$8,000 Tax Credit with your FHA Loan
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More good news for the first time home buyer! Where to use your $8,000 Tax Credit with your FHA loan If you are an eligible for an FHA loan and you are a first time buyer, you can: - Use the $8,000 tax credit for settlement fees, escrow charges, higher downpayment, or to "buy down your interest rate so that you can have a lower monthly payment
Eligibility. Here's how you can determine if you qualify: - You must be a first time buyer in the sense that you have not owned a primary residence during the last three years
- Your household gross income cannot exceed $95,000 if you are a single taxpayer, or $170,000 if you are a married couple filing jointly
- You are submitting an offer on a house you can afford to buy
- You are applying for a mortgage through an FHA-approved lender
- Your home purcase must close escrow between January 1, 2009 and November 30, 2009.
- And you must invest a minimum of 3.5% of purchase, from your own funds (which can be from your savings, and gifts from relatives)
What you need to do: Complete your FHA application - Complete the IR form 5405 --- this is your request to the federal government to send you a tax credit check.
- You can also file an amendment to your 2008 return to get your tax credit or file it on your 2009 taxes. You can download Form 5405 at www.IRS.gov
- Prove that you have no outstanding civil judgments, liens, unpaid taxes and other obligations that may eliminate the tax credit
- Prove that you are not subject to having your wage garnished that may affect how much of a tax credit you will receive
Frequently Asked Questions About the Home Buyer Tax Credit For more information, check out the Frequently Asked Question from http://www.federalhousingtaxcredit.com/2009/faq.php 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.
The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.
- Who is eligible to claim the tax credit?
- What is the definition of a first-time home buyer?
- How is the amount of the tax credit determined?
- Are there any income limits for claiming the tax credit?
- What is "modified adjusted gross income"?
- If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
- Can you give me an example of how the partial tax credit is determined?
- How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
- How do I claim the tax credit? Do I need to complete a form or application?
- What types of homes will qualify for the tax credit?
- I read that the tax credit is "refundable." What does that mean?
- I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
- Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
- Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
- I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
- I am not a U.S. citizen. Can I claim the tax credit?
- Is a tax credit the same as a tax deduction?
- I bought a home in 2008. Do I qualify for this credit?
- Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
- The Secretary of Housing and Urban Development has announced that HUD will allow "monetization" of the tax credit. What does that mean?
- If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
- For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
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What you need to know to buy a home today
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CAN YOU AFFORD TO BUY? 
If you can afford to buy, consider making homeownership a goal this year, especially if you haven't owned a principal residence in three years prior to buying. The new stimulus package sweetens the deal for homebuyers who purchase a residence on or after January 1, 2009, and before December 1, 2009. The incentive is for first-time homebuyers who remain in their home for at least three years. It provides a credit for 10 percent of the home purchase price, up to an $8,000 limit. The credit can be taken on your 2008 or 2009 tax return. If you close on a home after the April 15 tax deadline, you can apply for an extension provided that you close on your home before the extension deadline of October 15. If you're extra speedy and have already filed your 2008 return, don't worry — you can file an amendment to claim the credit. You have three years to do that. You'll need IRS Form 1040X to do that. Taking the credit on your 2009 return or getting the benefit now, before filing your return, by adjusting your income wage withholding are also options. The full credit applies to those first-time homebuyers whose modified adjusted income is less than $75,000 or $150,000 (filing jointly). The credit amount drops as your income rises. And if your income is over $95,000 or $170,000 (filing jointly) then you're out of luck—the credit is eliminated. STILL A BUYER'S MARKET  Yet another reason, you may want to shop around is to get in on the action while it's still a buyers' market. Others certainly see the U.S. as a stable place to invest. According to the Association of Foreign Investors (AFIRE), a survey released earlier this year showed that more than 53 percent of respondents ranked the "U.S. as the country providing the most stable and secure real estate investments." Foreigners from China, Thailand, Vietnam, Mexico, Europe, and South America are traveling to the U.S. to see what real estate opportunities exist in the U.S. Areas such as Las Vegas, New York, and Miami have been infiltrated with foreigners who are buying now to take advantage of their stronger currency or the opportunity to stash their cash in a dollar-dominated place. While many are looking for commercial properties, some are vying for residential properties too. "This is the greatest opportunity we've had in 50 years," says Billy Procida, president of William Procida, Inc., a turnaround management firm for middle market real estate companies. He says even though there is a lot of inventory on the market, certain properties will have less interest and be a better bargain. "If you buy something that is pristine, painted, clean—brand new—you're going to be competing … . This is truly the time when the folks who are willing to roll up their sleeves [and do some work] will benefit from it," says Procida. RECOMMENDATION  - Put as much down on a home that you can afford or don't buy it. He says even if you can get a larger loan, don't risk it. "Buy within your means. Look how we got in this crisis," says Procida. He adds, "There are still people out there doing no income verification loans." Bottom line—buy what you can afford.
