Mortgage rates are at an all time low, sellers are motivated, owning a home is a great investment in your future, and can lead to many, many years of happy memories.
And now….. Another great reason to buy a home now – an $8,000 tax credit for first time homebuyers!
If you qualify and buy your primary home residence before December 1, 2009, then you’re eligible for the credit—allowing you to deduct 10% of the purchase price of your home up to $8,000 when you file your taxes. A lot of people thought the $8,000 tax credit would be available for closing costs or to supplement the down payment of the purchase. Not so unless you live in Florida.
In Florida, the buyer can now access a down payment program (DAP) that is funded by the State of Florida based on a bill the Governor signed May 29. However, don't get too excited as it comes with strings attached, according to Michele Baena, Senior Home Mortgage Consultant, Florida Home Finance Group, LLC, An Affiliate Of Wells Fargo Home Mortgage.
She reminds us that the buyer can only use the down payment assistance [DAP] with an FHA loan and the Buyer must still come up with the first 3.5% down payment from their own funds (just like they do today). The DAP can be used to pay for closing costs, pre-paids, discounts points to lower rate or additional down payment. Lender also has to review tax returns carefully to make sure borrower will be eligible for the $8000 tax credit. DAP will also need to be counted as a second lien at the time of purchase and may have a monthly payment calculated into the ratios.
Michelle offers a simpler solution that accomplishes the same thing as the new legislation and is a lot less complicated.
Have the buyer go FHA and come up with their own 3.5% down payment (Gift or otherwise) just like you would have to under the new legislation. Have the SELLER pay the closing costs and pre-paids. Once the loan closes the buyer can wait until they file their 2009 tax returns in 2010 or they can easily file an amended tax return right after closing at no cost and get the $8000 tax credit right after they close.
If you use conventional financing, [most often you will need 20% down], or if you pay cash for the purchase, you would file an amended tax return for the $8,000 tax credit.
Want more information about the tax credit? Go to www.irs.gov or www.HousingMarketFacts.com, from the National Association of Realtors, for more information.
Ready to get started and search for your new home in South Florida, go to www.lorifeinsells.com to search properties for free.