How to fine information on buying a home

( Kim) Zion, IL(Zone 5a)

I have no idea if I can put this on here and for 2 days I have been looking for information on how to buy your first Home
It said that you get a tax credit than in the AARP Paper it said

Quoting:
Tax credit up to 8000.to help with down payment


Beside the AARP does anyone else no ware I can find information on this.
If I can't do this I am sorry

Thanks For reading
Kimberly (AKA) Dimmer

Dublin, CA(Zone 9a)

It's part of the new stimulus package, there is a tax credit of up to $8000 for first time home buyers. The credit phases out if you make too much money ($75K for single, $150K for married filing jointly). Also you have to buy the house by the end of this year. Of course there's a chance they may extend it if the housing market hasn't picked up enough, but there's no guarantee so if you're in a financial position where you can afford to get a house I'd make sure you get one this year. Here's some info http://www.federalhousingtaxcredit.com/

Hillsborough, NC(Zone 7b)

I heard that two options were still on the table..
one was that over a few years the credit would be paid back by the recipient the other was just to give an outright tax break no pay back.

has anyone heard if that decision had been reached?

Dublin, CA(Zone 9a)

Last year's program was a $7500 credit that had to be paid back, but the new plan for this year is $8000 that doesn't have to be paid back (unless you don't stay in the house for long enough--I think you have to stay for 3 yrs) If you bought a house anytime this calendar year you qualify for the new $8000 credit, but if you bought last year then you're stuck with the old credit that needs to be paid back.

( Kim) Zion, IL(Zone 5a)

So far all the information is true If single you have to make under75000. and you do have to live in house 3 year But I can't fine anywhere
you can use that for part of the down payment on the house I heard it on NBC today show on Sunday but can't fined it I do have the 20% for the house.But the extra 8000. wood be great

Dublin, CA(Zone 9a)

It's not part of the down payment, it's a tax credit that you would get when you file next year's taxes.

springfield area, MO(Zone 5b)

It is a credit that is put toward the tax you owe the IRS.
For instance if you normally would pay 8,000 in tax, then you would pay 0.
The other thing is depending on the details of the credit, you may only be allowed to use a portion of it each year for X number of years. For ex if you normally owe 8,000 per year, you might be able to use it is 2,000 increments, so it would take 4 years for you to get the benefit of the whole amount.
Also beware of paying in more in tax than you might really owe, as the IRS simply says 'we're broke, toodles!' and send you an IOU instead of your money.
I also heard that some states are going to do away with alot of credits because they are going broke and cannot honor them. I know it took us 5 years to get back our adoption credit here in MO because the state did not have enough money to honor all of the people who were eligible for the credit.

Dublin, CA(Zone 9a)

In all the things I've read on the subject I've never seen where you'd have to take the deduction over a couple of years...everything I've seen says you would always get that money back on next year's taxes (and if you buy a house soon enough, there is even a way you can get it back on this year's taxes if you want). If you have info that says something different can you post a link?

Also I don't know that we really need to worry about the IRS sending IOU's instead of checks, but if you want to be safe then adjust your withholdings from your paycheck so that you get a bit of that $8000 in each paycheck for the rest of the year, that way you don't have to worry about that. The states are a different story in terms of the IOU's and eliminating credits but this is a federal tax credit not a state credit so it's a safer bet.

Hillsborough, NC(Zone 7b)

I also heard (but again --these were just proposals) that the govt was going to subsidize the lenders (and I don't know if this was just banks or all lenders) so that new first time buyers would not have to pay PMI - which I think is even better than that 8000 credit --the PMI adds up quick over the years and I can't see houses increasing in value as they did in years past --which allowed for a quick release from the PMI as equity built.

springfield area, MO(Zone 5b)

Well IMO the IRS wants us to think it is a safer bet, but just because it has always been there, doesn't mean it always will, and besides why would someone want to pay in money interest free for Uncle Sam to use for a whole year anyway? It's better to closely figure your tax, withhold enough to cover it, and then use YOUR money to pay on debts that you owe, especially those with interest... which is most debt
.
I do not know if this new credit will be able to be taken all in one shot or if it will be able to be used over several years. Here's how our adoption credit with the IRS worked, assuming the housing credit is the same way, at least this is a scenario. She really should talk with a CPA or tax attorney before buying a house DEPENDING on the credit.

