With April 30 right around the corner, this is your last chance to take advantage of the Homebuyer Tax Credit. The credit has already been expired once, and you will be kicking yourself if you watch it come and go without taking advantage. Do not risk missing this – it really is a once in a lifetime opportunity.
Did I mention the government is giving you money? $8,000 if you’re a first-time homebuyer or $6,500 if you’re a current homeowner! Just for purchasing a home – not bad, not bad at all.
What is wonderful is that an estimated 2.2 million to 2.4 million are expected to take advantage of the extended and expanded homebuyer tax credit this year. That’s a lot of people. And according to Lawrence Yun, 800,000 of those transactions would not have been made without the credit – thank goodness for this fantastic tax credit!
Well, I hope you’ve…
Found the house you’ve been looking for
Are currently under contract (or will be by April 30!)
Had your new home inspected
Are prepared for the down payment and escrow (and ready for adjustments)
Friday’s are for following. At least in the Twitter world they are! One of the reasons I love the social world, where I’m happily settled into my blog, is because of all my wonderful, intelligent neighbors! I am surrounded by the best resources – and am constantly sharing my knowledge with my Twitter (@JoetheHomebuyer) followers, Facebook Fans and Blog readers.
Let’s start with my favorite site WisconsinHombuyers.org – this is my information hub. I’m willing to bet that this site has the most information on the Homebuyer Tax Credit than any other site out there. I mean, its main purpose in life is to provide Wisconsinites with the most up-to-date information on the Homebuyer Tax Credit!
And whenever a question arises that requires that I double-double-check my resources, I visit HUD or the IRS. Those two know pretty much everything!
Two other great resources for information on the Homebuyer Tax Credit are my Facebook page and Twitter stream. While everyone loves them some Facebook and Twitter distractions, these two social networks prove to be excellent places to receive and share information. Especially exciting breaking news – like when the Tax Credit was Extended and Expanded! Those of you checking your Twitter and Facebook probably heard about it first!
I am also a big fan of #FollowFriday on Twitter. This is a great time to acknowledge the people you think have great insights. It shows appreciation – and gives your followers the option to follow those who you think are great. It’s just one big sharing world out there! Some of my favorite people to follow for tips on the Wisconsin Real Estate world are @WiRealtors, @REALTORS. I also love to follow @HGTV and @BobVilacom for fun tips on being a home owner.
So – all of you potential homebuyers debating whether or not you’re ready to take advantage of the Homebuyer Tax Credit, I encourage you to dive into the social world! Once you’re settled, you’ll be very glad you did.
As a recent homeowner, memories of renting are fresh in my mind. While renting was perfect for me at the time, I very much appreciate owning my own home and not having to deal with landlords. Actually, there are quite a few things I do miss about renting.
I miss being told what colors I can paint my walls.
I miss being told I won’t get my security deposit back because of a small stain on the carpet.
I miss being told I need to move out because they are turning my apartment into condos.
I miss paying for my landlord’s vacations.
Wait… these things shouldn’t be missed!
If you’re a renter, contemplating purchasing a house (how could you not consider with the $8,000 tax credit as an incentive) I challenge you to do the math – what you’re paying now as a renter, versus an estimated mortgage for a house in your desired neighborhood.
Purchasing a home is the best investment you can make.
Recently on my Facebook Fan Page, I posted an article on the fact that you can use your tax credit as a down payment. A lot of questions arose as to whether or not, with the extension and expansion of the homebuyer tax credit, this statement was still valid.
I, Joe the Homebuyer/blogger, want to clarify that YES you can use the tax credit towards your down payment.
The only stipulation is that the FHA requires that a minimum of 3.5 percent of the down payment must come from the homebuyer’s own funds (and cannot include the proceeds of the sale of the anticipated tax credit or any other funds provided by the mortgagee, seller or any other party of interest to the transaction).
Okay. I hope this information helps! If you have more specific questions, click on the above links, @ or DM me on Twitter, or write your question on my Facebook Fan Page wall.
You’ve made the decision to jump on the homebuyer tax credit bandwagon and purchase a house! Yay you – you are among smartest people alive, by the way.
Assume you’ve budgeted correctly, done your research, worked with a wonderful Realtor® and placed an offer and had it accepted. Now what?
Now you file for the homebuyer tax credit, and get your money! Well, that and actually move in! Semantics, semantics…
How exactly do I go about claiming this? Well, you’re in luck. With the help of the IRS, I’ve laid it out for you in three or four (four for current homebuyers) easy steps:
Step 2: Along with Form 5405, include 2009 tax returns
Step 3: Include your Form 5405, 2009 tax returns, and one of the following documents:
• A copy of the settlement statement showing all parties’ names and signatures, property address, sales price and date of purchase. Normally, this is the properly executed Form HUD-1 Settlement Statement.
• For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
Step 4 – This step is only for the current homebuyer’s: You need to prove you lived in your old home for five consecutive years during the eight-year period (ending on the purchase date of the new home). To prove this, include:
• Form 1098 Mortgage Interest Statement or substitute mortgage interest statements; property tax records; or homeowner’s insurance records.
Please note that those claiming the homebuyer credit cannot file it electronically. You must file a paper tax return because of the additional documentation requirements.
I hear the IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February. So have patience!
