First-Time Home Buyer

9 Helpful Tips to Reduce the Stress of Buying a Home Today

Getting prepared for the holidays can be both a joyeous and a stressful time. The same could be said about the home buying process. As you search for your dream home, keep in mind these helpful tips to reduce the stress of buying a home today.

1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.
2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. When you find a home, don’t try to second guess interest rates or the housing market by waiting longer. You risk losing the home of your dreams. The housing market doesn’t change fast enough to make that much difference in price usually and a good home won’t stay on the market long.
3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family - the people who will be living in the home.
4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.
5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself - room size, kitchen, etc. - that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.
7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.
9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.

Try to remember that a home’s most important role is to serve as a comfortable, safe place to live. Buying a home should be fun, not stressful. If you have become too stressed during your home buying process, take a few minutes to review these helpful tips to reduce the stress of home buying today and start with tip 1.

First-Time Home Buyer

Home Buyer Tax Credit Still Available for a Special Group

Did you know that the home buyer tax credit that was so heralded during spring 2010 is still available. There are special rules that apply to the homebuyer tax credit if you are a member of the uniformed services, the Foreign Service of the United States, or an employee of the intelligence community.

Here is how it works:

• A “first time home buyer” is defined as someone who has not owned a primary home in the last three years. If you are a “first-time home buyer”, your tax credit will amount to 10% of the purchase price of your new home not to exceed $8,000.
• A “long-time resident” is defined as someone who has lived in the same primary home for 5 out of the past 8 years. If you are a “long-time resident”, your tax credit will amount to 10% of the purchase price of your new home not to exceed $6,500.
• The tax credit does not need to be paid back if you continue living in the home as your primary residence for three years without selling it. If you sell the home in connection with government orders for official service, the credit does not need to be repaid even if you sell your home within the three year timeframe.
• The home must be purchased for less than $800,000 before May 1, 2010. If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010. If you have served for at least 90 days of the year outside of the United States, you have until May 1, 2011 to purchase your home and receive the tax credit. In that case, if you sign a binding contract to purchase a home before May 1, 2011, you would need to close on the transaction before July 1, 2011.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
• You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent (child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews, nieces, and others.
• If you are married, both spouses must qualify for the credit.
• If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the total credit taken cannot exceed $8,000 (or $6,500 for “long-time residents”). Alternatively, if only one of the unmarried buyers qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit.
• The credit applies even if you have co-signers on your mortgage loan.
• The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others.

How does the tax credit work?

A tax credit is kind of like a gift certificate that you can use to pay your taxes – it reduces your income tax bill on a dollar for dollar basis. Imagine paying your bill at Restaurant IRS, and then later getting an Restaurant IRS gift certificate. Normally, you would need to go back to Restaurant IRS and buy more food in order to use your new gift certificate. But what if Restaurant IRS allowed you to just turn in your gift certificate for cash? That’s how the home buyer tax credit works!

All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check for $8,000 (or $6,500) – just like the example of Restaurant IRS that allows you to exchange your gift certificate for cash! Remember though, you’ll receive the $8,000 (or $6,500) from the IRS AFTER you purchase your new home, so you cannot use the funds to help with your down payment.

For more information about the home buyer tax credit as it applies to this special group, just contact us. We would be happy to assist you with your mortgage in the purchase of your new home!

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. I recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.

First-Time Home Buyer

It’s Time to Re-Approve Your Pre-Approval

As the federal home buyer tax credit nears its April 30 end-date, there’s a lot of would-be home buyers still working to get under contract in Chesterton, Crown Point, Dyer, Highland, Munster, Portage, Schererville and Valparaiso.

A piece of advice for all of them: If your pre-qualification and/or pre-approval letter is more than 8 weeks old, it would be prudent to have your lender “re-pre-approve” you.  Mortgage guidelines have been in flux and your original lender letter may now be invalid.

