Tag Archives: $8000 tax credit

Using Homebuyer Tax Credit for Down Payment

Buyers have inquired, and articles have been written about the possibility of using the first time homebuyer tax credit, or at least part of the funds, for a down payment on the purchase of home.  I had written previously about this opportunity..

The key to having funds be used for a down payment was finding someone who would fund this amount because it would really have to be a loan. Well, I actually saw this happen.  I recently had a closing in October, where the buyer for my sold listing actually did use the tax credit for the down payment.  The transaction contained seller’s assist (where the seller pays part of the closing fees) and the balance due after that was around $4k. PHFA (Pennsylvania Housing Financing Agency) backed the balance due amount. The buyer’s have 12 months to pay the approximately $4K amount back as an interest free loan. The funds to pay back would come after filing their taxes in the spring.  What we were told at the closing is, if they chose not to pay it off it would become a loan and would be a lien against the property.

What I did find out at the closing was the PHFA had run out of funds at the point of this closing so we were not likely to see funding again in the near future from PHFA. It was a great deal for the buyer because with the seller assist, VA backed funding, and the tax credit funds for the down payment, the cash due at closing from the buyer was “Zero dollars”.   This is extremely rare but apparently it does happen. The interesting thing was the buyer even had a credit due them at closing but due to the loan rules the buyer was not able to get any money in their pocket after the transaction so it had to go onto the principle of their loan.

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Photo Copyright 2007, Amy S Myers

Tax Credit Extension Signed into Law by President

Great News! It is official. The President has sign the homebuyer tax credit extension to law. Activity has already picked up in the area this week.

“Obama Signs Extended Tax Credit into Law”-Â Expected to contribute approximately $22 billion to the economy, Congress overwhelmingly passed a bipartisan measure this week extending the $8,000 home buyer tax credit to April 30, 2010″. . . . .

More people are now eligible to take advantage of the law, which includes a $6,500 tax credit for buyers who are current home owners and have lived in their home for five of the past eight years.”Â

“Which Properties Are Eligible? Â – The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?  – The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

1) The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

2) The buyer’s income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.” – Quoted from Realtor.org

Additional details on the tax credit

Here is a helpful chart on the new home buyer tax credit changes. You will be able to compare the first home buyer tax credit plan that expires November 30, 2009 and the new plan that starts December 1, 2009. Chart supplied by the NAR (National Association of Realtors)

Additional info from CNN.com

“The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers — those who have not owned a home in the past three years — still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.  “

Senate Democrats Agreed to Extend First-Time Home Buyer Tax Credit

Great News! Senate Democrats Agreed to to Extend First-Time Home Buyer Tax Credit. If you have paused your home search, get ready to go back out and look. The monetary cap is not as high but still very much worth the deal. For you home buyers who are ready to upgrade to your second home, now is the time because the buyers are going to still be enticed. Make sure you have your house priced right. There are still some great buys for “step up” buyers so have fun shopping.

“Senate Banking Committee Chairman Chris Dodd (D-Conn.) says Senate Democrats have agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed — not closed — by April 30. Purchasers would have another 60 days to close the sale. The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.

“The credit would be cut nearly 10 percent to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.”

Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/27/2009)and Realtor.org

img_6135-450lPhoto Copyright 2007-2009, Amy S. Myers

Possible Tax Extension Likely?

Today at my Real Estate board meeting it was discussed that there is a good chance of the Tax Credit being extended.  Here are some items that are being proposed for the new extension according to a guest lobbyist for government affairs:

1)Â The tax credit could apply to “step up buyers”, buyers who will be upgrading to a new home.

2)Â The “step up buyers” will have had to be in the home they are leaving for at least 7 years

3)Â Step up buyers” may have to be in their next home for at least three years.

4)Â The tax credit new deadline may extended to sometime in the spring of 2010.

5)Â If an executed contract is secured before the deadline, an extension for the credit could be possible for up to 60 days to complete closing.

Here is some additional information from the Associated Press and Realtor.org

“It seems likely that the U.S. Senate will approve a deal to extend the First-Time Homebuyer Tax Credit, but the devil is in the details.

Florida Democrat Sen. Bill Nelson told reporters traveling to Florida with President Obama on Monday that he thought that the extension would be approved, but both senators and representatives are among those who think that there should be some fiscal offset for the cost of the extension. . . . .

The proposal in the Senate that appears to have the most likelihood of passage would extend the $8,000 credit through March 31, then its value would drop by $2,000 for each of the subsequent three quarters of 2010. This plan was offered by Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus, a Montana Democrat.”

