With the first-time home buyer federal income tax credit of $8,000 this just might be the time to consider buying a home. But before you make that decision you may want to consider 5 tips that could help to determine if it’s truly the right time to shop for a home.
#1 – Learn about the first-time home buyer federal income tax credit.
According to FederalHousingTaxCredit.com, a consumer website those who purchase a home before Dec. 1, 2009 qualify for the tax credit. Unlike the 2008 federal tax credit, the money does not have to be repaid as long as the home is not sold for three years. Home purchasers who have not owned a home for three years are also eligible for the credit.
#2 – Calculate what you can afford.
Before you start searching for a new home, know what you can afford. According to the U.S. Department of Housing and Urban Development, a total monthly mortgage payment, including principal, interest, taxes and insurance should be about 29% of monthly gross income.
What you can afford is also based on how large of a down payment you can make. Start estimating this figure by using an affordability or loan calculator found on the Internet. A calculator can help determine what may fit comfortably within your budget based on factors such as annual income, debts, interest rates and credit score. Internet calculators and statistics are good references, but realty professionals also recommended that you consult a financial advisor to determine exactly how much you can afford.
#3 – Choose a neighborhood.
After you determine your budget think about where you want to live. Are you going to stay in your current neighborhood? Do you want to move to another city or town? No matter what, you should thoroughly research the demographics of the area. Some additional factors to consider are how far you will be from work and shopping — and if you have children, do thorough research on schools and crime rates.
#4 – Make a wish list of needs and wants.
Early in the home searching process make a list of your basic needs such as minimum square footage, number of bedrooms and bathrooms and location. If there are features that you would love to have in your home, but could live without, put them on your “want” list. This includes things like a pool, big yard, extra bedroom, etc.
#5 – Work with an experienced real estate professional.
Purchasing your first home is an exciting experience, but it can be overwhelming. Each step in the process can run afoul. Studies show that home purchasers save more on property when the deal is negotiated with the help of a Realtor. Choosing a professional who is knowledgeable and a local market expert with years of experience is vital. “Buying a home is one of the biggest financial commitments a person can make,” said Charlie Young, CEO of ERA Real Estate.