First Time Homeowner Tax Credit:
(Available for homes purchased April 1, 2008 through June 30, 2009)
The new law will extend a tax credit of up to $7,500 to first time homebuyers. The tax credit is for 10% of the purchase price, up to $7,500, but phases out for higher-income homeowners. This is a tax credit, not a deduction. It reduces the homeowner's tax bill by up to $7,500 for the tax year in which the purchase was made (please note that taxes must be filed). It is a one time credit.
There is a catch in that the money has to be repaid over 15 years, starting two years after the home is bought. The tax credit is truly an interest-free loan. If the tax credit is taken, the individual's income tax bill will increase by $500 a year for 15 years. If the house is sold before the money is paid back, then it will be due and payable upon sale
FHA Modernization Act:
100%financing of FHA loans is still available until Sept 30.
Seller funded down payment assistance is no longer available after October 1st. The loan must be final approved on September 30th and must close by no later than October 31st.
Source: WR Starkey, Walter Scott
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