2008 First Time Homebuyer Tax Credit - Worth it?

[JeeberD]

Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years (http://www.irs.gov/newsroom/article/0,,id=186831,00.html)

I had no idea this was available to me until TurboTax told me so. It sounds like a great deal...a $7500 interest-free loan from the government paid back at $500/year for 15 years starting in 2010. The only downside that I really see is that if we sell the house before it's all paid back, we have to pay the balance of what's owed that year. And it's not like the wife and I are planning on blowing the money, it would go into savings and earn interest and be there waiting for us when our 26 year old HVAC goes kaput.


And another thing to take into consideration is that if Obama's stimulus package goes through, we may not have to pay the $7500 back at all...

Congress may change home buyer tax credit for the better - St. Petersburg Times (http://www.tampabay.com/news/business/realestate/article969880.ece)

So...what does FOFC think about this tax credit?

[kcchief19]

The credit didn't really work the way anyone wanted it to but if you're eligible why not take it? It's a $7,500 tax-free loan. As you point out, it's a great deal if you just put it in the bank and earn interest or you use it as a rainy day fund instead of taking out a home equity loan or picking up credit card debt.

The housing industry is pushing hard to eliminate the repayment provision, so when you take that into consideration there's absolutely no reason not to take the credit -- if Congress does eliminate the payback provision, you would have essentially have thrown away $7,500 if you don't take it.

People call it a loan but really it's an advance -- instead of giving you $500 a year over the next 15 years, the government is giving you it now in one lump sum. You really won't miss the repayments either. With mortgage interest, property taxes and other deductions, you'll still probably end up with a tax refund each year depending on your withholding.

You're also protected if you move early. Even if Congress doesn't eliminate the payback provision, you only repay the deduction through capital gains on the house, not on equity. If you sell your house in two years and your home went up $2000 in value, that's all you'd pay back. If you sell your house for less than you bought it, you owe nothing. But any equity you've earned through paying down the principal is yours to keep.

I say take it.

[lordscarlet]

I wasn't aware of this. All I can say is that I got a $5,000 tax credit as a first time home buyer in DC and it was awesome. :) It did not have to be paid back, though.

[DanGarion]

I've pretty much figured we will end up taking it, even though I don't think we really need the credit. It's free money (as in no interest payback free). Heck it will pay for our windows this year and then we just give back $500 a year.

[PilotMan]

We were going to take it as well. I think this is the kind of deal that you don't turn down even if you have to pay it back. The problem with us is that we don't qualify because we used money from the Tax Exempt Mortgage Revenue Bonds program. We were able to get 8000 from the state that basically paid our downpayment and closing costs. We had to jump through major hoops to get the money, but we don't have to repay it as long as we live in the house for at least 5 years.

So we don't qualify for the loan, but we still get the benefits of the program because we are poor.

To answer your question, I think it's a no brainer, you take the money.

[Flasch186]

Whomever above said this did not work as intended is spot on. Not only was it not explained well, it wasn't marketed well, and the 'increase' in First time homebuyer's this brought out of the wood work was negligible at best. Take the money though.

[Lathum]

Question.

My wife and I bought a house in 2008. I am a first time buyer and she isn't, but we file jointly. Would I be elidgeable?

[Ironhead]

Question.

My wife and I bought a house in 2008. I am a first time buyer and she isn't, but we file jointly. Would I be elidgeable?

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

[Lathum]

thanks IH!

[digamma]

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

Did you get that from clicking the link above? Fascinating.

[gstelmack]

Apparently I was a first-time homebuyer about a decade too late for all the free giveaways. And somehow we made it just fine. Sigh.

[kcchief19]

Here's another link that answers questions about the credit in somewhat plain English:
Federal Housing Tax Credit for First-Time Home Buyers: Home (http://www.federalhousingtaxcredit.com)
Whomever above said this did not work as intended is spot on. Not only was it not explained well, it wasn't marketed well, and the 'increase' in First time homebuyer's this brought out of the wood work was negligible at best. Take the money though.
Mostly because no matter how many times the home builders and Realtors said it was a tax credit skeptics would call it a loan. My association did a lot of local marketing and pushing for the tax credit. A local reporter said I was mistaken and it wasn't a tax credit and it was an "advance" until I showed her where the IRS calls it a tax credit. Congress messed it up too by watering it down.

The National Association of Home Builders is pushing hard for Obama and Congress to expand the credit to a max of 10% of a home's purchase price up to a cap of 3.5% of FHA limits, which would be between $10,000 to $22,000 depending on where you live. The payback revision would be eliminated and it would be open to all homebuyers. The other major change would be allowing buyers to apply the credit as part of their downpayment. The proposal would also provide a 2.99% 30-year fixed rate on homes purchased before July 1 and a 3.99% on homes purchased by the end of the year.

i doubt all of these provisions pass. Right now, it looks like the payback elimination, downpayment option and reduced mortgage rates are possible. I think expanding the credit to higher amounts and including all buyers will be a tough sell. I've read estimates that the full plan has a price tag of around $300 billion and word is that Obama and Congress are only willing to go to about $100 billion.

The argument is that housing is at the heart of the economic mess and until you get housing going again and stabilize housing values it will be impossible to solve any other economic problems.

[terpkristin]

I am not planning on taking it. Right now too many provisos attached to it, and at the moment I don't need the "advance."

/tk

[stevew]

Darn. Bought too early. Would just about be the amount I need to get this place the way I want it as well. No chance of this going retroactive to Oct 2006?

[Flasch186]

hence why im selling (owe 161K think I can get 230-250K) and then looking to buy another home this year with the possibility of spending some months relocated into the parents house, yuck.

[DanGarion]

Here's another link that answers questions about the credit in somewhat plain English:
Federal Housing Tax Credit for First-Time Home Buyers: Home (http://www.federalhousingtaxcredit.com)

Mostly because no matter how many times the home builders and Realtors said it was a tax credit skeptics would call it a loan. My association did a lot of local marketing and pushing for the tax credit. A local reporter said I was mistaken and it wasn't a tax credit and it was an "advance" until I showed her where the IRS calls it a tax credit. Congress messed it up too by watering it down.



