$8000 First-Time Buyer Tax Credit
Earlier this year the government passed legislation allowing first-time homebuyers to receive up to $8000 in tax credit when they purchased a home. A first-time buyer is defined as one that has never owned a home or has not owned property in 3 years or more.
Many first-time buyers have benefited from this tax credit. The credit is based on the purchase price of the home and the maximum refund a new homeowner can receive is $8000. Homebuyers even have the option, if they purchased a home after they had filed their 2008 tax returns, to file an amended return after their closing and still receive the tax credit this year.
FHA then came out with a bridge loan program for homebuyers that alllows the homebuyer to use the tax credit at the time of purchase as part of their down payment. Borrowers can purchase the home with a bridge loan at no interest for 12 months in order to allow them time to file their return and receive the tax credit and pay off the bridge loan without incuring any penalty.
The tax credit benefit ends on 12/1/09. A new homebuyer must close by 11/30/09 in order to take advantage of this tax credit. With the high volume of refinance loans resulting from the extremely low interest rates, lenders are swamped with files and turn-times for processing have gotten longer.
It is important for any first-time buyer wanting to take advantage of the tax credit to get their loan application in early and to work with their realtor to find, offer and contract on their new home within the next 60 days to ensure they can get their loans closed before the tax credit end deadline.
There’s never been a more favorable time to buy a new home, don’t miss out!