Buying a New Home

It's exciting to visit a model home in a new development but consider the following before you buy.

Buying a New Home
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Buying a newly built home from a developer can give you the best of both worlds: You get to have your very own custom-built dream home without the potential headaches involved in contracting a house from scratch. Houses in new developments can bring their own set of problems, however. Here’s what you need to know before you shop for new construction.

1. Find a reputable builder
When you buy an existing home, you may have little or no direct contact with the seller. When you buy new construction, however, you’re entering a relationship with the builder. Some builders will treat you like royalty until you buy, after which they may ignore your complaints about the missing trim or squeaky floorboards. Learn everything you can about the builder you want to buy from. In partially completed developments, you can knock on the doors of neighboring homes. You can also search and compare homes from leading builders online through iNest, a service of LendingTree.

2. Scout the location
Before moving into a new development, try to find out as much as possible about your new neighborhood. Ask how many homes in the development remain unsold and whether other building phases will follow; you may not want to live on a construction site for three or four years. If the area has a homeowner’s association, ask what its policies are and make sure you can live by them. Finally, inquire about how the area has been zoned. You’ll want to know if that vacant lot next to your suburb is slated to become a community park or half a dozen big-box stores.

3. Hire a home inspector
Unfortunately, some developers cut corners to save time and money, and even honest ones can make mistakes. If the developer allows it, consider hiring an independent home inspector to visit the home during construction to head off common errors, such as walls that are not square, appliances that are poorly hooked up, or improperly installed plumbing or wiring.

4. Ask about the cost of upgrades
When you walk through a model home in a new development, you’ll probably be surrounded with luxury finishes and top-quality materials that are not included in your home’s base price. Extras such as landscaping may also not be part of the deal. Read through your contract carefully and ask specific questions about the cost of materials and extras. Be aware that the price of a newly built home is generally not negotiable, but builders may agree to add certain upgrades at no charge. Make sure, however, that any agreed upon extras are added into the written contract.

5. Get a warranty
Most newly built homes include a warranty, which may be backed by the builder or, even better, by an independent insurer. (You may also buy your own extra coverage from a third party.) The length of the warranty period varies for different parts of the house. Major structural defects are typically covered for 10 years; plumbing, electrical, heating and air conditioning for two years; and cosmetic features for one. Ask about the warranty before you sign, and read it over to make sure you understand what is covered.
 
Published on February 15, 2007

Read full article at realestate.com

First Time Homebuyers Credit

The first-time homebuyer credit is a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.

The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date.

The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009).

If you meet all first-time homebuyer eligibility requirements, see Form 5405, for more details:
Form 5405

For further detail visit:
http://www.irs.gov/



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