But in the context of the way it is built right now, it really is just a loan. I mean, anyone trying to claim it's something different would be lying.

[RendeR]

But in the context of the way it is built right now, it really is just a loan. I mean, anyone trying to claim it's something different would be lying.


Actually its not a loan, a loan would indicate a repayment with interest. It is actually a simple advance on your income tax refund. So long as you normally and regularly get at least 500+ in your refund, you are not going to be paying back anything.

Its your money, they're simply packaging up and letting you take it early.

[PilotMan]

Just about any financial advisor that I have read has said that money now is better than money later. Barring crippling deflation, 7500 dollars today is going to be worth more than 500 dollars a year over 15 years. Even if you have to repay it, it's still a better deal.

[Doug5984]

If you can get it- and invest it, in something as simple as a money market account- it is one of those rare instances of free money... I was 2 years 2 early on my home purchase.

[CU Tiger]

I dont qualify for a few reasons, but if you do this is a no brainer. If you take the 7500 and stick it in a tiered CD it'll net 3% and you pay it back dollar for dollar without interest. Inflation really doesnt play into this as interest is not involved. You pay it back with the money your borrow...free money, albeit a small amount

[Doug5984]

I'm sure we have someone who could whip up a quick spreadsheet and tell you exactly how much free money it is, paying back $500 a year, over 15 years, with it netting 3% interest in a CD. 1st year 7500 * 3%, 2nd year 7000 * 3%, and so on.

[CU Tiger]

I'm sure we have someone who could whip up a quick spreadsheet and tell you exactly how much free money it is, paying back $500 a year, over 15 years, with it netting 3% interest in a CD. 1st year 7500 * 3%, 2nd year 7000 * 3%, and so on.

Sure but itd be more like
1st year 7500
2nd year 7225
3rd year 6941
4th year 6650
5th year 6349
6th year 6039
7th year 5721
8th year 5392
9th year 5054
10th year 4706
11th year 4347
12th year 3977
13th year 3597
14th year 3205
15th year 2801
Each value is the balance after paying the $500 payment each year.
So if you *could* get 3% on a 1year CD you would make 2,801 after paying the loan back....assuming of course you never touch it. My local CU is paying 2.75% on a CD so its not out of the question.

Now if you are a great stock picker and can get 14%....well

[DanGarion]

Actually its not a loan, a loan would indicate a repayment with interest. It is actually a simple advance on your income tax refund. So long as you normally and regularly get at least 500+ in your refund, you are not going to be paying back anything.

Its your money, they're simply packaging up and letting you take it early.

I just can't agree with you. I understand your point but the word loan doesn't automatically mean repaying back with interest. When I loan a friend a couple bucks I'm not expecting him to get me more then I gave him back.

Now as for the advance on someones income tax, I'd love to see the numbers on how many people get money back compared to how many people end up paying on April 15th.

They are loaning your money early, hence it is a loan. It's your responsibility to do your taxes correctly so you end up not getting screwed by having to pay more back (just like it is with or without the money).

But that's just my opinion...

[chesapeake]

This is a synopsis of the change included in the portion of the stimulus bill passed by the House Ways & Means Committee last week:

Refundable first-time home buyer credit.
Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The bill would eliminate the repayment obligation for taxpayers that purchase homes after January 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. This proposal is estimated to cost $2.562 billion over 10 years.

[chesapeake]

BTW, I think this provision almost definitely will pass the House. I think it is likely to be in the final stimulus package because the $ amount is not too big in the greater context of the overall package.

[Chubby]

Interetsing.

We are looking at houses right now and my fiancee would qualify as long as we purchase before we are married (since I already used mine up years ago).

+1 to this thread

[RendeR]

I just can't agree with you. I understand your point but the word loan doesn't automatically mean repaying back with interest. When I loan a friend a couple bucks I'm not expecting him to get me more then I gave him back.

Now as for the advance on someones income tax, I'd love to see the numbers on how many people get money back compared to how many people end up paying on April 15th.

They are loaning your money early, hence it is a loan. It's your responsibility to do your taxes correctly so you end up not getting screwed by having to pay more back (just like it is with or without the money).

But that's just my opinion...


I have known one person in my entire LIFE that has had to pay in at tax time.

That person was ME and its because I screwed things up myself. it happened 1 time in my tax filing life.

I think the vast majority VAST, of normaly joe citizens get a refund of some amount back every year. Unless as you say, they aren't responsible enough to set things up properly.

Either way, its still your money, take it now, its worth more now than later.

[DanGarion]

Either way, its still your money, take it now, its worth more now than later.

Oh yeah I agree with you. That's what I said in the first place. :)

[Galaril]

This is a synopsis of the change included in the portion of the stimulus bill passed by the House Ways & Means Committee last week:

Refundable first-time home buyer credit.
Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The bill would eliminate the repayment obligation for taxpayers that purchase homes after January 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase. This proposal is estimated to cost $2.562 billion over 10 years.

He is a question we closed on our house May 28th 2008 does that fall in that window when it says purchased date?

[chesapeake]

That date would fall within the threshold of qualifying for the original tax credit. But the new language under consideration by the House would not apply, so you would have to repay the credit if you chose to take it.

This assumes that both you and your spouse are 1st time homebuyers.

[chesapeake]

I have known one person in my entire LIFE that has had to pay in at tax time.

That person was ME and its because I screwed things up myself. it happened 1 time in my tax filing life.

Actually, if you are really responsible, it is generally to your benefit to cut a check at tax time. You come out ahead on the accrued interest. People who get refunds just gave a no-interest, short-term loan to the federal government.

[DanGarion]

Actually, if you are really responsible, it is generally to your benefit to cut a check at tax time. You come out ahead on the accrued interest. People who get refunds just gave a no-interest, short-term loan to the federal government.
DING!

[Galaril]

That date would fall within the threshold of qualifying for the original tax credit. But the new language under consideration by the House would not apply, so you would have to repay the credit if you chose to take it.

This assumes that both you and your spouse are 1st time homebuyers.

