3, 2, 1, and Gone is the First Time Home Buyer Tax Credit

At the beginning of this year, President Obama signed into law the Recovery and Reinvestment Act of 2009. One provision is the first time home buyer tax credit. More specifically, it is opportunity for an $8,000 tax free check to you. However, this tax credit ends on November 31, 2009. Who qualifies for this First Time Home Buyer’s Tax Credit? Either a couple who makes less than $150,000 or a single person who make less than $75,000 and neither of whom have owned a home in the last three years. What this means to the first time home buyer is you must have purchased and closed on your new home between January 1, 2009 and November 31, 2009. If you haven’t already started your home buying process, you need to start now. Three and a half months may seem like a long time, but, since May 1, 2009 Congress enacted the Home Value Code of Conduct (HVCC May 2009) and Mortgage Disclosure Information Act (MDIA August 2009). Both of these new laws have added numerous days to the loan process. No longer is it possible to close a loan within a 15 - 30 day period. To be safe, you should plan on a 45 – 60 day process once you have a signed Purchase and Sale Agreement. If we use the worst case-60 day period for planning purposes, that means that you need to start prior to October 1, 2009. Let’s also not forget that Thanksgiving is at the end of November. Recording offices can be closed due to the holidays, and in many counties, their hours have been shortened due to budget cuts. And many are closed at least one day a week. On top of this, looking for a new home can take several weeks or more. So we are almost back to September 1, 2009 which is now only days away. So how do you start this process now? As a first time home buyer, it is important to know how much home you can afford. To begin with, you should talk to a Loan Originator/Certified Mortgage Planning Specialist (LO/CMPS). A LO/CMPS is qualified to assist you in assessing your credit situation, qualifying you for a home you can afford and explaining the different loan programs. Be prepared to talk honestly with us about your financial situation as our goal is to assist you in purchasing your first home. More than likely, the your largest asset you will ever acquire. Once you have been pre-approved for a mortgage, shopping for your new home with a realtor becomes more focused. You now know how much you can afford. The realtor will then direct you towards that price range. Being pre-approved also puts you in a better bargaining position when you do make an offer to purchase. We are still in a buyers’ market. Housing inventories are up, home values are down, existing home sales are low although they have been creeping up, and mortgage interest rates are still at historic lows. Sellers are more willing to give concessions on purchase price and pay a portion of your closing costs. This means you can get more home now than in an “up” market. When the market does turn around, everything reverses. More buyers are vying for that same house, values are going up, and mortgage interest rates will be higher. Sellers will no longer be willing to give concessions. This translates into that home which you could have afforded easily, may now no longer be within your financial reach. Take advantage of this “down” market and the first time home buyers tax credit. You could save more than simply $8,000 on your first home. Please, don’t be one of those new first time home buyers worrying whether, or not, you will meet the November 31, 2009 deadline. Instead, be in your new home before Thanksgiving, enjoying the holidays with your family and friends. To help you further in understanding this once in a life time tax credit, please download this free article, The First Time Home Buyer Tax Credit.