The South NJ RE Info Blog

In the past few months we have written a lot about the different home loans available to the home buyers, specifically, FHA loans and the different benefits of this mortgage product. But we have also written about the tightening of requirements in the mortgage industry, especially with the Freddie/ Fannie Conventional loans.

We have previously highlighted another type of conventional loan that requires NO down payment, NO monthly PMI, where the seller is allowed to pay all reasonable closing cost and prepaids, and NO hit to the rate for the zero down, it is NOT a first time home buyer program and no reserves needed.

But did you know that this particular mortgage also has a unique feature that all reasonable closing cost and prepaids can be rolled into the mortgage without the seller actually having to "pay" the cost (as long as the house appraises for the increased loan amount)?   Why is this a good thing?  We have had buyers who have submitted offers for homes that included seller concessions for the home sellers to help with the closing costs, only to have those offers rejected.  Now buyers have another option and are not at the mercy of the homes eller.  It is a conventional loan that has these great options and it is government backed loan (like FHA loans) but is backed by the USDA.

The downside of this loan is that tt is area-specific and income-limited, so it is important that you work with a lender who is very knowledgeable with these loan guidelines.  If you are interested to find out which areas are eligoible for USDA loans, click here.

If you need help in finding a knowledgable lender or to better understand how this loan can be of benefit to you, or just give you some assistance with your home search and loan pre-qualification steps, simply call us at 609-417-1084 or email us at info@i-teamhomes.com

We've had many a buyer call us and ask how the $8000 tax credit can help them buy a home if they can't get that money until they buy a home.  A classic Catch-22.  Well, NJ has come up with an answer for those first time home buyers who need the tax credit money to help them with their downpayment or closing costs.

The New Jersey Housing Mortgage Finance Agency (NJHMFA) is offering cash payments, in the form of a zero interest loan, of up to $5,000 for qualified first-time home buyers in order to help them defray their closing costs or to satisfy the downpayment requirements.  This will then help new home buyers get into the housing market and buy their first home.

This zero interest loan, offered as part of NJHMFA's "Prefund" program, would act like a cash advance against the $8,000 tax credit that is being offered to first time home buyers who purchase their home between April 8 and December 1 of this year. Basically, home buyers would be provided with the payment as a loan and would be required to repay the advance/loan when they receive their federal tax credit.

Who can get this zero interest loan/cash advance?  The loan/cash advance is available to first time home buyers who:

• Arrange their financing through the NJHMFA. (You can obtain a list of participating lenders by calling their toll-free number at  (800) NJ HOUSE)

• Are qualified for the tax credit offered as a part of the federal stimulus program

• Pledge to apply the proceeds of their tax credit to repay the cash

For more details about the NJHMFA's First Time Home Buyers Tax Credit Loan Program (TCLP) you can visit the HMFA page (http://www.state.nj.us/dca/hmfa/consu/buyers/ownprg/tclp.html).

The new law could put up to $8,000 in your pocket via a first-time homebuyer tax credit that does not have to be repaid.  But you must purchase a property this year to qualify.  We've had many a customer call us with questions regarding the new law.  So, as a service to all who are interested in the $8000 first time home buyer credit, here are a few Q&A's, but be sure to check with your personal financial expert to verify these answers:

When do I need to purchase to qualify?
If you buy a home between Jan. 1 and Dec. 1 this year and close escrow during these dates, you will qualify for a tax credit up to $8,000 - as long as it is your primary residence and you meet the simple requirements.

How does the law define "first-time homebuyer"?
The law defines "first-time homebuyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase.

What are other requirements to qualify?
All U.S. residences who file taxes are eligible to participate. An income limit of $75,000 a year for individuals and $150,000 a year for joint filers also applies.

How do I apply for the credit?
Taxpayers should use IRS Tax Form 5450 to claim the first-time homebuyer tax credit.

Does the credit have to be repaid?
No. Unlike a similar tax credit passed in 2008, this $8,000 tax credit does not have to be repaid to the IRS.

If you have any other questions, please don't hesitate to give us a call at 609-417-1084.