Thanks and we are both first time buyers:)

[Galaril]

So, I see that Republicans are proposing icreasing thios credit to 15,000. Iam pretty sure that is on home bought in 2009 though:( Theya re also prosing Fannie Mae and others to negotiate maortgagae rates at 4-4.5% that would even include existing mortagages that go through refinancing to get the lower rates. I haven't figured out how that would save me on my existing mortgage at 5.7%. I believe when I asked the mrotgage broker about this they had said it wouldn't be worth it until it was at least one full point below an existing rate.

[sterlingice]

So, I see that Republicans are proposing icreasing thios credit to 15,000. Iam pretty sure that is on home bought in 2009 though:( Theya re also prosing Fannie Mae and others to negotiate maortgagae rates at 4-4.5% that would even include existing mortagages that go through refinancing to get the lower rates. I haven't figured out how that would save me on my existing mortgage at 5.7%. I believe when I asked the mrotgage broker about this they had said it wouldn't be worth it until it was at least one full point below an existing rate.

I'm quite intrigued with this plan, the Fannie Mae/Freddie Mac part (the 15K tax credit is the same old tax cut stuff). What are the pluses/minuses of that plan as the AP story is just the outline?

SI

[kcchief19]

Republican senators devise plan to help stimulate home buying - Kansas City Star (http://www.kansascity.com/news/politics/story/1014417.html)

Essentially the Senate plan is double to existing tax credit to $15,000 and extend it to all homebuyers Jan. 1 through Dec. 31 with no payback provisions.

The loan provision would essentially require Fannie and Freddie to buy any mortgage made by banks at the 4 or 4.5 percent rate to qualified buyers. The cap supposedly is $625,000. I'm hearing there are possibilities to tie it to FHA loan limits which would make it a different amount depending on the cost of housing in your area.

Mitch McConnell is on board and Chuck Schumer has indicated support on the Democratic side. Barney Frank is carrying the rainwater in the House so there appears some bipartisan support to get it done. If Obama comes out in favor, it'll go through.

[Galaril]

Republican senators devise plan to help stimulate home buying - Kansas City Star (http://www.kansascity.com/news/politics/story/1014417.html)

Essentially the Senate plan is double to existing tax credit to $15,000 and extend it to all homebuyers Jan. 1 through Dec. 31 with no payback provisions.

The loan provision would essentially require Fannie and Freddie to buy any mortgage made by banks at the 4 or 4.5 percent rate to qualified buyers. The cap supposedly is $625,000. I'm hearing there are possibilities to tie it to FHA loan limits which would make it a different amount depending on the cost of housing in your area.

Mitch McConnell is on board and Chuck Schumer has indicated support on the Democratic side. Barney Frank is carrying the rainwater in the House so there appears some bipartisan support to get it done. If Obama comes out in favor, it'll go through.

So for what year is this proposed tax credit change starting at 2009 or 2008. What I mean is this only for those whoare buying homes this coming year or is it also for people who purchased homes last year?

[JeeberD]

I believe when I asked the mrotgage broker about this they had said it wouldn't be worth it until it was at least one full point below an existing rate.

Interesting, considering I got 6.35% on my loan...

[Chubby]

if the new proposal goes thru that would be huge for us as we're looking to buy a new home currently

[Mike Lowe]

How quickly will this be happening? The wife and I are closing on a home around March 2nd. We are locked in at 4.5% already, having bought the rate down from 5%, but would LOVE to have it that low without buying it down as we could do the same thing and get the interest rate into the 3's.

Also, sounds like we could apply for the tax credit no problem...

[Sublime 2]

Quick question:

For the tax credit, if we purchase in 09 can we still apply the credit to our 08 returns like we could w/ the previous rendition?

[DanGarion]

Well now it really can be a credit, instead of a loan it looks like, as long as this gets through. I'm starting to be happy we closed on our house in 2009 instead of 2008...

Riverside and San Bernardino real estate blog: More on the $15k tax credit (http://housing-kaboom.blogspot.com/2009/02/more-on-15k-tax-credit.html)
First of all, lets not get to excited as this is not a done deal yet. I don't like much of anything about these bailouts. But if they are going to give away $15k, I'll be happy to take it my serving.

Here's the whole thing if you want to read it.

It looks like this modifies the old $7500 tax loan program. This one is a tax credit though and NOT a loan. The qualifying max income caps have been changed from $75k as a single to $125K and the joint max income went from $150k to $250k (yippee). This makes just about every "normal" family eligible for this credit. You have to be WAY up there in the income brackets before you lose out on this one.

Any purchase made after Dec 31, 2008 will qualify. It looks like this is a $15k credit that can be used as part of your down payment if I read the thing right.

(g) Transfer of Credit-

`(1) IN GENERAL- A taxpayer may transfer all or a portion of the credit allowable under subsection (a) to 1 or more persons as payment of any liability of the taxpayer arising out of--

`(A) the downpayment of any portion of the purchase price of the principal residence,

`(B) mortgage, flood, and hazard insurance premiums in connection with the purchase and paid at or before closing,

`(C) interest on any debt incurred to purchase the residence,

`(D) State and local real property taxes paid in connection with the purchase, and

`(E) funding fees paid to the Department of Veterans Affairs in connection with the purchase.

[stevew]

Seems like the problem in the first place was people buying with no money down. I guess tne government is looking to formalize the process?

[Flasch186]

please, the no money down was a small portion of the problem. It was the batting of the eyes at the credit score and the falsifying or steering of docs that was the biggest problem. The minimal DP was not the main issue although you'd think it was the way some people focus on the poor in this issue...I have news for you. The people buying the McMansions that you see as foreclosures around were not considered poor when they bought the home, as a matter of fact, they had the money to put down but why would you when the arm youre getting the loan for is a rate of 2.99%? Be real.

[Flasch186]

DOLA and for what its worth, some of the homes you see in foreclosure are not from people who cant afford the payment anymore but choose not to throw their money at it when it's 100K or more underwater. Rather keep the cash then be the only ones playing by the rules.....the banks werent and arent.

[sterlingice]

I'm not in real estate like Flasch, but it's good to see someone who is in the know confirming what I already had been supposing for over a year now. The explanation being sold by some quarters just doesn't pass the smell test.

