Option 1st Financial Blog

As expected, President Obama signed the $787 billion American Recovery and Reinvestment Act (aka “the stimulus”) into law on Tuesday, February 17th.  You may or may not be aware that contained in the law, is a provision that allows first-time homebuyers (you can qualify as a first-time homebuyer if you have purchased a home in the past) to receive a tax credit. Details of the homebuyer tax credit are as follows:  

• The tax credit is 10% of the purchase price, up to $8,000;
• The tax credit is only valid for first-time homebuyers (call for a definition of first-time homebuyer as owning a home in the past does not necessarily exclude you from qualifying) purchasing principal residence;
• The tax credit can be applied to purchases made from 1/01/09-12/01/09;
• The home purchased must be a principal residence for 3 years or the credit will be recaptured, in other words, investment properties do not qualify for the tax credit; and 
• The tax credit only applies when taxable income for the year is less than $75,000 (file single return) or 150,000 (file join return).

This tax credit of course is good news for anyone thinking about buying a home and that meets the guidelines outlined in the American Recovery and Reinvestment Act! Unlike the tax credit signed into law last July, this tax credit would not have to be repaid and buyers could claim it against their 2008 or 2009 tax returns. 

So, if you have been thinking about purchasing a home as your principal residence (again, this tax credit does not apply to the purchase of investment properties), this tax credit offers an excellent opportunity to reduce your tax liability in 2008 or 2009, the net result of which would be less taxes owed; a refund of some sort; or a larger refund.     

The question is, are you in position to take advantage of the tax credit? Remember, you must still qualify for the loan by meeting lender guidelines before you can use the tax credit. Your credit profile, which includes your credit scores, must meet guidelines, as well as your debt to income. In addition, you need a minimum of 2 years of employment with the same employer or within the same industry. Of course, other requirements must be met and should you have any questions about lender guidelines or any questions about qualifying for a loan, please do not hesitate to give us a call at 240.784-6861 or send an mail to LCurtis@1stoption4u.com. 

In addition, I would encourage you to read our prior Blog posts: Top 5 Ways to Improve Your Credit Scores and Is this the Perfect Time to Buy?, if you are considering a home purchase.   

As always, best of luck and we hope that you find this information to be timely and helpful!