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photo copyright 2007-2009, Amy S Myers

Existing Home Sales Had a Large Rebound

According to the information below from Realtor.org, first-time home buyers accounted for almost half of home sales. I hope that the tax credit can be extended. Many of my recent activity has been buyers trying get the tax credit. This credit has also helped some of my sellers upgrade to their second home due to the first time home buyers purchasing their home. It will be interesting to see what congress decides in the coming weeks.

“Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of REALTORS®.

Existing-home sales—including single-family, townhomes, condominiums, and co-ops—jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in more than two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.” . . . . .

Conditions for First-Time Buyers:

Early information from a large annual consumer study to be released on Nov. 13, the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers shows that first-time home buyers accounted for more than 45 percent of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29 percent of transactions in September.”

Read More . . . Quoted from Realtor.org

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Photo Copyright, Amy S. Myers 2009

The Market is Changing

The housing market is changing everyday. As things change a new approach is needed on how to proceed. It is a buyers market, or a sellers? How are the rates? When should I buy? What is the next step in the process . . . etc . . .

Here are some good tips for first time home buyers to get you started. Be conservative and use wisdom in each step you make. Find a good agent that will be patient with you.

Homebuyer Tax Credit Window is Ticking Away

The days and hours are ticking away for the homebuyer tax credit. Have you pick a house? Activity is picking up fast. Keep in mind that you have to approximately October 1, 2009 to get a property under contract with a seller.   It will take approximately 6-8 weeks to close.  A homebuyer needs to close on their home by November 30, 2009 to qualify for the government homebuyer tax credit. Keep in mind there is a holiday in this window and loan officers will not be available during this time. The 6-8 week period is an average processing time as long as things go smoothly. So if you have your eye on that house or are sitting on the fence, jump off and get running. You have about two weeks left.

Additional Tax Credit Info

New Home Sales Have Risen

With all the super deals, increased home inventory, low interest rates, and the tax credit it is no wonder that the housing market statistics picked up in June. This is encouraging news for the market and the economy. Remember approximately two months left to get a home under contract to take advantage of the tax credit.

” Sales of newly built single-family homes rose 11 percent in June to an annualized rate of 384,000, according to a report released Monday by the U.S. Department of Housing and Urban Development.

“Analysts called the report a good sign. But overall, business is better.”

“The time for getting deals is going away.” Markstein said.

Source:Â Realtor.org

What Does Not Attract Buyers?

I have been extremely busy with buyers. Buyers are getting ready to purchase something knowing that they only have a limited time to take advantage of the tax credit opportunity. Due to this activity, I, of course, get to see a ton of homes – more than the norm. The more homes you see the more strange and interesting things you see as well as some really beautiful homes.

Well, yesterday, I showed a very nice two story colonial. An older couple owns it. Every inch of it is cared for. It is immaculate and for the most part move-in ready. My buyers loved this home looked on the outside. Then walking in we discovered (but we kind of new from the photos) . . . . there was wall paper everywhere. Eeeek . . . My buyers said “forget it”, even though it was a wonderful home. They were disappointed because they would have to tear off all the wall paper. Most of the wall paper was very nice. This kind of decor is very personal and makes it very hard to sell because there is a great cost in changing it all. So, even though it was move in condition, it really was not due to strong personal decorating. I told the listing agent about this and she said the owners would be willing to negotiate having all the wall paper removed by a contractor. My buyers were not the ones to say the wall paper was an issue.

Wow, so wall paper can kill the deal. Sellers keep in mind when investing in your home with decorating. Choose something that is appealing to the masses but tastefully done. Keep in mind neutral, neutral, neutral. This consideration will save you headaches when you go to sell. Do you really want a contractor to have to come in and strip all the walls in your home just to get it to sell or yet alone have to do it yourself? The buyers will turn away because it just looks like too much work to make it their home.

Home Buyers Don’t Miss the Opportunity For Your $8000

If you are a First Time Home Buyer time is running out. If you desire to take advantage of the First Time Home Buyer tax credit your property must close by December 1, 2009. Buyers should have a signed purchase contract with the seller signed by early October to have plenty of time to close.

For my buyers that need to finance, I always suggest about 6 weeks for closing, especially with inspections. In most “normal” cases that is enough time. I have seen other odd cases where it can take longer and the reasons can vary.

Just recently I was going to close on a home. It was delayed because the buyer for my seller’s home had to close on her house first.  Well, this buyer for the buyer in our transaction lost their financing and had to start all over. When all was said and done, the house closed about two months after it was suppose to and everyone involved was happy.

So consider this with only 6-8 weeks (hoping there are no snags), you need to find that house in the next 2 to 2 1/2 months or sooner. If you are eager to take advantage, hurry. If you are not sure where you stand with your credit, just take that step and talk to you loan officer.  Happy Hunting.

Details on First Time Home Buyer Tax Credit