First Time Buyers and $8000 Tax Credit
If you have been on the fence about whether or not to buy a home, perhaps now is the time. It feels like there has been no time better than in 2009 to purchase a new home in the United States. We’re talking about the $8000 home purchase tax credit for first time home buyers authorized by the Obama Administration with the American Recovery and Reinvestment Act of 2009.
A lot has been written about this first time home buyer tax credit program and we are no exception, however, our angle is a little different. We suggest a plan that should get you from the point of thinking about to a point of getting your keys. Well, not completely, but if you put these few items together you should be able to get yourself into a new home in 2009.
The $8000 Home Purchase Tax Credit Plan – 8 Steps
- You will need to determine if you are first time home buyer? Have you owned a home that you have lived in the past three years? Generally loan officers and underwriters determine this by looking on your credit report to see if you have had a mortgage in the past three years. If you haven’t then you will likely pass this part of the plan.
- Get a copy of your credit report with all three scores. You need to make sure your scores are at least 620. You need higher than a 620 to qualify for a FHA home loan.
- If your scores are less than 620 you will need to improve your credit scores – there are a variety of factors that can lead to low scores.
- If your scores are higher than 620 then you will need to find a mortgage company to do a mortgage pre-approval with. For many first time home buyers with credit scores just above 620 and little money in the bank to work with an FHA home loan is the best loan program to purchase a home with. The reason for this is that FHA home loans have flexible underwriting guidelines for credit – income – assets. While doing your pre-approval you will want to let your loan officer know that you are a looking to qualify for the federal housing tax credit and that you are a first time home buyer.
- Down payment and closing cost money – you will need to have at least 3.5% of the sales price for a down payment and around another 3-4% for your closing costs in cash. You can get this from a variety of sources if you are planning on using an FHA home loan. Some of these are: gift from relative, loan from friend/relative/bank, home seller assistance, and/or short term bridge loan from either your FHA lender or through your state housing agency if they offer a short term tax credit loan program.
- The short term bridge loan tax credit program through your FHA lender is a new program so make sure you ask your loan officer about it.
- Once your pre-approval is complete, you will have what you need to start searching for a home.
- Find a home, put in a sales purchase offer and close your loan. That’s it.
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