I am not a mortgage specialist and do not pretend to be… with that being said I have started asking mortgage specialist to provide information.
Written by; Fred Chamberlin, Senior Mortgage Consultant with Alpine Mortgage Planning – Fred can be reached at Eugene Loan Guy or email EugeneLoanGuy@gmail.com | phone numbers 541-342-7576 Office 541-221-3455 Cell
There is a lot of information circulating about the First Time Home Buyer Tax Credit of up to $8,000 that is included in the Stimulus Bill, including using it for down payment. First of all, at the present moment in time, it cannot be used for the down payment, even though the Secretary of Housing and Urban Development, Shaun Donovan, said it would be available in a recent speech to the National Association of REALTORS®.
It is my belief that the arrangements to make this happen will be done shortly. I think that there are procedures and non profit organizations in place that can make this happen with the assistance of HUD. I also believe that the administration wants this to happen, so it will. Estimates are that the use of the tax credit for down payment will put an additional 300,000 first time home buyers into homes. How can this be a bad thing?
This is what the Tax Credit for First Time Home Buyers is:
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction. Tax credits are equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years. From what I have read of the plan, the $8,000 is available for anyone buying a home that is a first time home buyer, whether single or married. However, if a married couple buys a home and files separate tax returns, they may only get $4,000 each.
There are ways to access the tax credit in advance, such as borrowing against a 401k and paying it back after receipt, borrowing from a local financial institution and paying it back after receipt, or by accepting a gift from a relative for the down payment. Talk to your trusted financial advisor about what this will mean to you. The credit is not repayable as long as you live in the home for 3 years or more.