We spent 20,000 to adopt 1 qualifying child. The fed had a credit for I think 10,000 at that time, (I think it might be a little more now)
The thing is you don't just GET the money. It is a credit that you use for your tax liability. So we were poor enough, that most years we only owed 2,000. That means we were able to carry the credit over to the next year, using 2 or 3000. It took several years to use all of the credit for us, because we owed so little tax anyway. (I was actually talking about a STATE credit in my previous post, which was different for us because we SOLD the credit at 75%. We owe so little in state tax, we would not have been able to utilize the full amount before the time expired on it)
That is the other option the poster MAY have, if she couldn't use the credit herself for whatever reason, can it be sold?
She REALLY needs to talk to someone who KNOWS more details about the credit she is wanting to use, BEFORE making a decision that would be depending on a credit that may turn out to be a ghost for her.
Many people make little money to begin with, have several children to claim a credit on, ect, by that time this 'credit' may not really be a benefit to them as they thought it would be.
It is a credit, not a refund. You don't get the money back, unless you paid it to begin with. NOT paid it on the house, but paid it on your taxes. (or you can use it to pay your taxes if you didn't pay into it during the year)
What we did on our Fed is file exempt since we knew we had a credit that was working for us. Then at the end of the year, we used the credit to pay the tax we owed. Plus then we got a refund of 3,000, because we had 3 children that qualified as dependents.
Everyone's tax situation is different.
There is also a toll free number and a website for the IRS that you can call to get information. I have called it before and got good results. Be sure you write down the Badge ID of whoever you talk to, the date and time. Keep a log of what they tell you.
There are also state offices to call if you have questions about state tax issues. If the IRS is offering a credit to first time home buyers, some states may follow that up with a state incentive of some kind as well. Never hurts to call and ask.
I never go to those H&R block type things, like at Walmart and such. Those people are ok to do BASIC tax forms (really most people could it themselves) But if you have credits, or any kind of business, or itemize, you should find someone more reputable. I called around about my adoption credit and NO ONE even knew what I was talking about when I told them I wanted to sell it. I ended up finding a tax attorney 4 hours from me that said 'oh, sure, no problem' and proceeded with language that let me know he had did that before. Cheap, fast, chain tax preparers can cost you a bundle if they do not know what they are doing. Not to mention the headache a couple years from now, when you try to straighten out the mess. IMO best to avoid those types. Look under the Yellow pages and find someone that has been in private business for awhile, or just ask around to find someone that is recommended.

Dublin, CA(Zone 9a)

There are some tax credits where if you don't have enough tax liability you'd have to spread it over several years, but this credit doesn't work that way. Here's the info from the FAQ in the website I linked to above:

Quoting:
I read that the tax credit is "refundable." What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

( Kim) Zion, IL(Zone 5a)

http://www.federalhousingtaxcredit.com/2009/faq.php
Hope this will work my Lawyer sent it to me
Kim

Dublin, CA(Zone 9a)

Yes, that's the FAQ from the same website I linked to up above.

( Kim) Zion, IL(Zone 5a)

I am sorry I was thinking ( OH NO) I shouldn't think LOL That now I have forgotten what I was going to say I am sorry I just want to thank you all for the information that has been given. It has helped alot
Kim

Dublin, CA(Zone 9a)

Glad to help! Hope you find yourself a nice house--that $8000 tax credit is really a great deal, I'm just sad they didn't have it when I was buying my first house!

