The Federal Government's Stimulus Package and Hope for the First Time Home Buyer

Homeownership has never been as precarious as it is now, at this time of instability in our economy.The government is working to alleviate some of our financial woes by offering programs that will help in our ability to survive and thrive as a nation. One particular program that is getting a lot of attention is the First Time Home Buyer Stimulus Package. This program encourages people to apply for home loans, something they may have believed was out of their reach. This plan is offered to first time buyers as well as those who have not owned a home in three or more years.

Buying a home utilizing the stimulus involves the purchase of a pre-owned home or one that is in the new construction phase. The latter will go a long way toward helping builders who are having financial difficulty by giving them houses to build and keeping their crews employed in the process. This program benefits home owners in three ways:

1. Tax credits
2. Assistance with down payments
3. Decreased interest rates

The stimulus programs were first created in 2008 when we began to experience a financial downturn. Later when it was apparent that the efforts being made were not going to be enough, the government invented a more comprehensive plan that would encourage home ownership. On the heals of a collapsing real estate market, when people were afraid to spend money for fear of losing their homes, this was believed to be a very positive shot in the proverbial arm.

A person buying a home between January 1, 2009 and December 31, 2009 may qualify for a 10 percent tax credit. The basis for this is the gross purchase price and can be as much as $8,000. This may be claimed the year the home is purchased or within the first two years after the home is purchased. This type of credit makes taxes less burdensome, possibly giving a homeowner the needed incentive to stash away the money that was saved because of the credit.

The next incentive is a possible reduction in your down payment. Most down payments are ten percent or more of the price of the house. The government plan may help by allowing a reduction in the down payment necessary to buy the house. Again, if you originally planned to put down ten percent and you are now allowed a reduction, the money you save can be put into an investment account or can be spent on further improving the home you are planning to purchase. The government may also allow you the pay less in interest points that are part of every home loan. This too acts as a way to lower the interest rate since basis points are just that. In order to qualify for the tax credit your income must fall within certain guidelines. If you as a single person are purchasing a home, your income can not exceed $75,000. If you and your partner are buying the home together you can not make more than $150,000.

A tax rebate is another way to encourage people to buy a home. This rebate is placed on the interest amount that is assessed on the loan. While tax credits and rebates may seem similar they are not related in any way. Actually, in the stimulus program for first time home buyers, a purchaser may be able to benefit using both forms of stimuli. This tax rebate can also be used by someone who is buying a property for income purposes and acting as a landlord. In this scenario, maintenance expenses are seen as income tax deductions because they go to the upkeep of the property being rented out.

Economic growth becomes obvious only when improvement and preservation of a country’s infrastructure is abundant. Our financial health has taken several blows and it is the government’s desire to make things right so we do not fail in the eyes of the world. By taking advantage of the First Time Home Buyer stimulus programs, people can enjoy being home owners while helping our ailing economy at the same time.

For tips and facts about how you can benefit from Obama's Stimulus Package - or to find out if you qualify, visit our no nonsense home buyer stimulus guide: first time home buyer stimulus.