Wow, can’t believe it’s February. When Congress passed the Home Tax Credit Extension and Expansion in November, we were thinking about turkey and this week, we were thinking about groundhogs.
Hopefully, not to eat.
This just demonstrates the smaller and smaller window home buyers have to take advantage of this tax credit. So, in an effort to look forward – we are going to look back, and inwards.
Since Joe moved in, the biggest search term on our site was “$6500 tax credit” – so to keep my fans happy, here’s some reminder information:
“If you have owned your home consecutively for 5 of the previous 8 years and are looking to sell you current home, you could receive up to the full $6,500 tax credit.”
Why this is an awesome time to buy a new home:
• You are expecting a child and that bachelor pad that you and your wife held on to is just getting a little too cramped. (Upgrade) You would also like to eat on a table, not an ironing board anymore.
• The nest is empty, and cleaning two to three bathrooms is no longer that much fun. Like it ever was. (Downgrade)
• You are finally going to take your band seriously. The noise violations are getting pricey. You need a bigger place, with no one around for your version of Stairway to Heaven to really rock. (Upgrade)
• Your band kicked you out, and you don’t need your recording studio anymore. (Downgrade)
Ok, Joe has to go. Apparently a band in town has an opening for a front man.
I know the extended $8,000, or expanded $6,500 tax credit is luring you into the housing market. Especially considering you are reading this blog post – you’re doing your research! Therefore, it’s my job to warn you, before you jump in head-first, of common mistakes home buyers face.
Below are the most common mistakes people make when deciding to purchase a home. Don’t make these mistakes. I repeat, do not make the following mistakes:
Don’t rush. I know my countdown to the tax credit expiration may seem a little pushy, and potential homebuyers might feel a bit rushed, but time must be taken to decide on a home. Research, research, research. To make sure the home buying process runs smoothly, I advise contacting a Realtor and mortgage lender. I also suggest you get your credit score, and create a realistic monthly budget.
Don’t move too slooowww. If you are working with a trusted Realtor and banker, know the market and area, and did your research beforehand, you are on track! If you come across a home that fits all your qualifications, don’t hesitate to act on it.
Don’t fail to budget for unexpected costs. The increase in foreclosures makes this even more of an issue. Have your budget prepared for the possibility of everything from a leaky roof, broken washing machine to dirty gutters. I suggest you buy a house that is a bit less that you can afford, leaving room in your budget for unexpected costs.
Don’t fall in love with the idea of the perfect house. When it comes down to it, decide exactly what qualities in a house you can’t live without. Next, decide on the things in a house that would be nice to have, but are not extremely vital. Be careful of what your idea of the perfect house is, and be willing to compromise… But only compromise enough to buy a home that meets your most important needs at a reasonable price, even if it isn’t exactly what you had in mind.
In the tsunami of information crashing on the public today, it is easy to get overwhelmed. This is especially true when it comes to the home tax credit program. I like to keep things simple, so I searched for some good advice to keep you focused when it comes to buying your dream home.
Or in my case, your dream blog.
From Elizabeth Weintraub, About.com Guide The “Red Shoes” Experience for a Home Buyer
“Women will relate to this. Say, you need a new pair of red shoes. You go to the mall. At the first shoe store, you find a fabulous pair of red shoes. You try them on. They fit perfectly. They are glamorous. Priced right, too. Do you buy them? Of course not! You go to every other store in the mall trying on red shoes until you are ready to drop from exhaustion. Then you return to the first store and buy those red shoes. Do not shop for a home this way. When you find the perfect home, buy it.”
From Bankrate.com A Penny Saved
“Start a down-payment fund. The goal should be to amass 20 percent. Set monthly savings goals. Shore up the family budget. Work an extra job if you have to. The pain will precede a gain: lower house payments and higher equity in the future.”
From ABC News Tax Time
“[To claim the tax credit] There’s a form, 5405, to fill out. You’ll also have to submit a copy of your settlement statement, usually Form HUD-1, with the names and signatures of all parties, the property address, the sales price and date of purchase.
To avoid refund delays, the IRS recommends that long-time homeowners who purchase a new home also provide documents to show they meet the requirement for consecutive years lived in their old house. These can include mortgage interest statements, or property tax or homeowner’s insurance records.”
From Joe himself:
This is a once-in-a-lifetime opportunity to get a great value for a home, and get a tax credit. If you dont subscribe to the Red Shoes Experience of homebuying, and fancy yourself an all-star comparison shopper – get out there now. You only have a few months to get the house, and get the tax credit.
Another Joe – Joe Murray – was on NBC 15 in Madison last night. Check out why this is a great time to look for a new home, especially if you have some tiny tenants like the family featured in the story.
Below is a video of my idol Lawrence Yun, NAR chief economist, explaining pending home sales over the past year.
Lawrence is the man. Below are three important things to note:
• We expected this downturn. People thought the first-time hombuyer tax credit would be ending November 30, explaining the huge surge in September and October. Thankfully it was extended and expanded!
• We currently have had an “exceptionally low, rock-bottom mortgage rates,” and consumers need to recognize this is not sustainable. Lock in at these rates now because mortgage rates are anticipated to creep higher by spring 2010.
• The November 2009 Midwest index is 9.2% higher than November 2008. Repeat, 9.2% higher!
Bottom line: Take advantage of the extended and expanded homebuyer tax credit before it is too late!
