Amid the economic upheaval, there is good news for first-time home buyers – a tax credit of up to $7,500. Even better – the definition of first-time home buyers includes those who have not owned a principal residence in the three year period prior to purchasing a qualifying home.

The tax credit, established through the Housing and Economic Recovery Act of 2008, is available only to first-time home buyers and only for homes purchased on or before April 9, 2008 and before July 1, 2009. Any home that will be used as a principal residence qualifies, including single family detached homes, townhomes, condominiums, mobile homes, and houseboats. New construction is also eligible, as long as possession or occupancy occurs within the parameters defined by the law.

For the purposes of this law, a first-time home buyer is defined as someone who has not owned a principal residence during the three years prior to the purchase of the qualified property. For married taxpayers, neither individual may have owned a principal residence in the previous years. A buyer will not be disqualified from the tax credit if they own a vacation home or rental property not used as their principal residence.

Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Eligibility is determined based on modified adjusted gross income. Partial credit may be available for those with higher incomes; however, individuals with a modified adjusted gross income exceeding $95,000, (or $170,000 for married couples filing jointly), will be ineligible for the tax credit.

The tax credit is equal to 10% of the qualified home purchase price, but is capped at $7,500; for homes purchased for less than $75,000, the credit will be 10% of the purchase price.
There are no special forms to fill out and no pre-approval necessary. The credit is easily claimed on the federal income tax return. Plus, the credit can be claimed on the 2008 return for a home purchased in 2009. If the tax credit exceeds the taxpayer’s outstanding liability for the year, the taxpayer will receive a check from the government.

The credit is like an interest-free loan, and it must be repaid to the government over a 15-year period. Payments do not have to begin until two years after the credit is claimed. If the home is sold before the credit is repaid, the outstanding amount will be paid from profits on the sale. If there is insufficient profit to repay the credit, the remaining amount will be forgiven.

For first-time home buyers (those who are truly new to the market and those who have not owned a principal residence in at least three years), this tax credit can make it easier to transition into home ownership. Combined with housing inventories increasing, prices decreasing, and mortgage rates dropping even lower, this tax credit may just make the difference in making home ownership a reality.

This article is informative only, based on information available at time of publication, and is not intended to provide tax or legal advice. Please be sure to consult with a tax advisor or legal professional about your particular situation prior to making any decisions or taking any action.

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If you have bad credit, attempting to refinance your mortgage loan can prove to be a frustrating, maddening and even a humiliating experience. You would love to take advantage of a refinance in order to lower your mortgage payments, but find it difficult because your credit score is just too low. It is tempting to give up, but it is not necessary, because there are ways to refinance your mortgage loan even with bad credit.

Before you begin your quest to obtain refinancing for your current loan with poor credit, consider two things. First, consider using a mortgage company that specializes in bad credit mortgage financing. Secondly, do whatever you can to clean up your credit report before you attempt to refinance your loan.

Because traditional lenders may shy away from refinancing individuals with poor credit scores, it might be a good idea to find a lender who specializes in bad credit refinancing. However, it would prove wise to try traditional lenders first, while avoiding lenders that you know very little about. Often times, traditional lenders have special programs for individuals with bad credit ratings.

Lendingtree.com would be a good example of this, because they are a traditional lender with a special program for people rebuilding their credit. You can get a free quote with no obligations. Do note, however, that you will end up paying higher interest rates when you refinance with whoever you choose to refinance your loan with due to a low credit score.

Another important step in securing a bad credit refinance is to fix any credit problems that you can. This will increase the likelihood of you receiving better terms. Obtain a copy of your credit report from the ‘big three’ credit bureaus. Scan it carefully and look for any mistakes.

If you find any, notify your creditors or the bureaus immediately. Also, if possible, try to pay down any credit cards that are near their lending limits. This makes you look better to the mortgage lender. Remember, just do what you can and then carefully and methodically research possible mortgage refinancing companies.

Refinancing your mortgage loan with bad credit can be a frustrating experience. However, like with most things, a little patience, persistence and resourcefulness will bring you closer to finding refinancing terms that work well for you.

By: Anthony S. 

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