It is the American dream to own your own home. Home-ownership helps to stabilize a person’s financial future, assuming he or she buys the right home. However, many people have been scared away from home ownership due to the rising number of foreclosures. Home values climbed so high over the last ten years and some people were simply locked out of the housing market.
Times have changed for a number of reasons:
- Property values have fallen drastically, making it far more affordable to buy a home.
- Mortgage interest rates are at very low levels. You can get into a mortgage with good credit for less than six, sometimes five percent.
- Government programs such as FHA make it even easier to qualify and they help to reduce the cost of closing on that property.
However, one of the most lucrative tools for saving money is the current tax credit available to home buyers. The First Time Home Buyer Tax Credit equates to an $8000 reduction in your taxes. In addition, those who are current homeowners who plan to buy a home (either new or existing) in the approved time period will earn a $6500 tax credit for doing so. Take a look at some of the details of this opportunity.
Those who are first time home buyers, or current homeowners who buy a new or existing home, will qualify for their deduction as long as they buy the home between now and April 30th, 2010. This can be any type of home, including a single family home, co ops, condos and townhomes, though it does have to be your principal residence to qualify.
The amount you earn through this program is based on the price of the home and your income. Those homes valued at over $800,000 do not qualify for this particular type of tax credit. Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 will qualify for the maximum credit towards the purchase of their home.
Why Should You Invest?
Now is an excellent time for individuals to buy the property that they need and want to own. Do plan to stay in your home for some time so that the value can grow over time. Also, you do want to look for the right home loan for your investment. A low interest rate is critical to being able to afford a home. You do not want to put yourself in a position of foreclosure.
To make it even more affordable, follow these tips:
- Have as much of a down payment as possible before you buy. Some lenders are now requiring 20 percent, though FHA requirements are less.
- Do negotiate with lenders to get the lowest interest rate possible for a fixed rate mortgage loan. This provides affordability and stability to you both now and in the long term.
- Do try to pay more than the minimum payment each month. This allows you to pay off your loan faster and saves you thousands of dollars per month.
Do take the time to consider how this tax credit can work to your advantage. For many people, it is an ideal reason to start investing in real estate. Keep in mind that you do have to close on or before April 30th to qualify for this tax credit and there is no information available to determine if that date will be extended.