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Posts Tagged ‘first time homebuyers’

Got this from the North Carolina Association of Realtors Government Update from last Friday (5/15/09):

HUD Reconsidering Tax Credit Use for Down Payment
HUD is apparently delaying its determination that the $8,000 first time homebuyer tax credit can be used for down payments.  This Tuesday, Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration was going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.  But later in the week this was rescinded and is apparently still being evaluated.

Donovan’s comments came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit: Advancing the U.S. Economy,” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..  The NATIONAL ASSOCIATION OF REALTORS® has been asking that the credit be advanced in the form of down payment assistance.”

I certainly hope they work this out.  The tax credit is a great buying incentive, but as it stands now, you won’t be able to take advantage of it if you don’t have enough cash for a downpayment and closing costs and pre-paid fees (insurance, taxes, etc.) which can be substantial- 2-3% of the price of the house.  It certainly makes sense to me that if the feds are going to give you the money after closing, then provided you qualify, you should be able to get that up front as a bridge loan from the lender which will be paid back when the tax credit check comes in.  They’d just assign that cash to the lender.

Stay tuned!

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OK, let’s review:

  1. House prices have come down to the lowest levels in years.  There’s some evidence that many markets are finding a bottom.
  2. Morgage Rates are around 4.75% for a 30 year conventional loan or 6% for a jumbo (over $417,000).
  3. USDA mortgage loans that offer no money down transactions for qualifying buyers are still available (income limits at $56,600- joint- for Iredell residents- varies by county).
  4. The Federal government is providing up to $8,000 tax credits (like cash) to qualifying first time home buyers (income limits up to $75,000 single and $150,000 joint).

If you think it will get better than this, I’d not hold my breath.  This is all driven by the difficult economy and slow housing sales.  As soon as sales pick up substantially, you’ll probably see the interest rates go up and the incentives become harder to get.  Timing markets like this is next to impossible- we’ve never seen anything like it, so how do you predict the future?

If all that looks to you like an ideal situation to buy a home, let me know.  I’ll be happy to get to work finding the right home for you.

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I keep running into people who don’t know about the government incentive to encourage first time homebuyers to go ahead and make that purchase.  For gosh sakes, you can get up to $8,000 free and clear for buying a house.  This is not a tax deduction like mortgage interest.  This is cash that the government will send to a qualifying first time homebuyer.  I’ve closed one transaction for a client who’ll amend his 2008 tax return and go ahead and get the cash.  I’ve got another ready to close in May.  Why let them have all the fun?

If you plan to buy your first home (or first after 3 years of renting) or know someone who’s thinking of doing it, now is the time.  You’ve got to purchase your home by November 30, 2009 to get the tax credit as things stand now.

Here is a pdf summary of the details.

Here is a much longer explanation.

Here is a look at the IRS form that you’d use to claim the tax credit.

Now, you have no excuse.  Call me, and we’ll find the right house for you!

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REALTORS are of course very interested in helping clients take advantage of the First Time Homebuyer Tax Credit, so I’ve been looking for various information sources to pass along to you to see if you qualify if you’re in the market.  Not surprisingly, the Natinal Association of Realtors is working hard to get the details and put them in easily understandable form.

Here is a link to the NAR site which will download a 25  Frequently Asked Questions document that should answer most of your questions about the new tax credit.  Remember that you should consults a tax professional for interpretation of many situations, and I understand that all the details will not be available until March 4.

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