If you are first-time homebuyer who has put off getting into homeownership, you only have a few short weeks left to take advantage of a fabulous incentive: the $8,000 first-time homebuyer credit.  Because the purchase must close before December 1, you can’t delay any longer. Mortgages are taking over a month to process these days, so don’t expect to wait until November and still qualify. 

The credit is 10% of the cost of a home, so a house costing as little as $80,000 is enough to qualify for the full credit.   Since the credit is refundable, the government will pay you the difference if your tax liability is less than your credit amount.  Unlike the first version of the credit, you don’t have to pay it back.  There is an income limit to qualify for the credit.  You must have “modified” adjusted gross income (MAGI) of $150,000 or less if you are a couple filing a joint return, $75,000 or less if you’re single to get a full credit. 

To be a “first-time homebuyer” you may not have owned a principal residence in the three years prior to the date of purchase of the home for which the credit is being claimed.  First-time homebuyers are flocking to FHA mortgages because of their low downpayment requirements (a minimum of only 3.5%) and more liberal loan qualification standards.  Making the first-time buyer credit even more attractive is that FHA is permitting the credit to be advanced to a purchaser to cover closing costs, an interest-rate buydown or to increase their downpayment beyond the 3.5% minimum. 

The advance can be paid off in one of two ways: the anticipated credit can be purchased by one of several qualified parties (lenders, certain non-profit agencies or government units) or through a second lien on the property.  In the latter case, FHA has some specific rules about the second lien structure. Talk to your Realtor or mortgage professional about how these rules might affect your purchase.  Could the credit be extended, even expanded? Possible.  But the current climate in Washington is to nix more stimulus spending and programs that add to the budget deficit, so we think an extension is a long shot, at best. 

So, with home sales climbing and prices stabilizing in many markets, this looks to be as ideal a time for a first-time homebuyer to get it the game as they may ever see.  © 2007, Real Estate Information Services, Capitol Assets & Choice Finance®

choicefinance.net contributing writer
Loan Officer for Maryland, Virginia, D.C.
Eric Strasser, 301-996-5001

This entry was posted on Monday, August 31st, 2009 at 4:32 pm and is filed under 2) General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.