Q: I’m a first-time buyer. First, how do I get the $8000 tax credit? Second, can I use it for the down payment?
A: The Dec. 1, 2009 deadline to purchase a home in time to qualify for the $8000 First-time Homebuyer Tax Credit is fast approaching. To add pressure to the time crunch, mortgage applications are up and lenders will be trying to close thousands of loans by Dec. 1. To make it even more challenging, because of changes in mortgage regulations, it is taking lenders approximately 45 to 60 days to close their loans.
If you want or need to get this free money for buying a home, I suggest you find a home to buy and have signed a contract to purchase that home by Oct.1. That said, here are the answers to your two questions:
1. If you’re a first-time buyer or you haven’t owned a home in three years, you make less than $75,000, and you buy a home before Dec. 1, you can get $8000 or 10 percent of the purchase price, whichever is lower, back in your taxes if you file Form 5405 with the IRS.
2. Yes, there is a way to use a portion of the tax credit in advance of filing your taxes! If you’d like to use the tax credit for settlement, get the PHFA Tax Credit Advance Loan of up to $5000, and you can use it for closing costs. There are several rules. Among them are: you must use a Keystone Loan 5.625 percent interest rate, you must put $1000 of your own money into the deal and you must pay PHFA back by June 30, 2010. Check with PHFA to find a lender that can help you.
Happy house hunting!
Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.