Home Mortgage Stimulus Credit

The home mortgage stimulus credit may be an excellent tool for those looking to purchase their first home. In 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 into law. A portion of the Act was a significant opportunity for first time home buyers to receive a tax credit for investing in a home purchase.

Find First Time Home Buyer Qualifications

The stimulus credit gives new home buyers the ability to get up to 10 percent of the home's purchase price - up to $8,000 - back as a tax credit. This substantial credit is able to aid homeowners in making their first purchase, allowing them to pay less out of pocket for a home loan.

Individuals will quality for this tax credit only if they earn under $75,000 per year as a single person or under $150,000 as a married couple. The property may only be used as a primary residence. Also, the home buyer must be a first time buyer, which is considered anyone who has not owned a property in the last two years. The home must be purchased by December 1, 2009.

When the home buyer purchases a home during this time, they will receive a tax credit on their 2009 tax return, filed in 2010. If the credit is more than the tax liability of the home buyer, the home buyer will receive a tax refund for the difference. The credit will be claimed on Form 5405.

The tax credit does not have to be paid back in most cases. The only time it will be required to be paid back is if the home ceases to be the main resident of the taxpayer within the first three years after the purchase of the property.

Those wishing to learn more about the stimulus credit can visit the Internal Revenue Service.

As a home buyer, getting a tax credit of this amount is an outstanding opportunity save money. There are also other benefits for obtaining this type of tax credit. The act was established to provide potential first time home buyers with an incentive to purchase now, rather than waiting. The underlying goal of the problem was to revitalize the struggling real estate markets by getting more people to purchase.

Not everyone will benefit from a home purchase during this time. In particular, individuals still must qualify for a mortgage on the property. Those with bad credit may find it difficult to obtain a mortgage. Those without employment or other income may also find it difficult to buy a home now.

Individuals considering a mortgage should ensure they can afford the monthly payments. Making a budget and analyzing savings are a good place to start. In addition, the tax credit does not negate the requirement of a down payment by many lenders. Those without a down payment may also find it hard to purchase a home now.

Those who already have a home mortgage may feel left out of the stimulus tax credit. There are other options available, though. In particular, the Making Home Affordable program, also established in 2009, is an opportunity for some homeowners to secure their home loan. It gives homeowners the ability to refinance their homes into more affordable loans. It can also help those struggling to make payments on their home to negotiate with lenders to secure a more stable option for them and therefore to keep them out of foreclosure.

To qualify for this program, an individual must be living in the home as a primary place of residence. The value of the home cannot exceed $729,750. Individuals may need to work with a debt counselor to determine the best modification option available to them.

Those interested in the Making Home Affordable program can learn more about it and find out if they qualify by visiting Making Home Affordable.gov or the US Treasury website. Individuals may also contact their lender to request more information about modification programs available.

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