Answers About The $8,000 First-Time Home Buyer Tax Credit

Q: Who is eligible to use the tax credit?

A: The $8,000 tax credit is available for first-time home buyers only. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program.

Q: Are there any payback provisions?

A: The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is if the home owner sold the home within three years after the purchase.

Q: Are there income limits to qualify for the credit?

A: Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000.

Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.

The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.

Q: What are the effective dates for the tax credit?

A: First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.

Q: Is the tax credit refundable?

A: Yes. A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.

If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).

Q: What years can buyers apply the tax credit to their tax returns?

A: Buyers can take the tax credit on their 2008 or 2009 income tax return.

Q: What types of homes qualify for the tax credit?

A: All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.

Q: Where can I find more details on the tax credit?

A: NAHB has a consumer Web site that provides comprehensive information on the tax credit. The Web site is www.federalhousingtaxcredit.com

If you have any other questions or need further details, call us at either 609-417-1084 or 609-417-1086.

Linda & Terry Iwaniw
ReSales & Investment Realty, LLC
856-795-3111 x263
http://www.snewjerseyhomes.com
info@i-teamhomes.com

Tags: Buyer Information, Finances, first time home buyers, home buying, tax credit

USDA Rural Home Loans – No Downpayment, No PMI Payments

In the past few months we have written a lot about the different home loans available to the home buyers, specifically, FHA loans and the different benefits of this mortgage product. But we have also written about the tightening of requirements in the mortgage industry, especially with the Freddie/ Fannie Conventional loans.

We have previously highlighted another type of conventional loan that requires NO down payment, NO monthly PMI, where the seller is allowed to pay all reasonable closing cost and prepaids, and NO hit to the rate for the zero down, it is NOT a first time home buyer program and no reserves needed.

But did you know that this particular mortgage also has a unique feature that all reasonable closing cost and prepaids can be rolled into the mortgage without the seller actually having to “pay” the cost (as long as the house appraises for the increased loan amount)?   Why is this a good thing?  We have had buyers who have submitted offers for homes that included seller concessions for the home sellers to help with the closing costs, only to have those offers rejected.  Now buyers have another option and are not at the mercy of the homes eller.  It is a conventional loan that has these great options and it is government backed loan (like FHA loans) but is backed by the USDA.

The downside of this loan is that tt is area-specific and income-limited, so it is important that you work with a lender who is very knowledgeable with these loan guidelines.  If you are interested to find out which areas are eligoible for USDA loans, click here.

If you need help in finding a knowledgable lender or to better understand how this loan can be of benefit to you, or just give you some assistance with your home search and loan pre-qualification steps, simply call us at 609-417-1084 or email us at info@i-teamhomes.com

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Tags: government backed loans, mortgages, no downpayment loans, usda, usda rural loans

NJHMFA Offers Cash Advance for First-time Buyers

We’ve had many a buyer call us and ask how the $8000 tax credit can help them buy a home if they can’t get that money until they buy a home.  A classic Catch-22.  Well, NJ has come up with an answer for those first time home buyers who need the tax credit money to help them with their downpayment or closing costs.

The New Jersey Housing Mortgage Finance Agency (NJHMFA) is offering cash payments, in the form of a zero interest loan, of up to $5,000 for qualified first-time home buyers in order to help them defray their closing costs or to satisfy the downpayment requirements.  This will then help new home buyers get into the housing market and buy their first home.

This zero interest loan, offered as part of NJHMFA’s “Prefund” program, would act like a cash advance against the $8,000 tax credit that is being offered to first time home buyers who purchase their home between April 8 and December 1 of this year. Basically, home buyers would be provided with the payment as a loan and would be required to repay the advance/loan when they receive their federal tax credit.

Who can get this zero interest loan/cash advance?  The loan/cash advance is available to first time home buyers who:

• Arrange their financing through the NJHMFA. (You can obtain a list of participating lenders by calling their toll-free number at  (800) NJ HOUSE)

• Are qualified for the tax credit offered as a part of the federal stimulus program

• Pledge to apply the proceeds of their tax credit to repay the cash

For more details about the NJHMFA’s First Time Home Buyers Tax Credit Loan Program (TCLP) you can visit the HMFA page (http://www.state.nj.us/dca/hmfa/consu/buyers/ownprg/tclp.html).

Tags: 8000 tax credit, first time home buyer, first time home buyers, HMFA, tax credit, zero interest loan