First-time home buyers will get a tax credit windfall if they settle between January 1, 2009 and November 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyers.

This credit is refundable, meaning tax filers see a credit of the full $8,000.

Scenario 1: If your tax liability is $6,000 and you have paid Uncle Sam $6,000 through withholding you will get an $8,000 refund.

Scenario 2: If your tax liability is $6,000 and you have paid Uncle Sam $7,000 through withholding you will get a $9,000 refund.

Scenario 3: If your tax liability is $6,000 and you have paid Uncle Sam $5,000 through withholding you will get a $7,000 refund.

The buyers must live in the house for at least three years or they will be obligated to pay back the credit.

There are income limits. The $8,000 credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). The $8,000 credit decreases if the gross income limits of $75,000 and $150,000 are exceeded. There is no credit available to individuals with adjusted gross income of more than $95,000 and joint filers with adjusted gross income of more than $170,000.

If you put the $8,000 in an non interest paying bank account to assist with the mortgage payments over one year it results in $666.66 each month; over two years it is $333.33 and over three years $222.22. The funds could also be used to remodel a kitchen, add a patio or finish a basement.

TIP: Your credit history may have an influence on whether you get that loan and what rate you will pay, if you will get hired for that new job and the premiums you pay for auto and homeowners insurance. You will get an overview of a sample credit report so you understand what kind of information it contains. You will learn how credit scores are determined and what you should do and not do to improve them. We will discuss how to start and maintain a good credit record including the type of credit you should have and how much credit is right. The Barndt Agency, Inc. and Cambridge Mortgage Associates, Ltd. are sponsoring a one night seminar to be held on Wednesday, April 8th at the Upper Perkiomen Valley Library, 350 Main Street, Red Hill. It will begin at 7:00PM.

RSVP to Linda Mertz at 215-234-8041 x 116 or LMertz@BarndtAgency.com

GLOSSARY: DEBT TO INCOME RATIO – This is the relationship between your gross monthly income (before income taxes are deducted) to your total monthly debt which includes your mortgage payment, installment loans, vehicle leases, credit card obligations and child or spousal support. This ratio is expressed as a percentage and the majority of lenders do not want the ratio to exceed 45%. For example if your gross monthly income is $5,000 your total monthly debt should not exceed $2,250.