Buying a Home … Today

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Uncategorized

Don’t let a slowing economy get you down. There are reasons to shop for personal items—including a new home. Recently there are advertisements for a new car that said you could return the car in the first year if you lose your job. While there may not be that incentive like that for homes yet, some other incentives might give you reason to start your housing search.

If you can afford to buy a home, consider making homeownership a goal this year, especially if you haven’t  previously owned a principal residence in three years prior to buying. The new stimulus package sweetens the deal for homebuyers who purchase a residence on or after January 1, 2009, and before December 1, 2009. The incentive is for first-time homebuyers who remain in their home for at least three years. It provides a credit for 10 percent of the home purchase price, up to $8,000. The credit can be taken on your 2008 or 2009 tax return.

If you close on a home after the April 15 tax deadline, you can apply for an extension provided that you close on your home before the extension deadline of October 15. If you have already filed your 2008 return, you can file an amendment to claim the credit. You have three years to do so. You’ll need IRS Form 1040X to do that.

Taking the credit on your 2009 return or getting the benefit now, before filing your return, by adjusting your income wage withholding are also options.

The full credit applies to those first-time homebuyers whose modified adjusted income is less than $75,000 or $150,000 (filing jointly). The credit amount drops as your income rises. And if your income is over $95,000 or $170,000 (filing jointly) then you’re out of luck—and the credit is no longer possible.

Yet another reason, you may want to shop around is to get in on the action while it’s still a buyers’ market. Others certainly see the U.S. as a stable place to invest.

So if you’re ready to buy but wondering if you can qualify for a loan, try to follow these rules:

1. Put down 20 percent on a home or don’t buy it. If you can get a larger loan, don’t risk it…buy within your means. Look how we got in this crisis. Bottom line—buy what you can afford.
2. Check your credit. Enough said.
3. Clean up your credit. If you have a delinquency….clean it up and check your report once it’s been cleaned up because sometimes the credit agencies neglect to update your credit report.
4. Be prepared. Get all your financial records such as two years of tax returns in order and have them handy to make the loan process go smoothly.
5. Liquidity is key. Don’t go buy a car before you plan to purchase a home. Having cash helps to show you are qualified to buy at the price point you want.