This last month more homes where bought than expected. While there are those that will say that’s not saying much, it does prove that people are still buying homes despite the end of the tax credit that was designed to get the housing market over a hump. Is the housing market booming like it was just a few years ago? We all know the answer to that is no. However, just like any other financial market, the housing market traditionally goes through much needed corrections from time to time.
Most experts believe there are some additional corrections that need to take place. But one has to remember that people have been and will continue to move from place to place as their lives change and families grow. This is the way of the world. There will always be a need for houses and the ebb and flow of the market will always be affected by the demand. Good, solid homes are still selling and good, solid people are buying and that’s the way it will always be.
After the April 30 end to the home buyer’s tax credit, mortgage applications took a nosedive to a 13 year low nationwide. While apps are still down, they have risen about 7% over the May numbers and since interest rates are still really good, it is still a very good time to buy a home if you are in the market.
Another measure that is awaiting Senate approval is an extension to the home owner tax credit for those who are waiting to close their current contract. In other words, this covers those who had a contract ratified by the April 30, 2010 date but have not been able to close or don’t think they will be able to close by the June 30th deadline. This bill HAS NOT passed the Senate as of yet but they are trying to get it done by the end of the month. This would extend the closing date to the end of September and give those people another few months to close. This will really help those purchasing new construction, which has a tendency to go over the proposed finish dates. I will keep you posted as to what happens next. In the mean time, if you know of someone who is looking to buy or list their home I would love the opportunity to visit with them.
I have talked to several people this month who are a bit confused about the deadline for the homebuyer tax credits so I wanted to remind you of the basics.
You must have a property under contract by the end of the day, April 30th, 2010 to close by June 30th of 2010 in order to qualify for the home buyer tax credits. However, you also must meet other qualifications as well. So just because you purchase a house within the allotted time frame does not guarantee that you will receive the tax credit. Make sure you check with your accountant to make sure you qualify as they are the best people to ask outside of calling the IRS.
You will also need to have the correct paperwork (#9) to give to your accountant in order to receive the credit. Again, talk to him or her to get the latest information. Realtors and mortgage lenders can give you the best information they have but, to know for sure, always talk to the person who does your accounting and taxes as they have up to date information.
Right now is the time to buy if you would like to qualify for the first time homebuyer’s tax credit or the move up/move down tax credit. You will need to have a house under contract by the end of April to qualify. The only exception to this date is for military personnel coming back from Iraq and Afghanistan.
The other reason it’s a good time to buy is interest rates. They are still historically low right now, though it has been predicted that they will be rising throughout the year into the 6’s. With that in mind, interest rates in the 6’s are not bad when you look at where rates have been over time.
The last reason to buy is the homes that are currently on the market. There are a great many homes to choose from and some are at great prices due to short sales and foreclosures. It can take more time to get a contract in place for these homes so it is important to start soon if this is the type of home you are looking for.
It seems in many different industries people talk about “a perfect storm”. The last couple of years were one of those times with the advent of sub-prime mortgages coupled with defaults from builders and creating a really bad environment for the housing market. However, as in every storm there also is a silver lining, if you’re willing to look. Right now is the best time we have seen in a long time to purchase a home, if you are ready.
By ready I mean you will need to have a work history of at least 2 years, a mid credit score of at least 620, decent income to cover a debit to income ratio of 45% and a down payment; though there are still programs that can help you with your down payment if you have everything else together. This is a good time because rates are still lower than normal and the government is offering a tax credit for those who have a property under contract by April 30, 2010 that will close by June 30, 2010. If you are one of those buyers it is important to start the process of getting pre-qualified with a lender and looking for homes you can afford. There is more competition than you would think right now so act quickly so you don’t miss out!
The first time home owner’s tax credit that has been in existence since January 2009 has been extended. There is also a new tax credit for move up buyers as well. President Obama officially signed the bill to extend the $8,000 credit but new rules apply. The new rules say the homebuyer must have a property under contract by the end of April, 2010 and closed on the new home by the end of July, 2010. Income limits have been raised to $125k for singles, and $225k if married. There is some additional required paperwork that will have to be done and the home price can not exceed $800k.
Move-Up buyers now qualify for a $6500 tax credit that has the same time-lines, income limitations, and sale price guidelines as the First-Time Buyer credit. This provision allows homeowners who have lived in their primary residence for at least 5 of the 8 previous years to sell and purchase a new home and claim a $6500 tax credit. If you have additional questions, talk to your accountant or the person that does your taxes.
