Home Buyer Tax Credit

8 Tips to Take Advantage of the Home Buyer Tax Credit before Time Runs Out

Two versions of the tax credit are still being offered: a maximum credit of $8,000 for first-time buyers (and those who last owned a home 3 or more years ago), as well as a $6,500 credit for current homeowners. Either way, the credit applies only to the purchase of a new principal residence costing $800,000 or less, and there are income restrictions and other limitations, including a requirement to close the sale before July 1.

How can buyers eager to capture the tax credit streamline their home shopping?
Here are some suggestions:
1. Get to Know Your Market: Buyers can do that using Internet sites that permit you to see the homes currently on the market, and by finding a good real estate agent who is ready to expedite the shopping process. "A capable agent can guide buyers through the home search process and save them a lot of time," contends Debbie Laskowski of RE/MAX Select in Chicago. "New listings can be emailed to buyers as they are posted, and buyers should stay on top of the market on a daily basis, seeing what properties are coming onto the market and which ones have sold."

2. Line Up Your Financing: Talk to a reputable lender right away and go through the pre-approval process. That will tell buyers quickly how much they can borrow. At today's extremely low interest rates, that amount may be more than many buyers imagined. But either way, the process will help buyers determine how much they are willing and able to spend on the home.

"When it comes to geography, buyers should factor in their daily commute. Few of us want to be more than 45 minutes from work. If buyers need access to public transit, then that also shapes their choice, and if they have children, schools are going to be a factor. Ideally, you can narrow you search to one or two communities rather quickly."

4.Separate Needs from Wants: Buyers can look at fewer homes if they can tell their agent what features the home they buy must have and what features would be nice but aren't required. "When it comes to must haves, start with the basics," recommends Dan Bundy of RE/MAX Center in Grayslake, Ill. "How many bedrooms are needed? Is a separate home office essential or just desirable? Do you require a basement? Will a two-car garage be sufficient, or do you need something larger? And don't forget to consider the type of home. Are you interested only in a traditional two-story single-family detached dwelling, or would a ranch plan work just as well? And what about a townhouse?"

"Buyers often have a hard time articulating what they will accept when it comes to condition," explained Jim Hannigan of RE/MAX Properties in Western Springs, Ill. "That's why it is important for a buyer to get out and walk through some properties with their agent as soon as possible. Buyers' reactions give an agent the clearest picture of their priorities."

6. Keep Things in Perspective: As nice as it may be to get the tax credit, don't let the desire to do so completely control your home search. "Some buyers are quick decision makers, and others aren't," noted Debbie Laskowski. "If you like to mull over important decisions, take the time you need. The tax credit is a great incentive, but an $8,000 credit equals just 2.5% of the price of a $320,000 home. Buying the wrong home can end up costing you a lot more."

However, "the more contingencies you have in a contract, the greater the risk that it won't close," said Bundy. For example, if an issue arises in the home inspection, and it can't be resolved, the buyer may want to find another house, but doing that after April 30 will mean losing the tax credit. Allowing time to work through the contingencies before the deadline reduces that risk.

Courtesy of www.rismedia.com