How do I buy a house and benefit from the $8,000 tax credit?

At this point the question is no longer “can I buy a house” but, “how do I buy a house and benefit from the $8,000 tax credit?”

Sure you’re anxious and concerned about getting into a risky situation, in a time when so many of our friends, family and neighbors are losing both their jobs and homes.

Your concerns are valid. No one has a crystal ball to predict the future. The best we can do is plan carefully.

You also know the basics

1. make sure you have enough in savings to cover a minimum of six months of expenses;
2. have a stable two year income history (I say income history not employment history, because self employment, education, regular seasonal work, social security awards, alimony, stocks, bonds, annuities, and many other forms of income may be used to qualify for a mortgage); and
3. have a one year positive credit history.

If you have the basics covered now you need to find the right mortgage. I believe there are no better mortgages than those offered by government agencies – the FHA 3.5% down payment first mortgage, the VA 100% guaranteed mortgage, and the various mortgages offered by USDA Rural Development. HUD provides a list of approved lenders and home buying education providers in your area. This is where you should start.

Down payment assistance loans and grants can save you thousands of dollars over the life of your mortgage. Visit My Home Down Payment for a description of down payment assistance programs available nationwide and in California and Texas.

Public servants – teachers, firefighters, emergency medical personnel -are eligible for special mortgage assistance. These programs are available nationwide, offered by states and many counties.

Union members may be eligible for first time homebuyer loans and grants. Others should contact their employer’s human resources department and ask if loans or grants are available for first time homebuyers.

If you have a 401K inquire about borrowing funds from your account toward your down payment and closing costs. Using 401K funds will not prevent low-to-moderate income families from qualifying for additional down payment assistance programs. Do this now. Depending on how your plan is administered, you may have to wait several months or an annual quarter to receive funds.

As you move through the process of purchasing your first home (first time homebuyers are generally defined as any one who has not owned a home in three years), post the story of your experiences on housingtales.ning.com. Feel free to vent your frustration and share your joy.

My hope for you is that you will purchase a home for your family this year, share your good fortune with others, and if you purchase a property that another family lost that you will pray for their well being.

The author, Yasmin Sabur, is the founding member of My Home Down Payment, an e-education business promoting mortgage down payment assistance programs for low-to-moderate income families.