So whether you are a first time homebuyer or want to move up into a more expensive home, it’s a great time to buy!
I wish I was talking about a cruise down the river or to the Caribbean, but I am not. I am talking about buying your first home before rates go back up to the 7 and 8 percent levels. That’s right, historical rates will not stay down forever and, fact is, they have already started to move upward at a pretty fast pace over the last two weeks.
Many people seem to believe that these rates will just stay this low until all the homes are sold and that’s just not true. Rates are based on many factors that are far more than I ever want to get into and all I know is they are going up and no one I am talking to right now thinks they are going to come back down.
If you want to get the first time tax credit up to $8,000, buy a new home and get the best rate possible, the time to look is now. There are still many great homes on the market and prices have come down over the past year. That simply means if you are in the market to own a home you can still take advantage of good rates, good prices and a tax credit if this is your first home. It doesn’t get any better than this!
If you know me you know that I have been around a while. If you don’t know me yet you’ll just have to take my word for it! In all that time I have seen interest rates go up into the teens and plummet to about the same place we are right now for a thirty year fixed mortgage. Four and a half is about as good as it gets for a fixed thirty year mortgage and as we have all become very aware, a thirty year fixed is where you want to be.
Place on top of that the tax credit for up to $8,000 for a first time home owner this year and you have the perfect time to buy a home if is the right time for you. By that I mean you have to be ready for a home and to qualify for a home. I would be more than happy to give you someone you can talk to so you can find out if you qualify. Once you know you qualify, and then we can start looking for a wonderful place for you to call home.
You can add to that the availability of properties to look at and the willingness of sellers to deal and you have just about the most favorable climate to buy that I have ever witnessed! If you have any questions about interest rates, the tax credit, properties or anything else about home ownership, please don’t hesitate to call me. I would love to help you!
On February 17th of this year, President Obama signed the American Recovery and Reinvestment Tax act. In the body of the act is a very good thing for first time home buyers. You are a first time home buyer if you have never owned and home or are not currently on the deed of another home or have not owned a home in the last 3 years. For those who fall into this category and who purchase a home between January 1, 2009 and December 1, 2009 you have access to this credit that can be as high as $8,000 depending on the house you purchase and your income.
If you are single and your income is more than $75,000 per year or married with a joint income of over $150,000 per year, you will need to check with your accountant to see how much you will qualify for, if any. You will also be expected to live in the home for at least 3 years or you will be required to pay the credit amount back in full. Two things to note: you can take the credit as soon as possible after your purchase by amending your 2008 taxes or wait until next year when you file your 2009 tax return and this credit applies to all kinds of housing that includes, mobile homes, yachts, travel trailers, etc. The definition is any type of place that has a bedroom and a working bathroom.
Have you heard about the latest tax credit for first time homeowners? If you purchase a home between April 9, 2008 and June 30, 2009, you may be eligible for a tax credit. You will need to check with your accountant or tax preparer to find out if you qualify for this credit or not. Like all such tax issues, this will depend on a number of factors.
But before you jump up and down with delight, you need to know that this credit is more like an interest free, fifteen year loan. In other words, you have to pay it back over time (15 years). You will be able to claim the lesser of $7,500 or 10% of the price of your home. Basically, any home over the selling price of $75,000 can claim $7,500 and a purchase price under $75,000 will be eligible to claim up to 10% of the purchase price.
There are nuances about when you have to start paying the credit back, what happens if you sell your home before you get the credit paid back in full and what if you sell your home at a loss? These are all things you will need to go over with a tax preparer.
If you have used another government program like THDA to buy a home during this time frame, you cannot qualify for this tax credit. A family or person can use only one type of assistance to get into a home. Just like THDA, there is an income cap that must be met for qualifiers. For this tax credit, if you’re single, the credit is not available if you earn more than $75,000 per year, or $150,000 for joint filers. It is unavailable completely if you earn $95,000 individually or $170,000 jointly.
The government is attempting to boost the housing market and get the economy started with this tax credit. However, be very careful and make sure you qualify for it before you start making plans to buy because if you don’t qualify, it could be a tax nightmare. Again, check with the person or company that does your taxes and make sure this is a good move for you to make.
