Earning First Time Tax Credit with a Co-Borrower who isn’t one!

written by Tom Harper and Turner Williams

Mortgage Consultant and Managing Partner

Southern Lending Consultants, LLC

In an effort to stabilize the ailing housing market, the Federal Government is offering a tax credit of $8,000 to people purchasing a primary residence, who have not owned a primary residence in the last three years. Unlike past versions, the latest plan is not a loan and does not have to be paid back.  You simply must live in the home for three years to keep the $8,000.  Though details have yet to be released, HUD/FHA has announced that the tax credit will be available for use as a down payment and for costs incurred upon closing on a residential property.

We have received many questions about earning the credit when a co-borrower is also on the loan with a first-time home buyer.  If the home is purchased as the primary residence of the first time home buyer, the tax credit will be given in full to the first time home buyer.  The co-borrower, who has had or does have ownership interest in a primary residence in the past three years, cannot claim any of the tax credit.  This provision allows parents, extended family or even friends to help someone qualify for a loan and still make the $8,000 credit available.  A helpful FAQ from the IRS can be found at http://www.irs.gov/newsroom/article/0,,id=206294,00.html.

With home values depressed and mortgage rates at historically low levels, the federal tax incentive can make owning a home much cheaper than renting.  With FHA loans requiring only 3.5% down payments, the $8,000 tax credit may cover the entire down payment and all of the costs to close on a home.  In some cases, borrowers have cash left over for other household expenses.  Now is the time to buy! For helpful calculators to evaluate renting versus owning or to determine how much you can borrow, visit our website at www.southernlendingconsultants.com.

If you are a buyer in our market, these are probably the best buying conditions in 30 years!  If you would like to search the Athens MLS please take a look at listings in our “Classic City” today!  On this web MLS search solution you can search every listing on the Georgia MLS for the Greater Athens area or in your Georgia town!

Also, don’t forget to check out your Local Market Snapshot at www.AthensHomeTrends.com!