A “Born Again” First Time Homebuyer?

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One of the many economic silver linings emerging these days is the first time home buyer program that will give you a tax credit that you can use as a down payment on your home at closing. Already bought a home in your past? Well, if it has been more than three years since you owned your principal residence, you get to claim your first time home buyer status again!

A “first time home buyer” is defined as someone who has not owned a principal residence during the three year period. The tax credit does not need to be repaid and is equal to 10 percent of the home’s purchase price up to a maximum of $8,000. However, if the residence is not used as the buyer’s primary residence for the next 36 months, a portion of the credit must be refunded. Eligible first time home buyers are single taxpayers with incomes up to $75,000 and married couples with incomes of up to $150,000. Keep in mind that all good things do come to an end as the tax credit only applies to homes purchased through Dec. 1, 2009. See an FHA approved lender for more information.

Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development, recently announced that the Federal Housing Administration (FHA) will permit its lenders to allow qualified first time home buyers to use the $8,000 tax credit as a down payment. Previously, home buyers wouldn’t be able to receive the funds until after they filed their tax return and that deterred some people from using the credit.

In remarks before the 2009 Realtors Midyear Legislative Meetings & Trade Expo on May 12, 2009, Donovan explained that FHA lenders will be permitted to “monetize” the tax credit through short-term bridge loans allowing eligible home buyers to access the funds immediately at the closing table. “We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment” Donovan said.

Ironically, because of the problems faced by our economy, both from an economic and energy perspective, there are several federal and city of Austin based programs that are avail- able to assist you with obtaining a residence if you are a First time Homebuyer, and these programs take it a step further, especially if you live in the city of Austin and are serviced by Austin Energy or Texas Gas that enable you to make your home more energy efficient through various financing and rebate programs that cover at times a large percentage of the costs associated with energy upgrades and basic repairs to your residence.

Federal – Nonbusiness Energy Property Credit

The nonbusiness energy property credit is a little known and rarely discussed federal tax credit that also provides homeowners with valuable incentives to make their homes more energy efficient. Currently, taxpayers can take a credit up to 30 percent of the cost of certain energy efficient property or improvements that are installed during 2009 up to a maximum of $1,500. Home improvements like high-efficiency heat pumps, air conditioners, and energy star rated water heaters qualify. Additionally, energy efficient windows, doors, and insulation may also qualify for the credit in some cases.

Federal – FHA New Streamlined 203(K) Program

The FHA has also introduced a new streamlined 203(k) mortgage called the “Streamlined (K) Limited Repair Program”. Under this program a homebuyer is permitted to finance up to an additional $35,000 into their primary mortgage to improve or upgrade their home BEFORE move-in. This affords homebuyers an avenue to implement repairs to the residence that they might not otherwise be able to do so. The permitted repairs would be of a nature such as those identified / recommended by a home inspector or FHA appraiser during the initial home inspection. An appraisal is performed to determine the value of the property after renovations are completed. This mortgage program is also fully assumable by a qualified future buyer.

As always, be sure to consult with your tax and/or financial advisor to see how these programs apply to your unique situation.

sources: national association of realtors; the Gardner Group website: www.teamgardner. com, national association of Home builders; www.federalhousingtaxcredit.com

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