What has really bugged me with the spin about the mortgage crisis is that it was clearly the poor who got us into this mess with a subtle racism component (and some Clinton bashing) thrown in for good measure. Now, if you are a first time homebuyer and put nothing down on a home for, say, $100K or even $150K- sure, you could lose your home. But those weren't the people $100K or more upside down on their homes- there was no where for those prices to go. They still have their value and someone else moved into that $100K or $150K home as rent prices are comparable to a mortgage on that home.

It was people who moved into $250-$750K grossly overvalued McMansions who put little down, some with the intent to stay, many with the intent to flip for a profit. But they took out stupid loans and got too much house. That's who created this mess. My parents moved from the home where I grew up into a $300K home in suburban Houston about 10 years ago. They used the sale of our old home for a down payment and are probably quite close or at least very well on their way to paying it off at this point with no difficulty. A lot of their neighbors aren't nearly as lucky and it's the type of neighborhood where there are a lot of for sale and some foreclosed signs. My parents never understood how some of them moved there in the first place and now it's quite apparent they shouldn't have.

SI

[DanGarion]

Seems like the problem in the first place was people buying with no money down. I guess tne government is looking to formalize the process?

I was about to say show me a home that only needs 15k to cover the 20% down, and then I remembered not everyone lives in SoCal.

[Sublime 2]

Well now it really can be a credit, instead of a loan it looks like, as long as this gets through. I'm starting to be happy we closed on our house in 2009 instead of 2008...

Riverside and San Bernardino real estate blog: More on the $15k tax credit (http://housing-kaboom.blogspot.com/2009/02/more-on-15k-tax-credit.html)

We close on our house this afternoon...WAHOO!!! But I've seen it listed in a few places that the 15k tax credit will only be for people who buy their homes AFTER the bill is enacted. Therefore, I would miss out on the 15k non-refundable tax credit, and only be eligible for the 7.5k non-interest loan. That would really make me pretty upset, but if what you posted is true, I'll be VERY happy.

[Flasch186]

I'm not in real estate like Flasch, but it's good to see someone who is in the know confirming what I already had been supposing for over a year now. The explanation being sold by some quarters just doesn't pass the smell test.

What has really bugged me with the spin about the mortgage crisis is that it was clearly the poor who got us into this mess with a subtle racism component (and some Clinton bashing) thrown in for good measure. Now, if you are a first time homebuyer and put nothing down on a home for, say, $100K or even $150K- sure, you could lose your home. But those weren't the people $100K or more upside down on their homes- there was no where for those prices to go. They still have their value and someone else moved into that $100K or $150K home as rent prices are comparable to a mortgage on that home.

It was people who moved into $250-$750K grossly overvalued McMansions who put little down, some with the intent to stay, many with the intent to flip for a profit. But they took out stupid loans and got too much house. That's who created this mess. My parents moved from the home where I grew up into a $300K home in suburban Houston about 10 years ago. They used the sale of our old home for a down payment and are probably quite close or at least very well on their way to paying it off at this point with no difficulty. A lot of their neighbors aren't nearly as lucky and it's the type of neighborhood where there are a lot of for sale and some foreclosed signs. My parents never understood how some of them moved there in the first place and now it's quite apparent they shouldn't have.

SI

not entirely true. The brokers were pushing these loans on people late to the party who in many cases didnt qualify under normal DTI's so they would qualify them on an adjusted DTI. Why? Because the brokers actually made more $ on the boutique loans than on the FHA loans at the time. The buyer didnt know which loan was better per se, they just knew their payment was lower and they couldnt believe that the home they were about to buy was the house of their dreams. They probably couldve afforded to put 3% down for an FHA loan but the broker and the realtor encouraged them not to. It's not as easy as pointing the finger at just one group to say they caused this mess, I mean, shoot you could point your finger at the appraiser and say without his BS appraisal that loan wouldnt fly anyways, PLUS you have the followup lenders wanting to do HELOC's on the heels of the first mortgage so you immediately upon day of movein get a letter in the mail saying that for NO money out of pocket they'll give you $20,000 (the fees are rolled in).....

you can point the fingers all over the place but it really ALL boiled down to MBS' and the house of cards that was built on top of it which is why I getg so pissed off when the banks refuse to work with anyone downstream. They created these exotic products and now they cant imagine why there are so many foreclosures and such, um, hello?! See that $300K rug in your company's foyer? there is your fucking answer.

So NO, I disagree with you. Youre pointing the finger at the last people at the trough. Im pointing it at the first group of people who got to the trough and said, "holy fuck, I know how we can glaze this trough in gold, and put little hoses off of it to reach everyone, AND we'll pay people to come drink from it." IMO, they are the creators of this mess but that's my $.02 and your opinion im sure will vary. I went back and underlined what you misapplied, IMO, or overlooked.

[DanGarion]

Just an FYI, I guess there are a couple different versions of the bill floating around one that says after the bill passes and another that says home sales after Dec. 31st 2008.

Those are significantly different.

[DanGarion]

They probably couldve afforded to put 3% down for an FHA loan but the broker and the realtor encouraged them not to. It's not as easy as pointing the finger at just one group to say they caused this mess, I mean, shoot you could point your finger at the appraiser and say without his BS appraisal that loan wouldnt fly anyways, PLUS you have the followup lenders wanting to do HELOC's on the heels of the first mortgage so you immediately upon day of movein get a letter in the mail saying that for NO money out of pocket they'll give you $20,000 (the fees are rolled in).....


Personally I always think it's funny when people were asking me if I was doing FHA because I'd only have to put 3% down. Well that's great and all but I have to pay PMI, plus because I only put 3% down my monthly payment is significantly higher then if I put the customary 20% down. In our loan that would have been like a difference of around 500 bucks a month just on the larger loan amount, an then another 200 or so for the PMI.

[stevew]

I was about to say show me a home that only needs 15k to cover the 20% down, and then I remembered not everyone lives in SoCal.

