Applying for $8,000 tax credit

• Single buyers should have an income less than $95,000 and married buyers should have an income less than $170,000 to be eligible. For full tax credit single buyers should have an income less than $75,000 and married buyers should have an income less than $150,000. Others can apply for reduced tax credit.

• Tax credit incentive is for first time home buyers only. People who have not owned a primary residence for the past 3 years are also considered as first time home buyers.

• 10% of the purchasing amount of the home is provided as credit which cannot exceed $8,000. This money can be used for down payment for buying a home.

• All types of homes including single family homes, condominium units and also manufactured homes are eligible but they should be used for primary residence.

• Closing date should be after January 1, 2009 and before December 1, 2009 to be eligible for full tax credit.

Recapture Tax

Many benefits are provided to first time homebuyer and who apply for FHA financing for buying a home. These benefits include loans on low interest rates and also funds for down payment assistance. These programs are governed by Federal laws. There is "recapture" tax to pay if the borrower meets the following conditions:

• Borrower sells the property within nine years of ownership.
  
• There is a net profit on the sale of the property.
  
• There is a increase (5% per year) in the income of the borrower.
  

But, the borrower don't have to pay the recapture tax if,

• the property is sold after nine years of ownership.
• there is no profit by selling the property.
  
• no increase in the salary of the borrower.
  
• the house is destroyed by any natural calamity.
  
• transfer of property to the spouse or ex-spouse as an agreement of divorce.

Buying a home after bankruptcy

Buying a home after filing bankruptcy is quite difficult. It affects your ability to take a loan in the coming months and sometimes in years but if you take proper steps then you can purchase a home after 18-24 months of filing bankruptcy. You have to wait until your bankruptcy case has been decided.

After bankruptcy, the most important step to take is to rebuild your credit scores. You must keep your credit scores perfect after bankruptcy and should have a steady job. Keeping credit scores perfect for nearly two years will bring back the faith of lenders in you. You have to prove to lenders that you can be trusted on paying back the money you owe. For this, you can apply for "installment loans" which can include student loan, car loan etc. and the only thing you have to do is pay your installments on time.

After improving your credit scores, you can go for FHA home loans as FHA requirements are flexible.

• two years have passed since bankruptcy have been discharged.
• three years have passed since a foreclosure
• all the judgments have been paid.

Your first home loan after a bankruptcy may be available to you on higher interest rates but if you can manage large down payment then, you can get loan at low interest rates.

Importance of FHA home inspection

Every home buyer should go for a FHA home inspection. When you want to buy a home, you want the home to be in proper condition. You don't want to face any problems in future or spend thousands of dollars in repair works. Getting a home inspection from a trained expert before buying a home is an intelligent step.

A home inspector will evaluate all the physical conditions of the home including construction, structure and mechanical systems. A inspector will also evaluate the working of major equipments (plumbing, air conditioning, electrical etc.) Inspector will provide the buyer with the detailed information about the home and any repair works that are needed in the home.

One thing home buyers should understand is that the home inspector will not evaluate the value of your home. Home inspection is different from an appraisal. Appraisal provides you with the estimated value of the home which is required by the lender before your FHA loan approval so that you don't borrow more than the value of the home.

FHA appraisal

FHA appraisal is a critical component of an FHA mortgage to determine the market value of the home. This market value serves the basis for the maximum FHA insured mortgage loan. FHA appraisal is done for the benefit of the lender and HUD and apart from determining the home value, it als0 provides an examination of the property for any defect that can be harmful for the people living in the house.

FHA appraisal determines the accurate value of the home to be financed which minimizes the risk of the lender because if the borrower defaults on the loan, then the home will provide the means of recovery for the lender. HUD requires appraisals for all FHA insured mortgages. FHA does not take guarantee that the home is in perfect condition but it ensures that the home is in safe and secure condition. Also, the home must meet all the FHA requirements.

FHA appraisers are required to repair or replace anything that affects the safe habitation of the house. FHA appraisers are required to make a complete inspection of the home, both from inside and also from outside. FHA appraisers must ensure that each and every thing is perfect may be its hand-rails, windows, smoke detectors, condition of the roofs and the kitchen. They must check whether all the components are working properly or not.

So, before buying a home, have a proper FHA appraisal so that any defects in the house can be repaired on time.

Tips to secure your FHA home loan

There are certain factors that you must keep in mind to secure your FHA home loan. Below are some simple tips on how you can secure your FHA insured mortgage.

• Credit score is the most important factor. You must clear your previous debts and should increase your credit score before going for the mortgage.

• You should not increase unnecessary debt using credit cards. You must limit its use and your spending money should be cash.

• You should consider your present financial conditions. If you don't have much savings and a good career then first you must improve your financial standing before buying a home.

• You must completely understand the procedure of the FHA loan processing and also pros and cons of the market before applying for the loan.

• You should compare the interest rates and the loan program of several lenders before finanlizing the loan.