Some Quick Q&A
When do I need to purchase to qualify?
If you buy a home between Jan. 1 and Dec. 1 this year and close escrow during these dates, you will qualify for an $8,000 tax credit - as long as it is your primary residence and you meet the simple requirements.
How does the law define "first-time homebuyer"?
The law defines "first-time homebuyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase.
What are other requirements to qualify?
All U.S. citizens who file taxes are eligible to participate. An income limit of $75,000 a year for individuals and $150,000 a year for joint filers also applies.
How do I apply for the credit?
Taxpayers should use IRS Tax Form 5450 to claim the first-time homebuyer tax credit.
Does the credit have to be repaid?
No. Unlike a similar tax credit passed in 2008, this $8,000 tax credit does not have to be repaid to the IRS.
Can I use the tax credit toward a down payment or other closing costs?
Yes. An announcement made May 29 allows the tax credit to be used toward purchase costs of a home, including down payment in some cases. This can be done one of two ways. First, buyers using an FHA-approved lender can sell their anticipated tax credit to the lender and use the proceeds to immediately apply the tax credit to any down payment above the minimum down payment of 3.5 percent required with FHA-insured mortgages. Second, buyers who receive financing through state housing finance agencies and certain non-profits will be able to use the tax credit for their down payments via a tax credit advance loan that does not result in any cash back to the buyer.
Monday, June 29, 2009
Wednesday, June 17, 2009
Choose Homeownership
From Military.com | By Wells Fargo
Homeownership is about security, comfort, and fulfilling the American dream. The sense of community that comes with putting down roots in a place of your own, the security of owning the roof over your head, the opportunity for financial growth--all these accompany the choice to become a homeowner.
But buying a home is also the single largest investment most people ever make. Along with all the benefits of homeownership comes the responsibility to manage that investment wisely.
Benefits of homeownership
The rewards of owning your own home include many benefits unavailable to renters. Among other things, homeownership allows you to:
Start building wealth: Making a mortgage payment every month builds up your equity stake in your home, contributing to your long-term savings and helping you solidify your financial future.
Reduce your tax burden: The interest you pay on your mortgage is usually tax-deductible, which can lead to significant tax savings--especially in the early years of the mortgage term, when most of your monthly payments go toward interest. Make sure you consult your tax advisor about the deductibility of interest.
Build your credit history: Timely mortgage payments can contribute to a positive credit history.
Eliminate landlord hassles: You'll no longer have to fear non-renewed leases and rent increases.
Make the house your own: Aside from zoning rules, Homeowner's Association requirements, and local building codes, you'll be free to decorate, remodel, and renovate as you wish.
Responsibilities of homeownership
Before deciding to buy a home, consider the responsibilities that will accompany your purchase. You will most likely have to make some adjustments to account for the following:
Additional financial responsibility: Whether buying is more costly than renting depends on your individual circumstances. As a renter, some or all of your utilities may have been paid for, but now they will be solely your responsibility. You'll also be responsible for property taxes and homeowner's insurance in addition to your loan.
Maintenance and repairs: Maintaining your property will be up to you, not the landlord.
Less mobility: Unlike having a lease where you can move with minimal notice, moving when you own a home is more complicated since you're responsible for ensuring the mortgage gets paid.
Depreciation: Real estate often increases in value over time, but not always. Owning a home means facing the risk that its value will depreciate.
Beyond the financial benefits, the personal rewards of homeownership can be tremendous -- as long as you prepare for the responsibilities that come along with it, and choose a home and a mortgage that are well-suited to your needs.
Homeownership is about security, comfort, and fulfilling the American dream. The sense of community that comes with putting down roots in a place of your own, the security of owning the roof over your head, the opportunity for financial growth--all these accompany the choice to become a homeowner.
But buying a home is also the single largest investment most people ever make. Along with all the benefits of homeownership comes the responsibility to manage that investment wisely.
Benefits of homeownership
The rewards of owning your own home include many benefits unavailable to renters. Among other things, homeownership allows you to:
Start building wealth: Making a mortgage payment every month builds up your equity stake in your home, contributing to your long-term savings and helping you solidify your financial future.
Reduce your tax burden: The interest you pay on your mortgage is usually tax-deductible, which can lead to significant tax savings--especially in the early years of the mortgage term, when most of your monthly payments go toward interest. Make sure you consult your tax advisor about the deductibility of interest.
Build your credit history: Timely mortgage payments can contribute to a positive credit history.
Eliminate landlord hassles: You'll no longer have to fear non-renewed leases and rent increases.
