If you are actively shopping for your first home, it’s impossible to avoid looking at foreclosed homes.  They represent almost half of the homes on the market in Minnesota.  There are four things to remember when you consider purchasing a foreclosed home:

The owner of the home is a bank.  The bank representative has never lived in the home and will not tell you anything about it.  They don’t know how old the roof is, whether the furnace has had annual service, whether there has been a water leak in the home and if everything in the home works.  In other words, you will receive no information on the home except what you discover yourself.

The personal property remaining in the home is not owned by the bank and they cannot and will not sell it to you.  If there is still a refrigerator, a stove, a microwave, a washer and a dryer, technically they belong to the original home owner and not the bank.  If the home owner chooses, they can come and remove them before closing.  If they don’t come to remove them and they “abandon” them, then you can claim them at the time you move in.

The utilities in these homes may have been disconnected without properly preparing the home.  If the heat has been turned off in the wintertime and the plumbing in the home has not been winterized and treated with antifreeze, the pipes may freeze and burst.  When spring comes and the water melts, it may cause mold to grow in the home.  These homes can cost a lot of money to repair and restore. 

There are usually one or more problems with foreclosed homes that require remedy by the buyer.  These may be big problems (burst pipes, mold, ageing roof) or these may be small problems (missing appliances, doors, kitchen cabinets etc.).  Be prepared to spend some money after closing to restore the home.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Did you know that you can claim your $7500 Tax Credit THIS YEAR even if you didn’t buy your first home until 2009?  Yes, that’s right.  You can file a claim to get your $7500 Tax Credit back BEFORE you file your 2009 taxes.  So you don’t have to wait till next year to get the money.

Congress is considering some other important changes to the current program.  Two changes are being discussed.  One change would be that the tax credit would be a true credit, rather than an interest-free long term loan.  Right now, the tax credit must be repaid $500 per year for the 15 years after it is claimed.  Under discussion is a law which would make the tax credit a true gift, with no repayment necessary.

Another change is under discussion.  Right now, the tax credit applies to first time Home Buyers purchasing a home between April 9, 2008 and July 1, 2009.  Congress is considering whether to extend the time during which the program would be in effect.  The new deadline would be December 31, 2009.  However, this has NOT YET been enacted into law.   It’s just under discussion.  Read another one of our blogs for some of the rules governing the $7500 tax credit.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Congress passed a law last year that allows you, if you are buying your first home, to claim a special tax credit only for first time home buyers.  You qualify if you haven’t owned a home in the last past three years, if you earn under $75,000 a year for a single person and $150,000 a year for a married couple, and if you purchased the home between April 9, 2008 and July 1, 2009.  You must purchase the home for your own use (you cannot purchase the home to rent it out).

The tax credit actually will pay you the $7500 at the time you file your tax return.  If you buy this year, for example, you could claim the $7500 credit at the time you filed your tax return next year.  However, the credit is not a true “credit”.  It really is an interest free long term loan that must be paid back over the next 15 years.  You would pay $500 per year for 15 years.

You could use the tax credit to fix up the home or if you asked a relative to assist you with down payment money for the home, you could pay back your relative with the tax credit money.  Congress hopes that this tax credit will help more first time home buyers be able to buy their first homes.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Buying a home is not like buying a car.  It’s a lot more complicated and with many more risks for you, the prospective home buyer.  We recommend attending one or more first time home buyer classes or meeting with a Realtor or Mortgage Consultant who specializes in working with first time home buyers. 

Your first step then is to locate a class.  Sometimes you will find classes offered through your local community education resource.  Other classes may be offered by government agencies.  Other sources of classes are Realtors and Mortgage Lenders who sponsor them.  Sometimes they will be listed in the housing or home section of your local newspaper or information website.

Wherever you go, whatever you do, become educated on how to buy a home.  If you know about the risks ahead of time, you can avoid the most common mistakes made by home buyers.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.