Paid 58K here. 3 bedrooms 1 bath. Full basement and deck. Place still needs work but its not like its a shanty. :)

[sterlingice]

not entirely true. The brokers were pushing these loans on people late to the party who in many cases didnt qualify under normal DTI's so they would qualify them on an adjusted DTI. Why? Because the brokers actually made more $ on the boutique loans than on the FHA loans at the time. The buyer didnt know which loan was better per se, they just knew their payment was lower and they couldnt believe that the home they were about to buy was the house of their dreams. They probably couldve afforded to put 3% down for an FHA loan but the broker and the realtor encouraged them not to. It's not as easy as pointing the finger at just one group to say they caused this mess, I mean, shoot you could point your finger at the appraiser and say without his BS appraisal that loan wouldnt fly anyways, PLUS you have the followup lenders wanting to do HELOC's on the heels of the first mortgage so you immediately upon day of movein get a letter in the mail saying that for NO money out of pocket they'll give you $20,000 (the fees are rolled in).....

you can point the fingers all over the place but it really ALL boiled down to MBS' and the house of cards that was built on top of it which is why I getg so pissed off when the banks refuse to work with anyone downstream. They created these exotic products and now they cant imagine why there are so many foreclosures and such, um, hello?! See that $300K rug in your company's foyer? there is your fucking answer.

So NO, I disagree with you. Youre pointing the finger at the last people at the trough. Im pointing it at the first group of people who got to the trough and said, "holy fuck, I know how we can glaze this trough in gold, and put little hoses off of it to reach everyone, AND we'll pay people to come drink from it." IMO, they are the creators of this mess but that's my $.02 and your opinion im sure will vary. I went back and underlined what you misapplied, IMO, or overlooked.

Fair enough. Glad for the clarificiation

SI

[kcchief19]

please, the no money down was a small portion of the problem. It was the batting of the eyes at the credit score and the falsifying or steering of docs that was the biggest problem. The minimal DP was not the main issue although you'd think it was the way some people focus on the poor in this issue.
I disagree because there is no real single cause of the problem, it's a bunch of problems that collectively created a clusterfuck. The no-money-down loans were a problem. The reason HUD banned downpayment assisted loans (where essentially the seller gave you the money for the downpayment) was that they had a default rate of 30 percent -- one in three no-down loans defaulted. For conventional 30-year loans, the traditional rate is 1 percent or less. Even now, 30-year conventional loans only have about a 3 percent default rte.
It was people who moved into $250-$750K grossly overvalued McMansions who put little down, some with the intent to stay, many with the intent to flip for a profit. But they took out stupid loans and got too much house. That's who created this mess.
Here I'm with Flasch. This was part of the problem, but not entirely. And like Flasch noted, a problem in markets like Florida, Las Vegas, California and even places like Ohio and Michigan is the prices plummeted 30% and these homes were underwater. So rather than continue paying on a home that won't be worth what they paid for another 10 years or more, they walked away.
you can point the fingers all over the place but it really ALL boiled down to MBS' and the house of cards that was built on top of it which is why I getg so pissed off when the banks refuse to work with anyone downstream. They created these exotic products and now they cant imagine why there are so many foreclosures and such, um, hello?!
Again, I only disagree with the first part because there isn't a single cause. The banks are to blame for making irresponsible loans. Builders are to blame for building up too much inventory. Cities are too blame for trying to increase property tax revenues by jacking up home prices and making them unaffordable. Consumers are to blame for not understanding their loans.

FHA loans virtually disappeared during the boom because people were using these alternative loan products. Right now, pretty much every loan you see is either a conventional 30 with 20% down or FHA.

[JonInMiddleGA]

Right now, pretty much every loan you see is either a conventional 30 with 20% down or FHA.

And if we had stayed there all along, along with requiring realistic credit requirements, are we even having this conversation?

I'd say that would have gone a long way toward avoiding the whole mess. Instead we fed the fantasy that everyone someone "deserves" a loan that's far beyond their means to pay, regardless of whether they had any history of paying their debts. And here we are.

I can't help but flash back to our last home purchase, with the lender virtually begging us to buy about half again as much house. Instead we had enough sense to know what was reasonable (at the time at least, it's not all that pleasant today) and we've managed to {gasp} actually pay our f'n mortgage, painful & difficult though it may be. And I'm sitting here feeling like a damned fool as I watch discussions of bailouts of people who didn't have enough sense to do the same thing and oh so looking forward to paying my next f'n tax bill to help finance it. I resent the hell out of it, I'm so f'n mad about it that I can barely keep a civil tongue (even by my standards) in my head about it, and there isn't one damned thing I can do about it. And people wonder why I haven't a shred of optimism left about much of anything?

edit to add: And while I'm at least starting to rant, I hear all this hue & cry about limiting the compensation of executives who take bailout money to save their mismanaged companies, can anybody point me to the limits being placed on the legion who are going to get themselves bailed out of their personal bad decisions? Or how much of their assets are going to be taken to help pay back the taxpayers?

[kcchief19]

Just an FYI, I guess there are a couple different versions of the bill floating around one that says after the bill passes and another that says home sales after Dec. 31st 2008.

My bad: The final version as agreed to by the Senate is for one year after enactment. That was modified from the original version which covered after Dec. 31.

There was also a question earlier about what year you can take the credit. Yes, you can apply the credit to your 2008. You also have the choice of applying the credit in a single year or splitting between two years -- meaning you can get a $7,500 tax credit for two years or a $15k in one.

Another note -- it looking at amendment, there is language in there that suggests to me that the credit is not fully refundable. The original first-time buyer credit allowed you to obtain the entire credit. In essence, if your tax liability was only $5,000, you'd get that money back plus $2,500. Of course you had to repay which this you will not. However, there is line that reads to me that the credit is limited to your tax liability -- meaning you can't get back more than you pay in taxes. I think the splitting the credit over two years may be what a lot of us do. You need to make around $100,000 to have a $15,000 tax liability, and even then your AGI and any other credits may reduce your tax liability further. I'm guessing you would need an income more than $100,000 to take the entire credit in one year.

That's not set in stone. That's just my plain text reading of the amendment. But in all the documentation I've read over the last week, no one has use the phrase "fully refundable," so I think you will be limited to your tax liability.

The 4% mortgage buy down amendment was shot down and appears to be dead ... for now. There are groups pushing to trying and pass it separately but I'm not betting on that. However, the Treasury Department has been authorized to do this with money set aside for them, and apparently they have been considering it. However, forecasts say we should see 4.5% 30-year rates this spring. If the spread between 10-year Treasuries and mortgage rates were at their normal level, we'd already be there. My guess is that the Treasury Department will wait and see what the tax credit does and what mortgage rates do. The mere threat of the Treasury buydown might keep rates low, at least around 5%.