( Kim) Zion, IL(Zone 5a)

I Have and I have been doing good I put a Bid on a house It started out at 185 went to 148 I have never brought a house so I went with 139 they came back 146 I said 1 more time and went to 143 they came back 144 so I said sold today I said lets get the paper work rolling and I got the instr est for 5.25 for a 30 year mortgage fixed I hope I am doing all the right things. Sunday I have the house inspector come and check it out
Thanks All
Kim

Naples, FL(Zone 10a)

congratulations Dimmer, this is exciting for you.
It sounds like you did it absolutely right. Good rate on that mortgage too!

Dublin, CA(Zone 9a)

Congratulations! Sounds like you got yourself a good deal, and a 30 yr fixed mortgage at 5.25% is a good deal too. I'll keep my fingers crossed for you that the inspection comes back good!

Hillsborough, NC(Zone 7b)

Coworker found an interest rate at 4.75 (he bought a 1/2 point) for 30 years. Suntrust. Do you have Suntrust bank there?

( Kim) Zion, IL(Zone 5a)

No I went with the credit Union And There are No point. What does that mean points
Oh And the house was built in 1997 here is a picture

Thumbnail by Dimmer
Dublin, CA(Zone 9a)

Points are a way to buy down your interest rate by paying more money up front. So if you pay one point, that means you're paying an additional amount equal to 1% of the value of the loan, and in exchange your interest rate will be reduced a little bit (I think in order to get your 5.25% loan down to 4.75%, you'd probably need to pay about 1 point).

If you've got got some extra cash available and are planning to stay in the house and in that loan (in other words not refinancing) for long enough that your monthly savings have added up to the additional money you had to spend up front then it can be a good deal, but sometimes people end up selling or refinancing before those initial points have paid for themselves since it typically takes a few years for the savings to add up.

Naples, FL(Zone 10a)

That is a lovely house and your yard is a blank slate which is the best kind!!

springfield area, MO(Zone 5b)

Lovely yard, nice GRASS- mine is all weeds lol

central, NJ(Zone 6b)

Didn't you go over all this with your realtor/mortagage broker? They should have explained all this stuff to you...esp points and how they work ?????

( Kim) Zion, IL(Zone 5a)

Points didn't come up at the bank or the Realtor and I don't have points so I had no idea what points were and with the tax credit all is so new and still learning
Well as of yesterday I have been approve and all things are coming together and I will be closing on the 6 to the 10 of April everything is flying. I saw the house on March 5 and try to think of everything and than being my first time buying a house I had to ask question.Had house inspector come on Sunday and just a few little thing have to be done. I did put picture of the House In General Discussion and Chat under ( Sweet interruption 114 )
I want to thank everyone for the help that you have given to me
Kim (AKA) Dimmer)

Naples, FL(Zone 10a)

Dimmer I went and looked at the thread where you posted the pictures.
http://davesgarden.com/community/forums/t/962852/

What a wonderful home this will be for you and you will have plenty of gardening to do to plant some interesting things in that yard!!
Congratulations again.

( Kim) Zion, IL(Zone 5a)

Thanks so much I am very Happy
Have a great Day
Kim

central, NJ(Zone 6b)

Guess their not into full disclosure...they should have def descussed points with you... if you had any $ available it's a way to lower the interest rate even more.

springfield area, MO(Zone 5b)

I thought she said she already did use all the money they had available.
that is probably why they didn't bring up the points issue.

Hillsborough, NC(Zone 7b)

I think they should have discussed the available rates - including those that could be bought down with points. Points can be put back into the loan so you don't need necessarily need point money at closing. It is a matter of "do I need for this monthly payment to be low now most importantly" as opposed to 'it isn't worth it for me to be paying for these points over 30 years (or 15 etc.) because I do intend to stay in this house for a long time' I know someone that just reduced his mortgage by 200 dollars/month (wife just had a baby and she is going to stay home so every little bit counts) and the cost for the points to lower the mortgage ($1200) went back into the loan.

Shenandoah Valley, VA

You should really look into what it would do if you got a 15 year loan vs a 30 year. When I bought my house, because the total interest is far less because the loan time is far shorter, the payments were only slightly higher for a 15 year loan and the interest rate was better too.

springfield area, MO(Zone 5b)

I agree a 15 or 20 yr loan is the ONLY way to buy a house. 30 years just drags it out too long and then you are paying TONS more in interest over that extra time. The monthly payment is usually not that much higher just from month to month.

