Real Estate Search Direct

Have you been trying to figure out how to come up with a down payment for a home?   Are you interested in using the first time home buyer tax credit to help you come up with a down payment?  Lately I have been getting the same question over and over lately.

“Can I use the first time home buyer tax credit for a down payment?”

The answer, technically, is no you can’t.

When Congress drew up the legislation for the first time home buyer tax credit, they wanted to make it something that would enable people to buy a home.  But they weren’t able to figure out how to get the money to the closing table at the time of closing.

The challenge they found was that since only first time home buyers with purchase transactions closing before December 2009 are eligible, and the IRS handles the tax credit,  the IRS would have to be involved in the closing in order to verify the transaction and provide funds for the transaction.

The IRS simply doesn’t have the capacity to be involved so many real estate transactions.

Until last month the only remedy was to get a personal loan to cover the down payment.  Normally, lenders would not allow such a personal loan to be used for a down payment because the loan would affect the buyer’s ability to repay.

Because of the first time home buyer tax credit, some lenders made exceptions to the normal “seasoning” requirement of the down payment.  Seasoning means the buyer could show proof of having the down payment funds available over the past few months.

So the tax credit did enable people to get money for their down payment when using conventional financing that involved a 10% or more down payment.  But people who can’t afford a 10% down payment, even with the tax credit were out of luck until now.

As of the May 29, the FHA announced that they will allow lenders to provide a bridge loan for the down payment that will be repaid with the first time home buyer tax credit.  With FHA financing, this means the down payment can be as low as 3.5% of the purchase price.

With up to $8000 from the first time home buyer tax credit you can now purchase a home for up to $228,000 as long as you can afford to pay the closing costs.

So from now until the end of November is a great time to buy a house.  Prices have fallen and interest rates are at historic lows.  Now the first time home buyer tax credit helps more than ever, as it is easier than ever to apply it to a down payment and closing costs.

The National Association of Realtors reports that sales have increased for the month of May by 2.4 percent over April.  There were even more sales expected based on pending sales, but a trend has emerged in the industry.  Recently there has been a rash of pending transactions that are delayed or canceled due to faulty appraisals.

You can reduce the risk of a purchase transaction falling apart by making sure your offer is not too high.  It’s less likely to have an appraisal problem if the value of the home is clearly more than the offer price.  It also helps protect you as the buyer against decreases in property value.

To keep up to date on information that can help you avoid problems in your purchase transaction and help you get the best deal possible subscribe to updates below.  You will also be enrolled in a free course on home buying in today’s market.

Comments (2) Jun 23 2009

If you are a regular visitor to realestatesearchdirect.com you may have noticed something new in the upper right corner of the page.  That little yellow tag is from 10 Million Clicks For Peace.  This is a campaign to promote world peace.  Do you support world peace?

10 Million Clicks For Peace was founded by Julian Kalmar to end war.  The premise behind 10 Million Clicks for Peace is to end the reasons for war.  If we can bring health, success and happiness into every life, then what will anyone need to fight about?

With over 1 billion internet users we can each spread the word to make an impact on the world.

10 million clicks for peace provides tools like the tag you see in the corner of this page to make it easy for each of us to spread the word and make a difference for this and future generations.

They also provide a Gifts of Peace ecourse free of charge contributed by well known authors, speakers and peacemakers including Deepak Chopra and Jack Canfield (Chicken Soup for the Soul and The Secret).  This is a program to promote health, wealth and happiness.

They have put together what amounts to a course in personal growth that will create a better life for each person and eliminate the reasons for war.

If you really love war and can’t stand the thought of peace on Earth, you probably haven’t read this far. So those of you reading this line, what reason can you have not to support world peace?
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Comments (4) Jun 11 2009

Do you know the facts about solar energy? It is in high demand with energy prices increasing and concerns over global warming.  Green energy is becoming more and more popular as people become more aware of their responsibility to the Earth and its natural resources.

When you are looking into buying a new home, it is a good idea to consider the energy sources you will use.  Many people are “off the grid” now and generating their own electricity from solar and wind generators.

You may think it sounds complicated and expensive, but it can save you a lot of money in the long run.  Do you know what is even better than saving money on energy?

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Comments (1) Jun 08 2009

Are you interested in buying  a home, and wondering “How much mortgage can I afford?”

Ivana Newhouse and her fiancé, Homer Buyer were planning to buy a house.  They started looking for a house by driving around looking for “Open House” and “For Sale” signs on houses.  They saw several the first day out and they looked at houses at various prices.

They quickly discovered that they would waste a lot of time if they looked at every house on the market.  They had to find a way to narrow down the list of prospects and the first thing they needed to do was eliminate those that were too expensive.

But exactly how much is too expensive?  How much mortgage could they afford?  That is the first question that most first time home buyers struggle with.

They wanted to determine what kind of monthly payment would be affordable and from that they could calculate what  purchase price they could afford when buying a home.

Homer and Ivana consulted a loan officer at their bank to find out what loan they would qualify for. The loan office pre-approved them for a loan of up to $480,000.00.  He told them that the monthly payment would be about $2500.

When Homer and Ivana purchased their home for $479,000 and then started making their monthly payments, they found that they were running short of cash at the end of each month.

They had considered that their monthly rent had come to practically the same amount as the mortgage payment, so they should be able to afford the payments.   What they didn’t take into consideration were the property taxes, insurance, and how much more their utility bills would be as home owners.  When they turned on the air conditioning in the summer, their monthly electricity bill came  to almost $200 each month.

What do you think they did about this problem?
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Comments (6) Jun 07 2009