For example, over the past half-dozen months, the majority of mortgage lenders in Northwest Indiana have reduced their risk tolerance with respect to:

• Maximum debt-to-income ratios
• Minimum allowable credit scores
• Calculation of “assets in reserve”

For buyers of condominiums and co-ops, even the subject property itself is coming under tougher scrutiny.

Today’s mortgage applicants need to be a complete package. It takes more than just good income and credit to get approved anymore and today’s buyers should revisit their qualifications. What passed underwriting in January may not pass in May.

Being pro-active brings other advantages, too. If a mortgage re-pre-approval does unearth an issue, it’ll be easier for every party to the transaction to address and correct it up-front versus trying to clean up a mess once a home’s already under contract.

Talk to your Realtor and your Certified Mortgage Planning Specialist about your pre-qualification/pre-approval letter before you bid on a home in Northwest Indiana.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

First-Time Home Buyer

Homebuyer Tax Credit Set To Expire in 30 Days

There’s just 30 days remaining to use the federal home buyer tax credit in Chesterton, Crown Point, Dyer, Highland, Munster, Portage, Schererville, Valparaiso and the rest of Northwest Indiana.

The credit ranges up to $8,000 for first-time homebuyers, and up to $6,500 for existing homeowners who have lived in their main home for 5 of the last 8 years.

Claiming the federal tax credit is a two-step process. First, you must be under contract for a new home on or before April 30, 2010.  Then, you must close on said home on or before June 30, 2010. 

There are no exceptions on the dates (except for certain members of the military).

Timeline aside, homebuyers and the subject property must also meet minimum requirements in order to be tax credit-eligible:

• You can’t purchase the home from a parent, spouse, or child
• You can’t purchase the home from an entity in which the seller is a majority owner
• You can’t acquire the home by gift or inheritance
• Each buyer in the purchase must meet eligibility requirements
• The home sale price may not exceed $800,000
• Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers

The complete eligibility checklist is published on the IRS website.  Or, if you find IRS-speak too difficult, make a phone call to your accountant.  Asking a tax professional’s advice on a tax-related matter is never a time-waster.

And lastly, don’t forget that if you’re claiming the federal tax credit for home buyers, it’s a tax credit and not a deduction.  This means that a tax filer who qualifies for the full $8,000 and for whom the “normal” federal tax liability is $8,000, will owe no federal taxes in 2010 to the IRS.

If you’re an active buyer in Northwest Indiana, mark your calendar for April 30, 2010. It’s 30 days from now and, as the date gets closer, buyer traffic will increase. The likely result is higher home prices and more difficult negotiations.  The best time to act may be today.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

First-Time Home Buyer

You’ve Got 15 More Days To Use The First-Time Home Buyer Tax Credit

The government’s First-Time Home Buyer Tax Credit program expires November 30, 2009 – a scant 60 days from today.

Considering it can take up to 60 days to close on a home, first-time buyers have 2 weeks at most to find a home.

Buyers not under contract by October 15 have little chance of meeting the November 30 deadline and, therefore, little chance of claiming the tax credit.

This is especially true for purchases involving short sales and foreclosures.

Congress passed the First-Time Homebuyer Tax Credit program as part of the 2009 economic stimulus plan.  IRS Form 5405 outlines the program criteria and includes the following stipulations:

• Buyer may not have owned a “main home” in the past 36 months
• The home may not be purchased from a parent, spouse, or child
• Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers

The credit is capped at $8,000 or 10% of the purchase price, whichever is less.  And don’t forget - the First-Time Home Buyer Tax Credit is a true tax credit.  It’s not a deduction. 

This means that a tax filer who claims the full $8,000 and whose “normal” tax liability is $5,000 would receive $3,000 cash from the US Treasury when their tax return is processed by the IRS.

If you can’t close by November 30, 2009, though, you can’t claim the credit.

The clock is ticking. If you’re planning to use the First-Time Home Buyer Tax Credit, the time to act is now.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

First-Time Home Buyer

The Reality of a 401(k) Withdrawal to Achieve a Lifetime Opportunity of Home Ownership

As downpayment requirements increase, anecdotally, home buyers are tapping 401(k) plans for extra cash.

