We are all aware of the Federal Homebuyers tax credit of $8000, but many still remain unclear as to how to get it and to get it quickly. Fortunately, there are many programs available to help your clients obtain the credit.
Buyers who use the Federal Housing Administration to get their loans will be able to use the $8000 tax credit in several ways including fees associated with closing escrow and/or other fees as long as the tax credit is claimed on their 2008 or 2009 tax returns.
Luckily, there are a number of states that offer programs to help the homebuyer to receive the money more timely.
Some of the restrictions in receiving the tax credit include the stipulation that the new homebuyer has not owned a home in the last 3 years.
If your clients are in the position to buy because the monthly costs to own are less than renting, this is a great time to buy.
Here are some tips to help your clients when they are ready to become homeowners.
Income Restrictions: Not everyone will be eligible to receive the federal tax credit since there are income limitations. Individuals who make $75,000 or less or couples that file jointly that make $150,000 combined or less will be eligible as long as the home is purchased by the end of November of this year.
Bridge Loans: There are about ten states that offer what's called a "bridge loan". A bridge loan allows eligible homebuyers to get use the $8000 tax credit before the 2010 tax filing period. Those states include Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania and Tennessee where the homeowners can get a loan with no interest or with a very low interest rate and repay it with their tax credit refund the following year.
California has also started it own program where a homeowner, which is also not just limited to first-time buyers, can buy a newly built home between Feb. 28th of this year and March 1, 2010 and they will receive a one-time nonrefundable credit, that is equal to 5 percent of the purchase price of the home up to $10,000. Furthermore the tax credit can be claimed over a three-year period. Other restrictions require that the property must be a single-family home with it being the main residence of the homeowner.
It should be noted that this tax credit is on a first-come, first-served basis and time is running out.
Advanced Tax Credit: The Federal Housing Administration said last month that its borrowers can receive the $8000 first-time homebuyer's tax credit in advance from lenders, thus eliminating the need for homebuyers to have to wait for the money from the IRS the following year.
The FHA further stated that borrowers will still be required to pay a 3.5 percent down payment for the loan. The good news is that they will be allowed to put the tax credit towards various fees and closing costs or put the money towards a bigger down-payment on top of the required 3.5 percent.
It's been said that not all lenders will participate in the advanced tax credit plan since this program will require more work from the lenders, but those lenders who do can require the homeowners to pay a fee up to 2.5 percent for the additional work.