How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.
On your second question, if you put option consideration down and the house goes to foreclosure you can refinance the property before that occurs if you are ready to as long as the debt owed is not larger than what you are purchasing for (and it shouldn't be). I've seen situations where the lease to own buyer cannot obtain financing for a number of years which is essentially a glorified rental. So, if you can't refinance into a new loan by the time a foreclosure happens than you could lose your option consideration. Or, the seller could work with a company like mine to work a short sale and get the debt reduced with the lender so that you can purchase. I hope that this helps. Unfortunately nothing is guaranteed.
Bee Home Solutions, Inc.