Make the house your own: Aside from zoning rules, Homeowner's Association requirements, and local building codes, you'll be free to decorate, remodel, and renovate as you wish.
Responsibilities of homeownership
Before deciding to buy a home, consider the responsibilities that will accompany your purchase. You will most likely have to make some adjustments to account for the following:
Additional financial responsibility: Whether buying is more costly than renting depends on your individual circumstances. As a renter, some or all of your utilities may have been paid for, but now they will be solely your responsibility. You'll also be responsible for property taxes and homeowner's insurance in addition to your loan.
Maintenance and repairs: Maintaining your property will be up to you, not the landlord.
Less mobility: Unlike having a lease where you can move with minimal notice, moving when you own a home is more complicated since you're responsible for ensuring the mortgage gets paid.
Depreciation: Real estate often increases in value over time, but not always. Owning a home means facing the risk that its value will depreciate.
Beyond the financial benefits, the personal rewards of homeownership can be tremendous -- as long as you prepare for the responsibilities that come along with it, and choose a home and a mortgage that are well-suited to your needs.
Tuesday, June 16, 2009
Foreclosed Properties - 5 Important Distinctions
From Military.com By: Joe Gladden
Here are five important distinctions that make a foreclosed property different than a typical home sale.
1) You are negotiating with an unemotional bank, not an individual.
Ultimately the bank will have a bottom line established by the officer or board. Whether or not the home sells does not directly impact an individual or their personal finances. And that bottom line may or may not be below market value.
2) Banks rely heavily on processes and procedures … which take time.
Do not expect the negotiations and decisions to move quickly. As opposed to the conventional negotiations with individual sellers, negotiations will not continue past normal working hours or into weekends. Likewise, expect the bank to impose additional contract requirements such as specific disclosures and addendums that will further encumber the process.
3) Most banks will list and sell the property “as is.”
This term has specific legal meaning and may vary by state laws and traditions. It may mean that the bank requires the purchaser to sign a disclosure or addendum that precludes negotiations based on a home inspection and / or the traditional pre-settlement walk through inspection. So, before you sign a contract on a foreclosure property, you may want to seek permission from the bank to complete the home inspection before making the contractual offer.
4) Foreclosures are truly a sad event and it is likely that the previous owner would not maintain the property in excellent condition during the process.
Some angry owners may in fact inflict intentional damage to the property upon departure. You should also consider that some or all of the utilities may be disconnected. It is even possible that utility meters have been removed, which can be quite expensive to reinstate. This can obviously present additional concerns and expenses as water seals in plumbing may dry out, the home may have been without heat or air conditioning for a period of time. All of these circumstances can increase your costs.
5) Although it is hard to believe, some states have a “Redemption” law.
This law allows previous owners to “Redeem” their home … even after the sale by paying off their debt. Each Redemption State may have different laws. You should do very careful research on this aspect of buying foreclosures, and consult an attorney, before you write the contract.
Here are five important distinctions that make a foreclosed property different than a typical home sale.
1) You are negotiating with an unemotional bank, not an individual.
Ultimately the bank will have a bottom line established by the officer or board. Whether or not the home sells does not directly impact an individual or their personal finances. And that bottom line may or may not be below market value.
2) Banks rely heavily on processes and procedures … which take time.
Do not expect the negotiations and decisions to move quickly. As opposed to the conventional negotiations with individual sellers, negotiations will not continue past normal working hours or into weekends. Likewise, expect the bank to impose additional contract requirements such as specific disclosures and addendums that will further encumber the process.
3) Most banks will list and sell the property “as is.”
This term has specific legal meaning and may vary by state laws and traditions. It may mean that the bank requires the purchaser to sign a disclosure or addendum that precludes negotiations based on a home inspection and / or the traditional pre-settlement walk through inspection. So, before you sign a contract on a foreclosure property, you may want to seek permission from the bank to complete the home inspection before making the contractual offer.
4) Foreclosures are truly a sad event and it is likely that the previous owner would not maintain the property in excellent condition during the process.
Some angry owners may in fact inflict intentional damage to the property upon departure. You should also consider that some or all of the utilities may be disconnected. It is even possible that utility meters have been removed, which can be quite expensive to reinstate. This can obviously present additional concerns and expenses as water seals in plumbing may dry out, the home may have been without heat or air conditioning for a period of time. All of these circumstances can increase your costs.
5) Although it is hard to believe, some states have a “Redemption” law.
This law allows previous owners to “Redeem” their home … even after the sale by paying off their debt. Each Redemption State may have different laws. You should do very careful research on this aspect of buying foreclosures, and consult an attorney, before you write the contract.
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