. They seem benign and some not so benign, but there they are, eating away at your rate.