FIRST TIME HOME BUYER

Potential homebuyers will be happy to know that mortgage rates have dropped for yet another week, while credit card shoppers can happily take advantage of a new database offered by the Fed that helps compare terms and prices. Also, those who are into saving money might be able to take advantage of Wal-Mart’s $97 iPhone.

Mortgage Rates Continue to Fall

Buying your first home can be a daunting and stressful task, especially with all the forms and possible tax breaks involved. Check out these articles from personal finance bloggers to be as prepared as possible for your search.

First Timer? Reduce the Cost of Your First Home

A new report released by the Commerce Department last Friday revealed that new home sales had a huge monthly jump in March. In fact, the jump was the biggest for new home sales that the Commerce Department has seen in 47 years.

Sales Soared 27 Percent

Somewhat spurred by reasonable mortgage rates, the sale of new homes in March soared by 27 percent. The seasonally-adjusted annual rate for March was 411,000 sold from the 324,000 sold in February. This is the biggest increase in home sales in one month since the 31 percent gain seen in March 1963.

In addition to reasonable rates, the increase in sales had a lot to do with the $8,000 and $6,500 home buyer tax credits to those buying new homes or upgrading to bigger homes. With the deadline for signing contracts being April 30, many people wanted to hurry up and get in on the action.

If you didn’t already know, the homebuyer tax credit countdown has started for those who are looking to sign on the dotted line for their homes.

This means, if you want to take advantage of thousands of dollars in credits for the 2010 tax year, now is the time to get out and begin looking for your home.

What’s Involved in the Homebuyer Tax Credit?

We recently reported that new home sales for January had reached the lowest point in 50 years. However, it turns out that new home sales for February have now reached a new record low that beat the previous month’s low. While the low sales may have had something to do with slightly-increased mortgage rates near the beginning of the year, this is not great news for the housing market.

The Numbers Continue to Drop

It appears that individuals who want to claim the first time homebuyer tax credit may face a few unexpected hurdles this tax season. Among the issues homebuyers may face in the 2009 tax season are new documentation requirements and filing delays.

About the First-Time Home Buyer Credit

The First-Time Home Buyer Credit is a tax credit designed to encourage people to go out, buy homes and stimulate the economy. As an incentive to take advantage of the credit, first time home buyers (which constituted those who hadn’t lived in their own home for three years) would receive an $8,000 credit from the IRS.

Those who have yet to take advantage of the hefty $8,000 First-Time Home Buyer Credit may have more time than they think to get in on the action. It seems that Congress is hard at work trying to extend the credit past its current deadline of Nov. 30, 2009. If the extension is passed, the credit will be available for a “limited” period of time, according to Treasury Secretary Tim Geithner and Housing Secretary Shaun Donovan.

Specifics of the Extension

If you filed an extension for your taxes back in April, your extension deadline has rolled around. You and approximately 10 million others will have to file your taxes by Thursday, October 15, 2009 to avoid penalties.

But according to tax preparation companies like H&R Block, filing your 2008 tax return by the extension deadline is not your only upcoming tax concern. Here are a few more:

• First-Time Home Buyer Credit – If you’re looking to get your hands on up to $8,000 in tax credit – and want to buy a home – then you’d better hurry up and get on the market soon. In order to officially meet the deadline for the First-Time Home Buyer Credit, you must close on your home by November 30th.
• Making Work Pay – This was a program that added extra money to each worker’s paycheck throughout the year. However, by adding to the paycheck, you will owe more in taxes. So while you still have time, now is when you want to make sure you adjust your withholdings so that you don’t end up owing more at tax time. According to H&R Block, you are especially at risk of owing if you are an individual with multiple incomes, married with dual incomes, a retiree with taxes withheld from pension or Social Security benefits, or an individual who works but are claimed as an dependent on another person’s return.
• Open Enrollment – This is also a good time to take advantage of fall benefits open enrollment. During this time, you can choose the right health and retirement plans to help limit your tax liability.

Nothing says safety and security like home. Buying and owning and maintaining a home is central to the American Dream, and just about everyone wants, at some point, to own one. It’s clearly the ideal place to settle down and raise a family. Given the current economic collapse, with its epicenter in the real estate industry, now is a very, very good time to buy.

If you’re in the process of buying a home, or are thinking about it, then you’re going to need a mortgage. One term that is critical to understanding how mortgages work is the “point.” Understanding points can help you evaluate mortgages better in order to find the one that suits you best. 

If after weighing all the pros and cons, you want to take the plunge and become a first time home buyer, congratulations on your decision!

After making sure you have the down payment and are pre-qualified for a mortgage, the fun process of house hunting can begin.

There are so many housing options to choose from: luxury co-ops, pre-fab homes in gated communities and historical properties can all be yours. But before you agree to sign on the dotted line, you must conduct the necessary legwork to ensure that you are buying your dream home and not a money pit.

Conduct a Title Search