Classified as a ”hardship withdrawal”, loans against your retirement funds can be cheap and simple.

1. There’s no credit check or approval process
2. There’s only a small set of paperwork
3. Money can be available in as little as a day

But just because you can get access to your retirement money doesn’t mean that you should.  401(k) withdrawals should only be made after careful consideration. 

There are some serious negatives, specifically with respect to taxation. 

If you open a 401(k) loan and don’t repay according to the loan terms, the withdrawal ends up getting taxed as income, plus a 10 percent penalty for people under 59 1/2. 

That’s a stiff penalty.

But, even if you do repay the loan on time, you’re still leaving yourself subject to double-taxation. 

• Taxation #1 occurs when the loan is repaid using post-tax dollars
• Taxation #2 occurs upon final withdrawal at retirement

Furthermore, when you borrow against a 401(k), you assume the opportunity costs of having that money out of the market.  Since March, the Dow Jones Industrial Average is up 44 percent.  If your 401(k) was empty, you’d have missed those gains forever.

Taking a loan against a 401(k) isn’t necessarily a bad idea, there just may be better choices. If you’re planning to withdraw from your 401(k) to make a downpayment on a home, talk with a qualified financial professional first.

You can never have too much good information.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

First-Time Home Buyer

There’s Now Just 6 Weeks To Find A Home To Use The $8,000 First-Time Home Buyer Tax Credit Program

If you plan to use the First-Time Home Buyer Tax Credit program, time is running out.  The program expires November 30, 2009 and closing on a home can take up to 60 days.

That leaves you 6 weeks from today to find a home and go under contract.

The First-Time Homebuyer Tax Credit program was passed as part of the 2009 economic stimulus plan. It credits up to $8,000 in tax payments to qualified buyers.

The qualification criteria are as follows:

• Buyer may not have owned a “main home” in the past 36 months
• The home may not be purchased from a parent, spouse, or child
• Adjusted gross income for the household must be below $95,000 for single tax filers and $170,000 for joint tax filers

Furthermore, not everyone who’s qualified will get the full $8,000. The credit can’t exceed 10 percent of a home’s purchase price, for example, and households with income approaching program limits get lesser benefits, too.

Meanwhile, an interesting note about the First-Time Home Buyer Tax Credit is that it’s a true tax credit and not a deduction. &nbsp. A person or couple claiming the $8,000 credit whose “normal” tax liability is $5,000 would get back $5,000 or whatever had been withheld for federal income taxes plus an additional $3,000 from the US Treasury when their tax return is processed by the IRS.

Review the program’s criteria at your leisure, but don’t wait until October to start looking for homes. If you can’t close by November 30, 2009 for any reason whatsoever, you won’t qualify for the tax credit. 

Better to be ahead of the deadline than chasing it.

First-Time Home Buyer

First-Time Home Buyers – The $1 Million Challenge

Did you know that First-Time Home Buyers make up over half (53.5%) of the home purchase market?

Consequently, the Obama administration enacted a tax credit to stablize the real estate industry and to generate more housing demand. But according to a survey commissioned by Move, Inc. –which operates Realtor.com– nearly half (47%) of ALL Americans don’t even know the $8,000 tax credit exists.

Consumer confidence has tumbled and the fear of the economy has frozen many first-time home buyers in their tracks. The Barath Group is collaborating with Realtors, service professionals and businesses to provide this FREE Educational Seminar to renew confidence back into the value of homeownership.

Not only will the tax credit be explained, but every attendee will receive a Home Buyer Handbook, a Credit Resourse Handbook and alo be eligible for valuable prizes*. Don’t delay. Time is RUNNING OUT.

Join Us as we set out to put $1 MILLION back in the hands of First-Time Home Buyers locally!

*Attendance Required to be Eligible for Prizes, Gift Certificates and FREE Services Courtesy of our Sponsors.