Buy house, get $8000 cash.

[Brad Johnson]

Well... not quite that easy, but close.

For those who haven't heard, first time home buyers, or those who have not owned a home for at least three years, can qualify for an $8000 tax credit.

Long story short, if you make less than $170,000 combined income (married) or $95,000 (single), and purchase a home between January 1 and November 30, 2009, you qualify.  It is 10% of the purchase price up to $8000.

The credit is treated like a cash payment against your taxes.  It is added to any amount you've had withheld, or have pre-paid, for the tax year.  Any amount of the combined funds not used to pay your taxes will be refunded to you.

Example 1:
You calculate your taxes and owe $5000.  You have had $5400 withheld from your paycheck, plus the $8000 credit.  You get a refund of $8400.

Example 2:
You calculate your taxes and owe $5000.  You have had $4800 withheld from your paycheck, plus the $8000 credit.  You get a refund of $7800.

The catch ... the home must be your primary residence and there is a three-year repayment provision.  If you stay in the home past the three-year mark the repayment provision goes away.

If you've already filed a return for the 2008 tax year, have received your refund, and purchased a qualifying home since January 1, you can file an amended return and get your full credit refunded to you.  If you do not file before April 15 (i.e.: you file an extension instead of a complete return) the credit will have to be claimed on your 2009 taxes.

Disclaimer - I am not an accountant, nor am I a tax professional.  Consult your accountant or tax professional for more information about qualifications and for filing your return.

Brad

[Teknoid]

That's the way I heard it. At least one member of my family will be "stimulated". My son was just discharged from the Marines, his wedding is in a month, and they'll be closing on a house before the honeymoon. VA loan, low interest, and 8k tax credit. Not a bad start, I guess.

[AZRedhawk44]

I will be stimulated as well by this.

Not changing my plans one way or another, but I figure it'll help fortify the bunker against blue helmet attack.

Okay, well actually it will be used to pay off the last of my truck's loan.

[Balog]

Like I wasn't motivated enough to buy a house.

[Northwoods]

I won't qualify as we sold our house in Phoenix in June 2007.  Not that I'd planned on buying a house this year anyway.  Besides, prices will probably drop another $8000+ here in the Puget Sound over the next year or so.  So I'm probably not going to loose anything by waiting even I did qualify.

[Paragon]

I guess this is what I get for being responsible and buying a house I could afford last March...

[InfidelSerf]

A question:

My wife owns the house we live in... well shares it with the state and bank whatever.
We have thought about putting my name on the title now that we are married.
Would it be legal for her to sell me the house for what she owes on it, to take advantage of the 1st time home buyer
benefits (I have never bought a home before)
Or just add my name and forget about filling out any annoying federal paperwork?

[makattak]

A question:

My wife owns the house we live in... well shares it with the state and bank whatever.
We have thought about putting my name on the title now that we are married.
Would it be legal for her to sell me the house for what she owes on it, to take advantage of the 1st time home buyer
benefits (I have never bought a home before)
Or just add my name and forget about filling out any annoying federal paperwork?

Answer:

Talk to a tax professional and/or a lawyer.

[Brad Johnson]

A question:

My wife owns the house we live in... well shares it with the state and bank whatever.
We have thought about putting my name on the title now that we are married.
Would it be legal for her to sell me the house for what she owes on it, to take advantage of the 1st time home buyer
benefits (I have never bought a home before)
Or just add my name and forget about filling out any annoying federal paperwork?

Answer - No.

In a married household both spouses must qualify.  Your wife has been a homeowner within the last three years so neither of you qualify for the credit.

Brad

[makattak]

Well, we've been saving to get a downpayment because I knew the market was unlikely to get much lower than this.

Looks like we need to scrimp and save to get everything we can prior to November 30.

Hopefully, we'll be in a position by then- I had thought it'd take another year though...

Hmmmm....

[Balog]

Well, we've been saving to get a downpayment because I knew the market was unlikely to get much lower than this.

Looks like we need to scrimp and save to get everything we can prior to November 30.

Hopefully, we'll be in a position by then- I had thought it'd take another year though...

Hmmmm....

Same here. I wonder if this credit will be renewed or otherwise available after the current iteration expires? I suppose it depends on how the market is doing.....

[Brad Johnson]

Well, we've been saving to get a downpayment because I knew the market was unlikely to get much lower than this.

Looks like we need to scrimp and save to get everything we can prior to November 30.

Hopefully, we'll be in a position by then- I had thought it'd take another year though...

Hmmmm....

How much house are you looking to buy?  Under the new FHA guidelines you will need a minimum of 3.5% OOP (out of pocket) going into the purchase.  You can negotiate with the seller to fund the remainder of your closing expenses.

