First homebuyers can get a $7500 tax credit for purchasing a home between April 9th 2008 and July 1st, 2009. How can this help your buyers?
David Hail, Allied Home Mortgage Capital Corp. FHA Trainer and Government Loan Guru makes this suggestion:
The Housing and Economic Recovery Act of 2008 authorizes a $7,500 tax credit for qualified 1st time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009.
The big question is how can a home buyer access the money sooner for down payment and closing costs than by filing their 2008 tax return? Remember, it's a tax credit and not readily available in a lump sum cash amount as a source of funds to close. Here's a way that at least helps your borrower get started using this tax credit benefit:
Any first-time home buyers who believe they would be eligible for all or part of the credit can modify their income tax withholding (through their employers) or adjust their quarterly estimated tax payments. The effect of reducing the tax withholding (up to the amount of the credit) will allow the potential home buyer to accumulate cash by increasing their take home pay. The accumulated money saved as a result of a net take-home pay increase could be used for down payment and closing costs. Individuals subject to income tax withholding could adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment.
Although this is not a perfect solution, if you have buyers who are just beginning to look for a home and are sure they want to buy in the next 6-8 months, you can make this suggestion to them to help them to increase their available funds. Just a reminder, you will look like a hero if you call your first time buyers who have purchased a home since April and have them contact their accountant to see how it will affect their take home. This is also a great opportunity to introduce one of your trusted advisors (your CPA) to your clients.
If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure!
If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest. Please contact me at 410-960-2061.