Looks like the housing tax credit survived the bipartisan agreement. The Dems agreed to cut some spending and tax cuts from the House version and add the Senate amendments.

There's some good stuff for people who don't buy a home too. The energy-efficiency tax credit has been improved so that you can get a credit of 30% up to $1,500 on such thing as energy-efficient windows, heating and cooling systems and certain other home improvements.

[kcchief19]

And if we had stayed there all along, along with requiring realistic credit requirements, are we even having this conversation?
Tying in with something I said yesterday in the bailout thread, we would be having a different conversation but not necessarily a good conversation. The housing boom artificially boosted the economy between 2001 to 2005 when by all rights we should have had a more prolonged recession. If we had a recession five years ago, maybe this wouldn't have happened or wouldn't be as severe.

But the blame is the chicken or the egg -- was it the bad home loan or the investor who bought the bad home loan and leveraged it 30 times its value and then went belly up when Joe Sixpack defaulted?

In the housing industry, I'm in the minority as the guy opposed to no-money down or downpayment assistance programs. These were especially used for new homes where in essence the buyer would get a "charity" to donate or loan money to them for a downpayment. Of course, the "charity" received a donation from the seller for the amount of the downpayment. The default rate on this was alarming. To me, what good is it for a builder to sell a home in his neighborhood if there is a 1 in 3 chance that a year from now he's going to be competiting against that foreclosure?

[sterlingice]

That both complicated and cleared up one thing I was wondering. To pay $15K a year in taxes, you have to be making a pretty hefty income- for instance, filing jointly with $100K a year between the couple still doesn't get you to $15K. So, what happens to the money above and beyond $15K if you don't pay that in taxes per year?

Also, what is the aim of this credit? Is it to get people to buy houses? If so, why should this be retroactive to the beginning of the year? Those people already were going to buy a home.

SI

[Flasch186]

And if we had stayed there all along, along with requiring realistic credit requirements, are we even having this conversation?

I'd say that would have gone a long way toward avoiding the whole mess. Instead we fed the fantasy that everyone someone "deserves" a loan that's far beyond their means to pay, regardless of whether they had any history of paying their debts. And here we are.

I can't help but flash back to our last home purchase, with the lender virtually begging us to buy about half again as much house. Instead we had enough sense to know what was reasonable (at the time at least, it's not all that pleasant today) and we've managed to {gasp} actually pay our f'n mortgage, painful & difficult though it may be. And I'm sitting here feeling like a damned fool as I watch discussions of bailouts of people who didn't have enough sense to do the same thing and oh so looking forward to paying my next f'n tax bill to help finance it. I resent the hell out of it, I'm so f'n mad about it that I can barely keep a civil tongue (even by my standards) in my head about it, and there isn't one damned thing I can do about it. And people wonder why I haven't a shred of optimism left about much of anything?

edit to add: And while I'm at least starting to rant, I hear all this hue & cry about limiting the compensation of executives who take bailout money to save their mismanaged companies, can anybody point me to the limits being placed on the legion who are going to get themselves bailed out of their personal bad decisions? Or how much of their assets are going to be taken to help pay back the taxpayers?

I remember harping on a certain state of the union address some time agoe wherein our POTUS told everyone to go out and own.....boy, how the world turns.

[JonInMiddleGA]

I remember harping on a certain state of the union address some time agoe wherein our POTUS told everyone to go out and own.....boy, how the world turns.

{shrug} I thought that was foolhardy then, think it's foolhardy now. Right up there with let's get everybody to go to college.

Kind of in the same vein as me being bemused by the whole "spreading Democracy" p.r. campaign I guess.

[Galaril]

My bad: The final version as agreed to by the Senate is for one year after enactment. That was modified from the original version which covered after Dec. 31.

There was also a question earlier about what year you can take the credit. Yes, you can apply the credit to your 2008. You also have the choice of applying the credit in a single year or splitting between two years -- meaning you can get a $7,500 tax credit for two years or a $15k in one.

Another note -- it looking at amendment, there is language in there that suggests to me that the credit is not fully refundable. The original first-time buyer credit allowed you to obtain the entire credit. In essence, if your tax liability was only $5,000, you'd get that money back plus $2,500. Of course you had to repay which this you will not. However, there is line that reads to me that the credit is limited to your tax liability -- meaning you can't get back more than you pay in taxes. I think the splitting the credit over two years may be what a lot of us do. You need to make around $100,000 to have a $15,000 tax liability, and even then your AGI and any other credits may reduce your tax liability further. I'm guessing you would need an income more than $100,000 to take the entire credit in one year.

That's not set in stone. That's just my plain text reading of the amendment. But in all the documentation I've read over the last week, no one has use the phrase "fully refundable," so I think you will be limited to your tax liability.

The 4% mortgage buy down amendment was shot down and appears to be dead ... for now. There are groups pushing to trying and pass it separately but I'm not betting on that. However, the Treasury Department has been authorized to do this with money set aside for them, and apparently they have been considering it. However, forecasts say we should see 4.5% 30-year rates this spring. If the spread between 10-year Treasuries and mortgage rates were at their normal level, we'd already be there. My guess is that the Treasury Department will wait and see what the tax credit does and what mortgage rates do. The mere threat of the Treasury buydown might keep rates low, at least around 5%.

Looks like the housing tax credit survived the bipartisan agreement. The Dems agreed to cut some spending and tax cuts from the House version and add the Senate amendments.

There's some good stuff for people who don't buy a home too. The energy-efficiency tax credit has been improved so that you can get a credit of 30% up to $1,500 on such thing as energy-efficient windows, heating and cooling systems and certain other home improvements.

So, I just filed my taxes on Tuesday and got the 7500 credit for our first home we ourchased back in June 08. So, this now mean we could of possibly got 15,000? Or could we cliam the other 7500 next year?