- Check your credit. Procida says one of his family members found out that there was $20,000 of erroneously reported credit debt. "It's absolutely incorrect, but it was on there," says Procida.
- Clean up your credit. "If you have a delinquency clean it up, says Procida. And he advises that you check your report once it's been cleaned up because sometimes the credit agencies neglect to update your credit report.
- Be prepared. Get all your financial records such as two years of tax returns in order and have them handy to make the loan process go smoothly.
- Liquidity is key. Don't go buy a car before you plan to purchase a home (even if you can return it). Having cash helps to show you are qualified to buy at the price point you want.
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Why Buy a Home Now
 If you're renting and wondering if you should buy a home, consider what bestselling author, David Bach, says, "The average homeowner is worth 35 times more than the average renter."
He advises renters to take action immediately and start saving part of their paycheck every month to help accumulate a down payment. He also encourages renters to borrow 10-20 percent less than what the bank is willing to lend; that way they're only buying as much home as they can afford. The longer you rent, the longer it may take you to eventually get into homeownership. If the market conditions have scared you, perhaps you're not looking at the other side of the coin. Owning a home becomes part of your investment portfolio, provides tax benefits, allows you to build equity (it still exists), and, if you buy now, you may get an excellent deal. See MarketWatch article on Time to buy? the pros and cons of the first time home buyer tax credit. Negotiating Power Buying a home now can provide some real negotiating power to request improvements, price reductions, help with closing costs, and more. "People can get a lot of what they need and almost all of what they want today," said Jay Papasan, one of the authors of "Your First Home". While poor market conditions have created a troubling situation for some homeowners, the downturn has made the buying market ripe for others. The affordability of homes is better than ever. The National Association of Realtors' housing affordability index concluded that homes in December of 2008 were more affordable than at any other point since 1970 (the start of the index). And with numerous foreclosures on the market and prices dropping in many areas, now is a good time to buy. Questions to ask yourself - How long will you be in the home? Some experts advise that if you are planning to move within a year, buying may not be the best option because of the expenses associated with moving. However, if you're searching for a place to live for, at least, several years, buying now could be a good choice for you.
- How much you can afford. Don't let tighter lending regulations scare you off from making a purchase. Instead, understand what you truly can afford. Don't get caught up in buying too much home. In fact, these days, the trend is moving toward smaller homes -- simpler living.
- Mortgage rates drop to historical low. How much home you can afford is affected by mortgage interest rates that, right now, are highly appealing. Good credit, documenting your income, and a substantial down payment will make you a better candidate for the better mortgage rates
Freedom to choose. Now, unlike several years ago, the market has a large inventory in many areas. The market time to sell a home has increased which creates a large inventory of homes, everything including new, existing, and foreclosures. Buyers can peruse the market and have the freedom to select the home they really want. If you're interest is in a new home, know that many developers are getting more competitive with their pricing because they also have taken a hit by the ailing economy. Quality of life. Buying a home can create a higher quality of life, giving you pride of homeownership, and something to enjoy improving and developing over the years. Tax credit benefit.  The American Recovery and Reinvestment Act of 2009 provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser. Recent TaxWatch Stories
Reprinted with permission from RealtyTimes
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What's In, What's Out for Home Buyers in 2009?
