The Edmond Sun

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September 25, 2009

Deadline approaches for first-time homebuyers

Kathy Toppins

EDMOND — BY KATHY TOPPINS

THE EDMOND SUN



Potential first-time homebuyers, drawn to the pristine carpets, freshly painted walls and shiny, new appliances they see in the next nine days at the Parade of Homes, should have a contract by the end of October if they want to take advantage of the $8,000 first-time homebuyer credit, according to local realtors. The last day to close on a home and receive the credit is Nov. 30.

Many homebuyers will be looking for good opportunities in purchasing pre-owned homes in the Edmond area, as well.

“We have plenty of inventory,” said Gordon Wynn, with Keller Williams Realty, provided buyers are looking for a home in price ranges above $100,000.

If they act intelligently and quickly, said Ted Clay, senior loan consultant with Starkey Mortgage, first-time buyers can get into a new home for little down, then manually file an amended tax return and use the $8,000 they will receive six to eight weeks later to offset the down payment, pay down student loans or pay off credit card debt.

That’s putting the cart before the horse, though, Clay suggested. Clay advised first-time buyers to start the process by gathering their W-2s from the past two years, paycheck stubs from the past 30 days and bank statements from the past two months. Buyers should provide those documents to a loan officer as soon as possible to make sure they qualify for the loan.

“They need to have their ducks in order,” Wynn said. “It wouldn’t be wise to grab a realtor, go out and find a house and hope everything turns out right.” They can, however, contact a realtor who will connect them to a lender, Wynn suggested.

Completing a loan application over the phone to get pre-qualified is not a guarantee that the loan will be approved.

“Sometimes we’ll have a surprise, like in bank statements,” Clay said. “If there’s a large deposit that’s not verified, then we have to know where that money came from.”

The concern, Clay explained, is the large deposit is a loan that must be repaid.

Homebuyers also will need to have a 620 credit score, Clay said. “If they’re not there,” Clay said, “I might be able to counsel them in order to get that credit score up.”

The process can get more complicated, for example, if potential homebuyers are self-employed or incorporated, or if they’ve experienced bankruptcies or foreclosures.

Clay also recommended homebuyers contact their accountant to make sure they qualify for the tax credit.

Jim Denton, a CPA and managing partner with John M. Arledge & Associates P.C., said the rules related to previous ownership of a principal residence have caused some confusion. The taxpayer cannot have owned another main home during the three years prior to the purchase of the qualifying new home. If there is any question about previous home ownership or the definition of principal residence the homebuyer should contact his or her accountant,Denton said.

Another issue that has confused some taxpayers is the income phaseout. A full credit is available for individuals with an adjusted gross income of no more than $75,000, or $150,000 for couples filing a joint return. The credit phases out until it reaches caps of $95,000 for indivuals and $170,000 for couples.

Denton also advised buyers to be aware of the credit repayment provision. If the homeowners move out of the home within three years of the purchase, the entire amount of the credit must be repaid.

For a homebuyer who meets all the qualifications and intends to live in the home for three years, however, the credit presents an excellent opportunity. “Owning a good home has always been favorable for taxpayers due to the deductibility of interest and real estate taxes,” Denton said.



ktoppins@edmondsun.com | 341-2121, ext. 112

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