Example:

House price
$100,000

Lender estimated total Out Of Pocket expenses, including down payment
$8000 (amount is common for Lubbock. Your area may differ)

Your required minimum contribution (3.5% of $100,000)
$3500

You can negotiate with the seller to contribute $4500 towards the remainder of your closing expenses.  Whether you can find a seller willing to do so will depend on the seller's attitude, motivation, and needs, and on the market in your area.

You need to (A) hook up with a good real estate agent and (B) start talking to lenders NOW.  If you can't find one you like in your area give me a ring.  We have some local guys who can do out of state stuff, and that will probably beat the pants off most lenders on rates and fees.

Brad

[makattak]

How much house are you looking to buy?  Under the new FHA guidelines you will need a minimum of 3.5% OOP (out of pocket) going into the purchase.  You can negotiate with the seller to fund the remainder of your closing expenses.

Example:

House price
$100,000

Lender estimated total Out Of Pocket expenses, including down payment
$8000 (amount is common for this area. Your area may differ)

Your required minimum contribution (3.5% of $100,000)
$3500

You can negotiate with the seller to contribute $4500 towards the remainder of your closing expenses.  Whether you can find a seller willing to do so will depend on the seller's attitude, motivation, and needs, and on the market in your area.

Brad

ONLY 3.5%!???

I was trying for 20% and I thought I might be able to get by with 10....

This is looking more doable.

[cassandra and sara's daddy]

things might be tougher now but i was able to buy houses when i couldn't get a decent car loan   no credit

[Balog]

I wonder if this applies to loans brokered (is that the right term?) by the VA?

[Brad Johnson]

ONLY 3.5%!???

I was trying for 20% and I thought I might be able to get by with 10....

This is looking more doable.

3.5% is the minimum required Buyer contribution under the new FHA guidelines.  Keep in mind that doesn't mean it's 3.5% out of pocket, there are other costs associated with closing (insurance, surveys, appraisals, prepays into excrow, etc).  Around these parts the incedental costs and fees normally run 3.5% to 4.5% of the contract amount.  You may or may not have to come out of pocket for the these expenses, depending on whether you can negotiate with the seller to contribute some amount to your closing costs. 

If you are forced to go completely out of pocket for the entire Buyer's side of the transaction, figure a minimum of 7-9% of the contract price for total buying expenses.  This should include all your prepaids, fees, and the the 3.5% (minimum) downpayment.

But as always... Hook up with a good lender and have them do a GFE (Good Faith Estimate) for you.

I wonder if this applies to loans brokered (is that the right term?) by the VA?

VA and FHA do no broker or make loans.  An "FHA loan" or "VA loan" is made by the same company or underwriter as conventional mortgage products, it is simply made under guidelines set forth by the Federal Housing Administration  or the Veterans Administration.  Mortgage loans made under FHA or VA guidelines are insured against default for the lender, and by the respective Administration involved. 

In other words an "FHA loan" is not made by the FHA, only insured by them.  The loan is made by XYZ Mortgage under the FHA guidelines.  FHA then insures XYZ Mortgage against borrower default.  Ditto VA.

Brad

[Balog]

Right, I knew the VA isn't directly involved in the lending process. I just wasn't aware of the correct terminology. 

[Brad Johnson]

things might be tougher now but i was able to buy houses when i couldn't get a decent car loan   no credit

They've put the clamp on mortgage loans.  No-doc loans are a thing of the past unless you have an 800 credit score and a buttload of money to put down (like 30-50%, minumum).

For conventional and FHA-insured products the minimum credit score needs to be at least 630 (it used to be 570).  Full documentation of income is required, including documentation of cash on hand for closing expenses.  In other words, it better be in your account, or you better be able to show that you are setting aside a regular amount against it.  If the cash just suddenly "appeared" in your account last month, you must be able to document that it came from a legitimate source, and is not borrowed in any way, shape, or form.  (so no getting a cash advance on your Visa).

Brad

[Nick1911]

They've put the clamp on mortgage loans.  No-doc loans are a thing of the past unless you have an 800 credit score and a buttload of money to put down (like 30-50%, minumum).

For conventional and FHA-insured products the minimum credit score needs to be at least 630 (it used to be 570).  Full documentation of income is required, including documentation of cash on hand for closing expenses.  In other words, it better be in your account, or you better be able to show that you are setting aside a regular amount against it.  If the cash just suddenly "appeared" in your account last month, you must be able to document that it came from a legitimate source, and is not borrowed in any way, shape, or form.  (so no getting a cash advance on your Visa).

Brad

I think I bought a house at a good time (last summer).  Loans were still relatively easy to get, and hosing prices had dropped a fair amount by then.

Of course, I has 15%ish down, and the house cost about 1.4 times our yearly pay.  In other words, we bought within our means.

[cassandra and sara's daddy]

it'll be a while before i do anything  i might refi to remodel but i typically do that outa pocket.when i got this place 10 years ago i thought the loan officer was gonna stroke out when he ran my credit  thank god for my wifes bad taste in men