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| | | What's In, What's Out with Home Buyers in 2009?
Mark Nash, author of four real estate books, has completed his annual survey of 839 real estate agents in all fifty states in the US and the eight provinces of Canada. What's in, what's out with Homebuyers illuminates what's popular or what sours homebuyers in both the home purchase or sale transaction and home decor. Compiled annually from-the-trenches, it offers a spectrum of tips that cover reality of buying a home and design no-no's for home sellers and buyer must-haves. What's IN - Sidelined home buyers. Family or lifestyle additions or changes made in buyers households in the last three years are forcing those waiting out the market transition to finally get off the fence and say, it's time for our family to buy the new home that suits our new needs.
- Home uplifts. Not a big renovation, but some new finishes that can visually holdover stay-put home sellers. Not a gut rehab to the studs new kitchen, but new flooring, countertops and appliances.
- Collaborative home pricing. The old days of home sellers configuring a homes price are out. What's new is that the seller with their agent look at closed comparables, set a price, then the buyer and their agent agree or disagree, but in the end, a mortgage lender and their appraiser will set the price, as they are assuming the most risk in the transaction.
- Balanced reporting by real estate and personal finance journalists. Consumers learned in 2008 that the 'doom and gloom' residential real estate market headlines don't apply to all markets. What's been lost in the foreclosure hype is that there are still stories of homes selling in short market times (in as little as 3 days), homes selling at full price and some selling with multiple contracts on the table. Existing home sales will be 5.02 million versus 5.652 million for 2007, a decrease of just over eleven percent, considerably less that the recent correction in the U.S. stock market, plus a realistic view that over five million people purchased a home despite the headlines in 2008.
- Creative home seller financing. Exhausted home sellers are turning to self-financing to move properties. Installment sale contracts and lease to own are the most popular and effective ways for sellers to begin to receive income from a property that has languished on the market in 2008.
- Property tax appeals. With home prices dropping, many savvy home owners are appealing their property taxes. This is especially attractive to those looking to sell their home in 2009. With a competitive marketplace, those with the most realistic taxes are more likely to offer buyers an overall lower expense in home ownership.
- House therapists. Divided partners in a home are increasingly relying on an independent third party (house therapist or coach) to bring household relationships to common ground on such prickly issues such as to stay or move, how much to spend on remodeling or decorating, or spending nothing at all. Third parties can outline the benefits and pitfalls of over-spending on a new larger home or weighing in on a spouses desire to over-improve for the neighborhood. With less equity and with the financial stakes higher smart couples hire a home therapist to wrangle concessions and agreements out with their significant other instead of doing damage to their relationship by going head-to-head with them.
- Architectural overhead garage doors. After years of bland vanilla garage doors, the architecture has permeated the door most people look at the most. Traditional styling has arrived with mullioned windows, faux wrought iron hinges and latches that provide the original non-overhead garage door look. Contemporary looks now include the adjacent siding applied over the door for a seamless look, much like the panels installed on refrigerator doors to complement cabinets in a kitchen.
- Loveseats. A pair or trio is gaining acceptance as the functional way to rearrange a living or family room. Consumers appreciate the ease at which they can rearrange them, move an extra one to another room, or provide long-term furniture flexibility in future homes. Plus, they're tired of sitting miles away from others on over-sized sectional sofas.
- The master bed as a throne. With consumer spending down and more nesting at home, home owners are focusing on making their bed like an at-home luxury hotel experience. Posh linens, pillows and mattresses create a getaway without leaving home.
- Older war-horse appliances. Collectable, working appliances form the 1940's through the late 1980's have found a new niche among homeowners who appreciate their rock-solid construction and durability. Harvest gold double ovens from the 1970's have been repainted a metallic red and go from boring to bold. Cold spot refrigerators from the 1950's refinished in sky blue perks up the butler's pantry in suburban home. And, the early 1960's dryer that looks like it's from a Jet son house painted pink to match punches up the in-unit laundry room in a condominium.
