Deadline Requires a Closing by December 1, 2009

The American Recovery and Reinvestment Act of 2009, commonly referred to as the stimulus package, provided for an $8000 tax credit for qualified buyers of primary residences purchased before December 1, 2009.  Potential homebuyers must realize the typical time lines associated with the home buying process; otherwise they miss out on this unique opportunity.

Most home buyers take the first 30 days to become familiar with the process with normally starts with a discussion and credit approval with a qualified lender.  It is absolutely critical that a buyer understand the limits of their borrowing power and the maximum purchase price they can afford.  The total monthly payment a borrower is qualified for,  which includes the principal, interest, taxes and insurance (and condo fee if appropriate,  is based on income, current debt, credit score, savings and in general the ability to repay the loan. 

The tax benefits of homeownership should be considered when determining the affordability of the property being purchased.  These benefits are significant and are the primary motivating factor for most renters purchasing their first home.  In most cases, the federal government will provide yearly tax reductions (based on income and deductions) of up to 31% of the monthly payment.  I advise that you contact your accountant to determine the tax benefits for your specific situation.

For many first-time home buyers, the cash required to close is the barrier to homeownership and do not know that there are options available.  The USDA provides for 100% financing in communities with populations fewer than 20,000.  The FHA provides 96.5% financing and the down payment may be gifted and the Seller can pay closing costs.  In many states, non-profit housing agencies provide resources to “monetize” the $8000 tax credit so that funds may be available and used at closing.  These options emphasize the importance of buyers connecting with lending professionals that can provide the appropriate programs to meet their needs.

The second phase of the process is to become educated to the market so that ‘value” becomes apparent based on your needs.  Most Realtors offer “buyer agency” services where they will represent you in the home buying process.  Purchasing a home can be a very stressful process and experienced professionals guiding you will facilitate the successful purchase of your first home.

Time is running out, so if you are interested in exploring the opportunity of receiving the $8000 tax credit, contact us at Virtual Homes Real Estate to begin the process.