Posts Tagged ‘first time home buyer’

First-time Home Buyers Still have Options

May 13, 2010

The home buyer’s tax credit program has ended.  While many were able to take advantage of the savings; we also know that many more did not.  Perhaps the timing of the program didn’t fit with your current financial picture.  Do you feel left out and like the opportunity to buy your dream home is gone for good?  While this particular program may be over, what if something else existed to help?  Wouldn’t you want to know?  Fortunately one does!

The Mortgage Credit Certificate (MCC) program is a Federal tax credit on the mortgage interest you pay on your home loan over a calendar year.  It effectively reduces the annual interest rate on your loan. 

This is not a limited life program or something offered for just a set period of time.  The MCC credit remains in effect for as long as your home continues to be your primary residence and the original mortgage loan remains in place.  Only if you refinance your home loan, sell your home or purchase a second home that becomes your primary residence, will the credit end.  Plus in select targeted areas you do not need to be a first-time home buyer to qualify.

Unfortunately this program is not offered in all states.  In the 5 states we currently do business only Michigan and Indiana offer the MCC program.  (This would be a great question to ask your state senators and representatives about if your state does not offer this program.)  Even more amazing though is that not all lenders participate in this program.  Awareness Home Funding does and will continue to do so for every state we conduct business in when available.   

If you are looking to purchase a home, now or in the future, ask us about the MCC program.  We are very familiar with how the program works and more importantly, how it can work for you.

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The Other Side of the Coin

February 2, 2010

As your parents most likely told you growing up, there are two sides to every coin; and therefore two sides to every story.  On one side we have the home buyer’s tax credit with up to $8,000 available for first-time home buyers and up to $6,500 available for existing home owners.  This has been a great program that has helped many buyers.  Some of our clients have used this to essentially recoup their closing costs.  Others have used this to update or furnish their new homes.  However they are choosing to use the credit, there is money coming their way.

So, what’s the catch?  The other side of this coin is what it takes to actually receive the tax credit.  In mid-January, the Internal Revenue Service released the new Form 5405 for the credit that needs to be included with the buyer’s return.  Along with the form, buyers also need to include proof of residency, the signed HUD-1 statement from the closing, and a copy of their driver’s license.  “Great!” you say.  Not a problem.  However there is one little catch.  Because of this extra documentation, filing electronically will not work – the IRS e-file system is not equipped to handle these pieces.  That means taxpayers with these claims must file a paper return and that means filing via mail.  Filing by mail means it will take time.  For your 2009 taxes this can mean up to 8 weeks for the refund, up to 16 weeks for an amended 2008 return.

 Why the extra hoops here?  The short story is the IRS is requiring more documentation to stop those individuals who have already taken advantage of a good thing and cheated the program.  So now, you need to prove you purchased a home and that this is indeed your home.  Bottom line, the credit is available and a significant value, just don’t spend it before you have it.  Your parents probably told you that one too.

For more information, click here for a link to instructions for Form 5405.