Homebuyer’s Tax Credit, HURRY!

It may sound crazy for some but now is the best time to buy a home.  With the price of real estate plummeting and the rise in the number of foreclosed homes, the cost of a house is to point where the average Joe can actually pay his mortgage and still have money left over to go food shopping. Also, interest rates are still historically low at about 5.25% meaning it is still cheap to borrow money.

Many potential buyers are still scared to jump into the market, so President Barack Obama and the Federal Government created the American Recovery Act in 2009 to give incentives to individuals and families to purchase their first home.

The major part of the American Recovery Act is a first time homeowner tax credit that was extended into 2010 and unlike other previous tax credits; it doesn’t have to be repaid. Some details of the tax credit include:

-    First time homebuyer tax credit for $8,000 and $6,500 for repeat homebuyers. Anyone seeking to take advantage of the tax credits has to be in contract on the purchase of a home by April 30th and close by the end of June, so move fast!!

-    Buyers can claim the credit on their federal tax returns to reduce their tax liability, get a refund, or lower the amount of taxes owed.

-    The income limit for single taxpayer is $125,000; the limit for married taxpayers is $225,000. The home has to be used as the primary residence to qualify and must be equal to or less than $800,000.

FHA approved lenders, for first time homeowners, will allow you to use the credit towards your down payment now without you having to wait to next year to get the credit back in your taxes. So if you are in contract to purchase a home for $200,000 with an FHA loan, you have to put 3.5% down or $7,000. By using the tax credit, you can buy the home with no money down and walk away with $1,000!

“I feel that everyone should take advantage of the tax credit and the low prices in real estate and interest rates before they are gone,” states Elaine Stroman, a loan consultant from New York City. “You do not want to look back five years from now with regrets.”

Take the first step and get qualified by a mortgage professional, find a dream home to purchase and use the tax credit before you lose it. You are a tax paying citizen, why not?

By Carl Agard
Financial Editor Carl Agard is a Real Estate Broker and Author of three books on real estate www.carlagard.com