Last Call for Home-Buyer Tax Credits
The federal home-buyer tax credits
Qualified first-time and repeat home buyers can still take advantage of the federal home-buyer tax credits. The credits are back, after a short hiatus, and prospective home buyers stand to save thousands of dollars by taking advantage of them. They should be used wisely,however. Here are a few things to keep in mind:
The deadline is approaching
The deadline for the federal home-buyer tax credits is April 30, 2010. That means that if you want to use the credit, you have to have your home under contract, or in escrow, by that date. In addition, the transaction must close within 60 days. Although 60 days may sound like a long time, consider that the average home takes just under that to close. Also, if you are a first-time buyer, you should start looking soon.
The amount of the credit varies
People need to understand that the amount of the tax credit is not set in stone. In fact, it’s actually 10% of the sale price of the home. Remember though that there is a maximum on the credit of $8,000 for qualified first-time buyers and $6,500 for qualified repeat buyers. For example, let’s say a first-time buyer finds a home for $75,000. Their tax credit would be $7,500. On the other hand, if repeat buyers find their dream home for $110,000, the maximum tax credit would be $6,500.
Consult the experts
It’s never a good idea to try to sort through complex tax laws yourself, even if you do some research. Make sure you find the right people to guide you through the purchase and help you out. You want to have a mortgage lender who helps you find the right loan product, a realtor who can help you find homes with the right requirements and a tax preparer who knows the details of qualifying for the credit. Working together, they can create a sure-fire plan of action so you can take the tax credit and have all the necessary paperwork to prove your eligibility.
Be wise about lenders
Remember the lending boom? Part of the problem with it was that companies were lending via unscrupulous lending policies. They suggested people take out much larger loans than they reasonably could afford. They suggested people withhold certain information. They even doctored the numbers on loa forms. Don’t be a victim. If your lender suggests any of these practices, run. As Patti Ketcham, owner of Ketcham Realty Group, said in a Bankrate.com article, “It is critical that buyers educate themselves and that they not fall for the slick smoke and mirrors. Anytime you have found money, it brings out all the rats.”
Arm yourself with knowledge
In the end, it’s up to buyers to protect themselves from fraud or other unfair dealings. Take advantage of the federal homebuyers’ tax credit, but act wisely. Surround yourself with the right professionals who can guide you through the process and then enjoy the benefits. The credits are a great way to reduce the cost of moving into the home of your dreams.