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November 30, 2009

If you are a First Time Home Buyer in and around the St. Louis area time is quickly running out to purchase your first new home and receive that $8,000 tax credit your Uncle Sam is wanting to give you.  A Tax Credit is money that the Federal Government will GIVE to you over and above what you owe them in that tax year. So, if you owed nothing or if you already paid your tax obligation the $8,000 tax credit is all yours!  As of this writing the last day to close on a purchase and still have the ability to receive this money is November 30th, 2009! Since the home buying process takes about 60 days from when you decide to find  your first new home to that last day when you close, if you are starting today you are already half way to the deadline.

What is the Tax Credit for First Time Home Buyers?

For reasons of fiduciary responsibility I recommend that you talk with a tax expert and visit the source, here are two links to the IRS website that asks and then answers all the relevant questions:

http://www.irs.gov/newsroom/article/0,,id=206291,00.html

http://www.irs.gov/newsroom/article/0,,id=206293,00.html

Now that I have taken care of the legal portion of my responsibilities; the tax credit is for first time home buyers, if you have not owned a home in over 3 years you are a first time home buyer. You can claim up to 10% of the sales price or $8,000 whichever is the lesser, there are income limitations: (I recommend you go to the links)

Married filing jointly – $150,000 and Individually $75,000

Yes, if you buy a home this year you can get the tax credit by filling out a special form to amend your 2008 tax return, this will give you the tax credit as soon as the IRS can complete your paperwork or you can wait until you file your 2009 tax return next year.

Can I Use the $8,000 as my Down Payment?

Yes and No. There was some really stupid legislature that now allows for the monetization of the Tax Credit to be used to help with your down payment but the money can not be used for the initial minimum down payment. If this isn’t an example of our Federal Government at work, really! Just to clarify, FHA requires you have 3.5% of the sales price of your new home as a down payment. To use the tax credit as your down payment you first must come up with 3.5% then you can apply the tax credit to an amount exceeding that initial 3.5% down payment. Goofy!

The State of Missouri has a program available through the Missouri Housing Development Commission, MHDC, that will monetize a portion of the $8,000 tax credit up to $6750.00. The MHDC and many loan officers will tell you that this is a program that has no cost to you but they are wrong. If your loan officer is telling you the MHDC program has no fee or your loan officer is telling you this is a great program please do yourself a great favor and save yourself a lot of money and call me.

True, the MHDC program has no upfront cost but the MHDC has a first mortgage program that you are forced to use when you get your advance of the $8,000 tax credit. This first mortgage program has an interest rate of from .750 to 1.000 percent higher than the going true market interest rate for a like mortgage program. For every $100,000.00 you spend on your new home it will cost you $750 to $1,000 in extra interest every year just to get that advance. Over the life of your mortgage that can add up to THOUSANDS OF DOLLARS for a no cost loan!

22 Ways to Fund Your Down Payment

I help tons of First Time Home Buyers get their new home every month, most have come to me thinking they had no way to come up with the money for a down payment. I have yet had to send one First Time Home Buyer to MHDC to get an advance loan of their $8,000 tax credit. If you really want to buy a new home and you are having a tough time saving for the required down payment, give me a call or email me and I will provide 22 different methods to fund your down payment. There are actually more than 22 methods when you consider that you can mix and match them to come up with a 3.5% down payment.

Time is Running Out

Get started today shopping for your next new home, it takes time to buy your first home and before you know it November 30th will be here and you will have lost an $8,000 gift from your Uncle. The first thing you need to do is go to my website, www.stlouismortgagepro.com and click on the Purchase Assistant to get pre-qualified. I will not pull a credit report but provide a reliable resource to get your questions answered. Once we have you ready with a mortgage you can go shopping for your NEW HOME with the peace of mind of knowing you can buy your new home in time to get your $8,000 Tax Credit.

Bonus

While you are at my web site, www.stlouismortgagepro.com click on the button; Guide to Buying Your First Home and I will send you my e-book titled; “The Definitive Guide to Buying Your First Home”. The e-book is free, really, not free like at the MHDC.