2009 HOME BUYER TAX CREDIT

The first-time home buyer tax credit is set to expire December 1, 2009. The national median home price rose $7,000 last month, so if you are considering waiting for the market to "bottom out" it may have already done so.

• The $8,000 tax credit is not only for first-time buyers. If you have not owned a primary residence in the past 3 years you also qualify.
  
• The home may not be purchased from a family member.
  
• The credit is limited to 10% of the purchase price or $8,000, whichever is less.
  
• You must repay the credit only if the home ceases to be your primary residence within the first 3 years.
• You can not claim the credit if you adjusted gross income is $95,000 or more ($170,000 if married filing jointly)

Remember that escrow takes time, so do not wait until the last minute to take advantage of the tax credit.

What is a Short Sale?

To "short sale" your home means to sell it for less than what is owed to the lender. In other words to sell your home short of what is owed. It is an alternative to foreclosure, but is less traumatic to your credit than a foreclosure. If you are struggling to make mortgage payments you should list your home with a reputable Realtor as soon as possible. If your Realtor advises you that your home is likely to sell for less than what you owe contact your lender's "workout" department immediately. Ask for the loss and mitigation department and have a short sale package mailed to you.

• Authorize your Realtor in writing to work and to negotiate directly with your lender.
• Make sure your Realtor includes a cover letter that explains the buyers qualifications. If the buyer is asking for concessions explain why.
• Write a hardship letter. Present your finances in the worst light. Explain any illness, death in the family, loss of job, etc.
• Make sure the package is thorough! The lender will want to see: the offer to purchase your home, your hardship letter, a balance sheet with your monthly income and expenses, a net sheet, 2 months worth of pay stubs, 2 months worth of bank statements, 2 years tax returns, etc.