[DanGarion]

So, I just filed my taxes on Tuesday and got the 7500 credit for our first home we ourchased back in June 08. So, this now mean we could of possibly got 15,000? Or could we cliam the other 7500 next year?

With how I understand the bill as it is now, it's only going to be for those that buy after it's enacted. :(

So I guess we will just go for the 7500 0% loan.

[Mustang]

So much for the new $15K credit..

Looks like it was removed totally.

[Sublime 2]

The more I've read about the stimulus it appears the 15k credit has been chopped back. My hope is that they will just make the 7.5k credit non-repayable for everyone going back to the original law's date and extend it out to the end of 2009. We closed last week, so at the very least I'll be going with the 7.5k zero % loan.

[Mustang]

'Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.'


hxxp://news.yahoo.com/s/ap/20090211/ap_on_go_co/congress_stimulus

[Flasch186]

kept it for cars but not homes? so dumb.

[SteveMax58]

The only part of this bill that I thought would be truly stimulative in the next few months gets removed. Ugh....

[Bigsmooth]

Wow. That is very disappointing....

[Sublime 2]

A $35 billion tax credit to support home sales was being jettisoned in favor of a more modest $2 billion to $3 billion proposal that would eliminate the repayment requirement in the existing $7,500 tax credit for first-time homebuyers.

Got this from a WSJ article. I would have missed out on the $15,000 proposal, so I'm very happy with the $7,500 non-repayable tax credit!!

[Flasch186]

most people didnt understand the difference and, from what Ive heard, this idea of $15K had a lot of potential buyers ready to buy....Im not sure the 7500 that's already been out there for a while will have the same effect (although it will have more than 0)

[SteveMax58]

Just as a side note...it would have been ridiculous to have not allowed those who qualified for the $7500/payback credit to also benefit from the $15k/no-payback credit.

It continues to perpetuate the notion of "wait on the sidelines because something better might happen later" mentality that the government seems to have perfected. No wonder the stock market is in shambles.

[DanGarion]

Got this from a WSJ article. I would have missed out on the $15,000 proposal, so I'm very happy with the $7,500 non-repayable tax credit!!

AWESOME! Free money!

[PilotMan]

Just as a side note...it would have been ridiculous to have not allowed those who qualified for the $7500/payback credit to also benefit from the $15k/no-payback credit.

It continues to perpetuate the notion of "wait on the sidelines because something better might happen later" mentality that the government seems to have perfected. No wonder the stock market is in shambles.

bingo

[JeeberD]

Got this from a WSJ article. I would have missed out on the $15,000 proposal, so I'm very happy with the $7,500 non-repayable tax credit!!

Outstanding news!

[Mike Lowe]

So I'm a bit confused...they nixed the $15,000 but I'm still eligible to get the $7,500 and it's not something that needs to be repayed?

My wife and I are closing between Feb 24th and Mar 2; supposed to find out by early next week.

Either way, we feel blessed!

[Sublime 2]

I've also now seen that the bill will increase the dollar amount to $8,000 from $7,500. But the dollar figure isn't set in stone I guess. I understand that we'll all be paying this (entire stimulus) back, but I'm just going to sit back on this one and take the "free" money for now and shut up.

[Bigsmooth]

Yep, looks like they are increasing to $8000 and extending the close date through August, 2009. I've also read that you cannot qualify for the entire 8 G's unless you are married. Singles only get 4000. What an Amehzing deal!

First-time buyers get $8,000 tax credit in stimulus bill | L.A. Land | Los Angeles Times (http://latimesblogs.latimes.com/laland/2009/02/an-8000-tax-cre.html)

[kcchief19]

Yep, looks like they are increasing to $8000 and extending the close date through August, 2009. I've also read that you cannot qualify for the entire 8 G's unless you are married. Singles only get 4000. What an Amehzing deal!

First-time buyers get $8,000 tax credit in stimulus bill | L.A. Land | Los Angeles Times (http://latimesblogs.latimes.com/laland/2009/02/an-8000-tax-cre.html)
It will be $8,000 and cover homes purchased between January 1, 2009 and December 1, 2009 -- have no idea where Dec. 1 came from. There is nothing I have seen come my way that says anything about singles only getting $4,000 -- with the original credit, single buyers still got the full $7,500. I think someone has read that married couples filing separately can only claim $4,000 a piece and is confused.

Still only for first-time buyers (anyone who hasn't owned a home for three years -- if married, neither one of you could have owned a home during the last three years).

I don't think this will do anything. The $15,000 credit had people motivated and I don't think eliminating the payback will stimulate anything. Plus, it looks like the housing industry is going to push to still try and get the bigger credit in a separate bill later. That means we're going to have a lot of people continuing to wait on buying to see if the offer gets sweeter. In the end, the hype over the credit and not getting it is going to make things even worse for the market.

[JonInMiddleGA]

Meanwhile I just love the way the definition of the phrase "first-time" has been reworked.

Does that mean if someone goes without sex for three years their virginity is restored?

[SteveMax58]

Meanwhile I just love the way the definition of the phrase "first-time" has been reworked.

Does that mean if someone goes without sex for three years their virginity is restored?

Wait until they start applying this logic to infidelity.

[JonInMiddleGA]

Wait until they start applying this logic to infidelity.

Heh, I can see it now. The Three-Year-Rule becomes to infidelity what the Ten-Second-Rule is to the feeding of small children.

[Chubby]

What if you are single and 1st time homer buyer, buy house, then get married?

[JonInMiddleGA]

What if you are single and 1st time homer buyer, buy house, then get married?

Then I believe the rule is you own roughly half a house, give or take half of your half.

[Raiders Army]

Outstanding news!

I'm bummed actually since we bought last year. Always miss the good stuff...

[SteveMax58]

I'm bummed actually since we bought last year. Always miss the good stuff...

That'll teach ya to do something without waiting for the government to intervene.

[kcchief19]

What if you are single and 1st time homer buyer, buy house, then get married?
Interesting question. I may still have a sheet at work that actually explains such a scenario. My understanding is that if you are single and buy the home, the credit belongs to you. You can claim it on your taxes whether you file separately or jointly.

However, if your wife is not a first-time buyer, you could not claim the credit filing jointly -- you would have to file separately. If you are married, both buyers must be first-time buyers, not just one.