- Dining chairs that don't match. With consumers watching their non-essential spending closely and electing to stay home to entertain friends, many have found a quick pick-me-up for their dining room suite, mismatched pairs or single chairs. Feedback from friends or family has been favorable to this easy and cost effective way to say welcome to my cutting edge table.
What's OUT - Fixer-upper homes. With larger down payments required by mortgage lenders and consumer credit cards mixed out, home buyers want a home in move-in condition. The DYI days are on the wane as buyers want to inherit new kitchens and bathrooms.
- Foreclosure fluff. The foreclosure rate nationally in 2008 was just under 3 percent. In the Great Depression it was just over forty-percent.
- Home buyers endless "circling" prospective short-list properties. Overly optimistic thinking by buyers to circle a preferred property indefinitely, often for months, waiting for further price reductions or to wear out long weary sellers. This practice has backfired for buyers who practice this style of pre-negotiating. They often loose their short-list dream home and frustrate savvy price-right sellers. Ditto the bottom-feeder buyers.
- Home staging. A recently over-used low cost marketing band-aid for vacant or occupied homes with longer than normal market times. Buyers have said enough of the non-professional usage of assorted leftover props placed around a for-sale home to make it supposedly homey. Buyers say, market it as it is and clear out the tired silk flowers and stale potpourri.
- Indoor-outdoor carpet. The staples of quick-fix home sellers for basements, balconies, screened porches and lanai's, buyers have said enough. Many have told agents that inexpensive indoor-outdoor carpet is visual pollution and often masks flaws in a home.
- Track lighting. Thought of by homeowners to be a quick way to get an art gallery look, many prospective buyers usually take them out and discount their appeal. As one Gen-X home buyer said to me "Why do sellers install them up when they don't really have any interesting artwork or architectural features to spotlight? They bring undue attention to nothing."
Written by Mark Nash
Wondering What Your Home Is Worth? -- Let me show you. |
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Because buying your home is one of the most important purchases you will make, Let's start by making sure everyone you love is factored in your search process. Finding the right home for you Help You Get Pre-Qualified
This step will show you how much you can afford. Shop around for a lender. Establish what monthly payments you will be comfortable with. Today, we have the luxury of choosing from a variety of programs for nearly every situation. Home Shopping
It helps to know if you are in a Seller's, Buyer's or Balanced market. In an active market, timing is key. I will use every available method to locate a property that matches your search parameters. This will include properties listed with my office at Gallagher and Lindsey, Inc., those offered through other real estate companies, as well as unlisted properties. I will disclose known facts about the property that may help you with your decision-making process. When we find the home that meets your criteria, I will help you strategize on writing an offer, and I will be an active advocate for your interests. Determine Your Wants and Needs
This is the single most important step. By asking you a series of questions I will establish what you are looking for. My goal is to maximize your time by looking at properties that have the characteristics of the home you want, and are in your stated price range. Throughout the buying process I will maintain your confidentiality and represent your best interests. As your agent, I'll let you know when suitable properties become available, and advise you on the current situation to help you make an informed decision. |
There are many sources of information that can guide you the home buyer through the process starting from getting prequalified for a loan, finding the right realtor, estimating if it's better tax-wise to buy or rent, understanding escrow, decorating, and more. Here's a start. |
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Alameda's first GREEN home
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Fabulous and new GREEN home makes history with energy-efficient, energy-savings, environment-friendly, high WalkScore home.
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Almost NEW in Bayport
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Fabulous home in Alameda's newest community.
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LIVE/WORK opportunity
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Zoned commercial, house can be used as residence or small office, or BOTH. Has large windows for displays, garage and drive way for off-street parking.
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There are various programs that are available to help buyers qualify to buy a home. Here are links to information on what some cities are doing to help make this American dream come true. |
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