The Obama administrations economic stimulus package provided for many things including a tax credit for homebuyers who qualify as first-time buyers. This tax credit would equal either 10% of the homes value or $8000, depending on which amount is less. This portion of the stimulus package was included in an effort to energize the real estate businesses by giving homebuyers a good reason to invest in new homes before December 1, 2009. This is good news for people considering a home purchase and more particularly in areas where home values have already reached the bottom of their cycle.

Although there was a tax credit passed by Congress in July 2008, it was really nothing more than an interest free loan because the credit needed to be repaid. The new tax credit does not need to be repaid; it does not act like a loan but rather functions like a grant.

Qualification as a first-time home buyer requires that the buyer has not owned a home for three years. This means that previous homeowners who sold their properties during the bubble may qualify as new home buyers under this stimulus scheme. It is also important to note that one restriction on this tax credit prevents the buyer from receiving it if they purchase a home from family: parents, grandparents, children, spouse or spouses family. Ownership of a rental property or vacation home that has not been used as a primary residence does not disqualify a buyer from being first-time for the purposes of this credit.

In order to receive the full credit, a new home buyer has to make less than $75,000 per year, or be less than $150,000 for couples filing jointly. Above this threshold, the amount of the credit available begins to cycle downward at $20,000 increments. Individuals making more than $95,000 or couples filing jointly that make more than $170,000 are not eligible for the credit at all.

If they qualified, homebuyers were allowed by the IRS to file amended returns to claim this tax credit. The refund could be received in fewer than 12 weeks.

This tax credit is well designed to help middle-class home buyers acquire a home during the recession. However, it does not protect against making a bad investment. It is imperative for the potential home buyer to carefully study the local real estate market to determine whether or not the desired property has reached the end of its valuation adjustment. If this is the case, the tax credit may provide the answer for potential home buyers in the current market climate.

Wendy Polisi is the founder of Credit Repair College and Finance the Dream. Their video training is designed to allow consumers to take control of their financial future by learning the insider secrets of credit repair. For more information on bad credit repair, please visit them on the web. Finance the Dream helps people looking for a rent to own house take advantage of the $8,000 tax credit.

Gone are the days of low documentation home loans. Getting a home loan today requires a lot of documentation. And if you are prepared, it will make the process a lot smoother

Getting prepared for the credit check. It is important to get yourself a recent credit report so you can see your current score and review all your accounts and credit history. Make sure you get a credit report that combines the date from all 3 credit bureaus. You can have a loan officer check your credit or can go to one of the credit bureaus web sites.

Make sure you go through your credit score with a fine tooth comb to make sure everything on your report is accurate. For more information on credit tips visit my article at www.socalfhahomeloans.com. Generally you’ll need a 620 or above credit score to get the better FHA interest rates. Although you still can get an FHA loan with a score below 620.

Employment History for FHA Loans: For an FHA loan the underwriter will look at your last 2 years of employment history. They are looking for a solid 2 year history of employment. It is generally OK if there were periods that you were for example unemployed or in school and not working over the last 2 years. That just has to be explained with a letter of explantion to the underwriter.

Salary documentation needed for an FHA loan. If you are paid wages by your employer and reciece a W-2, the FHA lender will require your most recent 30 days copies of your paycheck. If part of your income comes from overtime, bonus and or your are paid hourly, the FHA lender will require your employer to fill out a form that your loan officer will send to them to explain the details of your pay. You must have recieved bonus income the last 24 mos to include it in your income. Oftentimes if your hours vary monthly or your recieve overtime pay, the FHA lender will take a long term average of your income.

Documenting your down payment and cash reserves. The FHA lender will want to see your latest 2 months of bank statements, every page, to show where your down payment will be coming from. FHA allows you to recieve a gift from a relative or someone like a relative for the down payment. The donar of the gift to you must document the source of the gift and you must show how the donar transfered the gift funds to you.

Be careful of large deposits showing on your bank statements. FHA underwriters will ask you to “source” any large deposits into your bank account over the last 2 months.

Getting a home loan today requires detailed credit, income and cash reserve/down payment documentation. It is in your favor to be very organized and prepared to deliver your loan officer the documentation discussed in this article. Make you have this documentation ready and get it quickly to your loan officer. And make sure nothing is missing, there can’t be one page missing and everything has to be clearly readable. This ensure a very successful loan closing and minimize frustration.