Definitely understand the eye-rolling at the definition of "first-time buyer." Even more reason to open it up to everyone IMHO.

[Chubby]

Interesting question. I may still have a sheet at work that actually explains such a scenario. My understanding is that if you are single and buy the home, the credit belongs to you. You can claim it on your taxes whether you file separately or jointly.

However, if your wife is not a first-time buyer, you could not claim the credit filing jointly -- you would have to file separately. If you are married, both buyers must be first-time buyers, not just one.

Definitely understand the eye-rolling at the definition of "first-time buyer." Even more reason to open it up to everyone IMHO.

Basically she is 1st time buyer, I am not. We are not married (yet) but will be shortly since she's 4 months pregnant and for insurance purposes we are legally getting married beore the baby is born (then holding a traditional churchy wedding at some point after). I think if she buys and I cobuy she can get the credit but would have to file separate next year.

I'm pretty sure if we are married prepurchase we lose out on the credit as I don't qualify.

And I concur with the 1st time homeowner silliness involved. I've seen somewhere that they are no longer going to require repayment as well but not sure on that.

[PilotMan]

Heh, I can see it now. The Three-Year-Rule becomes to infidelity what the Ten-Second-Rule is to the feeding of small children.


Whaddyamean feeding of small children? When was that stip put on? :confused::confused:

[Chubby]

So this is all but law (passed both chambers, just needs Obama's sig).

If you close on a house after the bill is signed, which tax thing to you get: 08, new, your choice?

[Bigsmooth]

Oh baby. This turned out pretty sweet, not $15000 sweet, but $8000 isn't too shabby. It's "refundable" meaning that you get the full credit no matter your tax liability. Check out this chart that details the changes from the original $7500 deal:

hxxp://www.realtor.org/wps/wcm/connect/b32db1004d05f6338052c5fd73e5610f/government_affairs_tax_credit_chart_021308.pdf?MOD=AJPERES&CACHEID=b32db1004d05f6338052c5fd73e5610f

[JeeberD]

Crap...gotta pay back this year's version, though. :mad:

[DanGarion]

Crap...gotta pay back this year's version, though. :mad:

What?

Oh nevermind you bought before 2009. We got lucky, ours was supposed to close before the 1st.

[Sublime 2]

Oh baby. This turned out pretty sweet, not $15000 sweet, but $8000 isn't too shabby. It's "refundable" meaning that you get the full credit no matter your tax liability. Check out this chart that details the changes from the original $7500 deal:

hxxp://www.realtor.org/wps/wcm/connect/b32db1004d05f6338052c5fd73e5610f/government_affairs_tax_credit_chart_021308.pdf?MOD=AJPERES&CACHEID=b32db1004d05f6338052c5fd73e5610f

Also to add from the federalhousingtaxcredit.com FAQ.

#20
If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

[Bigsmooth]

Let me run this by you all. I’ve been thinking about this a lot. Why couldn’t you amend your 2008 taxes to receive the $8000 before you close on a house? I don’t think they will ask for an actual closing date before issuing you the money if it is similar to the $7500 deal. They only ask for an estimated close date. So you could gamble that you will be closing by December 1, 2009, while using the $8000 as your down payment. Worst case scenario, you can’t close and have to give the money back? Makes sense to me.

[miked]

What if I bought my house in 2006 :(

[Flasch186]

Let me run this by you all. I’ve been thinking about this a lot. Why couldn’t you amend your 2008 taxes to receive the $8000 before you close on a house? I don’t think they will ask for an actual closing date before issuing you the money if it is similar to the $7500 deal. They only ask for an estimated close date. So you could gamble that you will be closing by December 1, 2009, while using the $8000 as your down payment. Worst case scenario, you can’t close and have to give the money back? Makes sense to me.

most lenders want to see where your down payment came from, "seasoning" vs. gift vs 401K etc. so I'd have to imagine that they will frown on the DP coming from the 'credit'. Do your own DD as I do not specialize in the financing end of the game.

[Chubby]

ok, we have an offer on our house I'm pretty sure we're going to take (going to make $1200 after realtor commissions which making any money on a house we've had for 2.5 years in this economy is a plus).

Has any of the people here more familiar than I run into my situation or know how it works? i.e. Girlfriend is 1st time home buyer (not married), I would be 2nd name on the morgatge. We would get married at some point after closing on the house. Can she still get the $8K by amending her 08 taxes (we would file separate next year both for the housing reason and the baby on the way)?

It seems like we should be fine but just looking for some confirmation as we want to make totally sure we are good to go before signing.

[Swaggs]

ok, we have an offer on our house I'm pretty sure we're going to take (going to make $1200 after realtor commissions which making any money on a house we've had for 2.5 years in this economy is a plus).

Has any of the people here more familiar than I run into my situation or know how it works? i.e. Girlfriend is 1st time home buyer (not married), I would be 2nd name on the morgatge. We would get married at some point after closing on the house. Can she still get the $8K by amending her 08 taxes (we would file separate next year both for the housing reason and the baby on the way)?

It seems like we should be fine but just looking for some confirmation as we want to make totally sure we are good to go before signing.

I would imagine that, as long as you are not on the title (to begin with) and/or you are not on the loan application (ie: her credit/income will be enough to get the new house w/o you), she would certainly be in line for the tax credit. I'm pretty sure you can put whoever you want on the title (regardless of the financing), so that shouldn't be a problem and it is something you can change down the road. If she cannot buy w/o your credit/income, I would think that it would be considered your second home and would nullify the tax credit for both of you.

[Chubby]

I would imagine that, as long as you are not on the title (to begin with) and/or you are not on the loan application (ie: her credit/income will be enough to get the new house w/o you), she would certainly be in line for the tax credit. I'm pretty sure you can put whoever you want on the title (regardless of the financing), so that shouldn't be a problem and it is something you can change down the road. If she cannot buy w/o your credit/income, I would think that it would be considered your second home and would nullify the tax credit for both of you.

according to Federal Housing Tax Credit for First-Time Home Buyers: Frequently Asked Questions (http://www.federalhousingtaxcredit.com/2009/faq.php) as long as we aren't married it's not an issue:

2. What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.