I purchased a home on contract for deed in April 2008. Therefore I filed for the first time home buyer tax credit and received it.
I am moving and being released from the contract and want to know if I look to buy a home am I considered a first time home buyer?
I have been answering the question yes to my banker because it has been over 3 years since I purchased this one on contract. But I feel like I am lying. Am I? Or would I still be considered a first time home buyer now? I hope you guys can help.
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Hello there Jamie;
Wow! Your are someone special. I'm very proud of you and the questions you have ask here in my blog.
I commend you for having a conscience. Seems like many people today do not have one.
You say you purchased a home on a contract and have since been released from it. So, if I understand it right, this was private financing since the seller was likely the person who held the contract.
For whatever reason, you are not any longer under this contract. If this contract was not recorded at your county register of deeds, there is really no record of it at all. And even if it was recorded, it is not likely a mortgage company would even know about it.
So to put your mind at ease, consider it rent you paid. It was not really a mortgage with a lender.
However, to qualify for a new FHA home loan, the new lender will want to see a rental history. They do what is call a VOR (Verification of Rent) with your previous landlord.
In your case it may be the person who contracted with you. The new lender will want to have them verify you paid your rent on time for at least the past 2 years.
So with all of that said, hopefully you have a good relationship with the previous person. It appears to me you were on a rent with option to buy contract and you did not exercise your right to purchase.
If this is the case, you can rightfully call yourself a first time home buyer. And a funny thing, FHA lenders do not really care if you owned a home before anyway. Their program for first time home buyers is a one size fits all type of loan program.
I would be more concerned about the tax credit. Here is a quote from the IRS website.
The repayment of the IRS tax credit can be a sticky issue. For some people, depending on when they made the purchase of their home, they do have to repay it. It was like an interest free loan.
Many of the tax returns related to the purchase of a home in 2008 are being impacted in 2011. The time has expired and now these folks have to begin repayment. The IRS seems to be real good at getting behind and many folks are getting hit with interest and penalties.
Please seek professional help since I'm not the best one to ask these kind of questions.
The only reason I bring this up is you said you received the tax credit for first time home buyers. So my guess is, you have a little homework to do on that to find out if you have to pay back that credit.
Hopefully you have found this information helpful to you. If you did, please pay it forward by telling others about us in your FaceBook and Twitter accounts. We really appreciate when kind folks like you help us spread the word.
I was told that the tax credit was actually a loan and would have to be repaid over 10 or 15 years.
That is for most people that received it I believe. But thank you for your help. I hope now I can buy a bigger and better home with an actual mortgage.
The only thing I'm finding out that being a first time buyer helps with is that there is a grant that will help you with your down payment.
So if I don't qualify for that then I will have to try USDA which does 100% financing. Thanks again for your help
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