American Dream

The American Dream of Home Ownership is something that can move from a dream to reality by setting some realistic goals and setting some dates to measure your progress. There are many programs to help someone become a first time home buyer. I will lay out a simple pattern to set the dream in motion.

1. Set up an automatic deduction from your paycheck that will deposit money into a account that encourages you to keep saving, an IRA is a great option here. 
2. You are allowed to withdraw up to $10,000 from an IRA for a first-time home purchase without IRS penalties. 
3. Take advantage of a IRS Savers Tax Credit each year when you file your taxes. This credit can provide up to $2,000 extra dollars to your tax return and help you increase your home buying power. Here is a sketch of what a modest own your own home in five years savings plan may look like:

This year, year #1. Place $2,500 in a 5 year Flexible premium Annuity/IRA from your tax return dollars, add the saver's tax credit of up to $1,250, this provides up to $3,750 in savings this year. Place the Saver's credit in a second non-IRA account dedicated to buying your first home . Now automate your savings by having $70 each paycheck deposited into your IRA.
Next year, year #2. You have a $1,820 tax deduction for automatically funding your IRA with $70 a paycheck. Take the Saver's Tax Credit for an additional $910 in your tax return. Place your extra $910 into your non-IRA home savings account. This give you $4,320 in your IRA and $2,160 in your non-IRA home savings.
Year #3. Your automated, keep doing what you did in year two. 
Year #4. Keep going, your automated.
Year #5. Keep going, at the end of the year you have $10.000 saved in your IRA that is available to withdraw for your first time home purchase and and $4,890 in your non-IRA home savings account and you are well prepared to go shopping for your first home.

Easy Peasy $2,500 saved from one years tax refund and $70 a paycheck, you now have $14,890 to buy a home. You saved $9,780 and received $4,890 in tax credits + paid less in taxes and earn some interest.
This is a sample, there are many variations on this, contact PCL Southern to help work out a plan that works for you.