( Kim) Zion, IL(Zone 5a)

Well As I said I am the only one that will be in the house and I am a Union LAborer so I work Road construction from Middle of April til Thanksgiving but If I want to pay off before the 30 years There is no problems.
I am putting 20 % down and 7000, for closing
Kim

Hillsborough, NC(Zone 7b)

Yes that is right there should be no prepayment penalty.

Many folks choose to get the 30 year loan but pay it off sooner to avoid all that interest. They just like the comfort of having a lower monthly payment should they have problems. You do pay a higher interest tho usually for the 'privilege' of carrying the financing out 30 years.
7000 for closing seems like an awful lot - but I don't know if these things vary from state to state.

Good Luck to you in your new house Kim. May only good things cross its threshold. I hope you plant a garden that will make all of us go wild with envy!!!

Dublin, CA(Zone 9a)

Closing amounts can vary a lot depending on how much property tax you have to pay at closing, and also some places there are transfer taxes and things like that which can add up too. But I would definitely take a peek at the fees being charged to make sure that the number is high because of property taxes/insurance and/or transfer taxes and not because of junk fees. I think credit unions are probably better than some other lenders about this, but it wouldn't surprise me if they tack on a few unecessary fees too.

Hillsborough, NC(Zone 7b)

Yeah, I guess so but 7000 seems awfully high. Even with the three months that are escrowed etc. etc., and even with the transfer taxes --which typically don't amount to much. Even on HGTV (smile) where all kinds of houses are sold during all different times of the year --whenever they reveal costs to the viewing audience -- -monthly payment, down payment etc. etc. the closing fees are never more than a few thousand.

central, NJ(Zone 6b)

Our closing costs 4 years ago were $9700.00

Dublin, CA(Zone 9a)

Seems to me my closing costs were in the $7-8K range when I bought a house in Ohio about 10 years ago...they've been about double that on the two houses I've bought since I moved here but this is California so everything is more expensive! On a lot of the HGTV shows that I've seen, the buyers negotiate to have the sellers pay some/all of their closing costs, so that's probably why some of the numbers you're seeing are so low (I'm also not sure when HGTV reports the closing costs on those programs whether they're including taxes and impounds and things like that which could help make them look low too)

Another thing to consider is that depending on when you buy the house relative to when property taxes were paid you can end up having pay the seller back for property taxes that they already paid. When I bought my current house I ended up having to repay the seller for about 5 months of taxes that he had already paid, plus if I had done an impound account for taxes/insurance the lender wanted an extra few months worth of taxes on top of that. Then you typically have to pay for your first 6 months or a year of homeowner's insurance as part of closing, so when you take all that and then tack on even legitimate lender fees and you could easily get up to $7K.

But it is always a good idea to go through the good faith estimate line by line and make sure that all the fees are legitimate--even relatively good lenders will usually stick a few things in there that aren't really necessary so chances are you can save yourself something by going through with a fine-tooth comb and arguing with them over any fees that aren't truly needed.

( Kim) Zion, IL(Zone 5a)

The reason is 5800 is in the taxes my taxes are high and if I understand The seller has to pay back the taxes up until the time I move in
That is what I understand than the 2000 for closing.After I move in I will do an appeal for lower taxes I have allot of the information on that already That I think will be in the fall. But I am going so fast here but that I guess is why its called Short Sale.
I have been getting so many calls not from friends or Family I have to charge up my phone 2 time a day But its worst it

Dublin, CA(Zone 9a)

Actually short sale has nothing to do with the speed...what it means is that you are paying less for the house than what the seller owes on their mortgage. As a matter of fact short sales can sometimes move slower than a regular sale because the bank is involved too and needs to say if an offer is OK or not, but maybe in this case you were lucky and the bank realized that it's in their best interests to help the seller get the house sold quickly.

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