Ten Commandments of Buying a Home

Commandments of Buying a Home (1)


There are some obvious checklist items that need to be taken care of when buying a home (i.e. getting loan pre-qualification and approval), however there are a few possibly less-obvious things that many new home buyers may not consider.

  • Don‚Äôt change or quit your current job while you are in the process of getting a loan or finalizing paper work.
  • Put off other large purchases (i.e. a new car) until after all is said, done, and signed with your new home.
  • Keep credit lines current and don‚Äôt miss payments on already existing credit cards or loans.
  • Maintain your savings account.
  • Identify all debt or lines of credit on your loan application.
  • Avoid having other inquiries on your credit before your loan has been approved and you have keys to your new home.
  • Don‚Äôt make any large, seemingly random cash deposits into your bank account.
  • Avoid co-signing loans for anyone else, as this will definitely affect your credit ‚Äúworthiness‚ÄĚ in the eyes of loan officers.

Homebuyer Tax Credit Frequently Asked Questions

Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit   

Question: Existing homeowner credit: Must the new house cost more than the old house?  


Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit. 

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit? 

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.   

Question: I am a firsttime

homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit.

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill.

The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phaseout range).¬†¬†¬†

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amountabove $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.¬†¬†¬†Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?¬†¬†Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight what he did since 3 years doesn’t impact eligibility.¬†

Question: I am an eligible firsttime homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?

if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be asTo search for Anacortes real estate or property anywhere in the NW please visit www.CBIslandLiving.com

This information is time sensitive.   Please contact one of our outstanding Coldwell Banker Island Living real estate agents and allow  us to assist you.  We are here to help!

nantucket inn anacortes

Federal tax credit of up to $8,000 toward the purchase of a home…but restrictions apply

The Federal Housing Administration has issued formal guidelines allowing first-time homebuyers to apply a federal tax credit of up to $8,000 toward the purchase of a home with an FHA-backed mortgage, however,¬†the tax credit can’t be used toward FHA’s 3.5 percent minimum down-payment requirement.

But the tax credit can be used as an additional down payment and for other closing costs toward their home purchase, which can help borrowers obtain a lower interest rate and reduced the money needed at closing.

For the average FHA-insured mortgage of $182,000, buyers must bring to the closing table or finance about $8,600 in costs on top of their down payment — about $5,460 in closing costs (typically around 3 percent of the sales price) and $3,185 for FHA’s initial 1.75 percent mortgage-insurance premium.¬†

The ability to “monetize” the tax credit and apply it to a home purchase will not only help families purchase their first Anacortes home, but¬† Anacortes real estate agents¬†estimate that the tax credit will generate significant home sales by existing homeowners who will be able to sell their starter homes and trade up.

The final guidelines for lenders, spelled out in Mortgagee Letter 2009-15, explain the conditions under which FHA-approved lenders and nonprofits, and federal, state and local government agencies may purchase the tax credits anticipated by homebuyers.

Here is more information from the IRS site.

Rent vs. Buy


If you are trying to decide whether to rent or buy a home in Anacortes,La Conner, Whidbey Island, Guemes Island, or Skagit County, here is a great TOOL to help you make your decision.





Please call or email for your free copy of "Get The Facts" published by the National Association of REALTORS.

Please call or email for your free copy.





You might find that buying a home is more affordable than you think! 



  If you would like more information on buying your first home, we would be happy to send you a free brochure published by the National Association of REALTORS. 

Jean Groesbeck & Assoc. LLC   (360) 961-3734


www.JeanGroesbeck.com      www.AnacortesRealEstateBlog.com