One element of the Obama administration’s economic stimulus package is a tax credit for first-time homebuyers of up to $8,000. As described in an LA Times article, the credit recently got even more valuable when it was made available to help cover closing costs or for use as part of the down payment.
For those who have been diligent about saving and avoiding debt, the recession has brought about some good bargains–one of which is real estate. Prices have fallen, mortgage rates are low, and this first-time homebuyer’s credit is a great deal. I still encourage making a 20 percent down payment (made easier now that the tax credit can be used for part of that) and keeping your monthly payment for the combination of your mortgage, taxes, and insurance to a maximum of 25% of your monthly gross income.
There is more information about the first-time home buyer’s tax credit, and specifically on how to access the money for closing costs or down payment assistance on the National Association of Home Builders’ web site.