Are you planning to buy a home for the first time? Do you have enough cash or you need to take out a mortgage loan to buy a property? There are several financial institutions that offer loans for first time homebuyers. Before taking out a home loan, it is advisable that you gather proper knowledge so that you can obtain a suitable mortgage loan that suits your financial condition. Reading through this article will also make you aware of how to take advantage of first-time homebuyer tax credit.
* Types of mortgage loans
There are primarily 2 types of mortgage loans for first time homebuyers – FRMs and ARMs.
1. Adjustable Rate Mortgage (ARM) – The interest rate remains fixed for a certain period and which it gets adjusted periodically.
2. Fixed Rate Mortgage (FRM) – The rate of interest remains fixed throughout the term of the mortgage loan.
* Documents to produce
You need to produce the following documents in order to take out a mortgage loan.
• Income proof
• Address proof
• W-2 forms for the past 2 years
• Paystubs for the past 2 years
• Your Social Security Number
• Recent statements of your stocks, bonds and deposit amounts
* First-time homebuyer tax credit
Barack Obama has signed a law that enables you to get a first-time homebuyer tax credit if you buy a primary residence between April 8, 2008 and April 30, 2010. Moreover, you can also take the advantage if you enter into a binding contract before April 30, 2010. By signing this contract, you can claim the federal tax credit if you can settle the purchase before June 30, 2010. You can get a maximum of $8000 homebuyer tax credit if you satisfy the eligibility criteria of a first-time homebuyer.
* First-time homebuyer – Eligibility criteria
In order to take advantage of the federal tax credit, the purchased property needs to be the primary residence of the taxpayer. Moreover, the taxpayer shouldn’t have purchased a primary residence within a period of 3 years prior to buying the current house. If you are married, then you or your partner shouldn’t have owned a residence within the said period. In order to get the full tax credit, the MAGI (Modified Adjusted Gross Income) need to be within $125,000 for a single tax filer and $225,000 for joint filers.
You can take help of online forums if you want to know more about loans for first time homebuyers or first-time homebuyer tax credit.
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