Decision Time Draws Near for First Time Buyer’s Credit

While the economy continues to show signs of improvement and many housing markets are beginning to heat up, scores of would-be buyers are still waiting on the sidelines for further positive housing trends. But for first-time buyers, time is running short on the federal government’s $8,000 tax credit.

Though the official expiration date of the credit is December 1, in reality on-the-fence buyers will need to make a decision one way or the other fairly soon. The reason: in order to qualify for the credit, the home purchase must close by December 1st. Merely having loan approval, an accepted offer or a signed contract won’t be enough to qualify for the Housing and Economic Recovery Act.

Decision-Making Timeline - While each transaction is unique, closing a real estate deal is no speedy matter. On average, closing takes place 45 to 60 days after the date that the contract is signed. In order to meet the December 1st deadline, this would mean having a signing date in late September or early October. Those who consider the tax credit an important incentive but are still unsure about entering the market will need to make a decision one way or another before many more summer days pass

To have any chance at finding a home and having an offer accepted by early October, buyers will want to wade into the home buying process right away. The immediate steps include making a final list of desired home attributes, scouting favorite neighborhoods and areas, starting the mortgage pre-approval process and beginning the home search process online.

Potential for Delays - Buying a home is a complicated process, and it is not unusual for purchases involving first-time buyers to take slightly longer than those involving experienced buyers. Some of the delays that first-time buyers may face over the coming months:

Competition with Other Buyers
While home may be selling at a lower rate than in years past; in many areas changes in inventory have created extremely competitive buying environments. Foreclosures or other homes with greatly lowered asking prices are particularly sought after, and in many cases investors are very active in the marketplace.

If you are interested purchasing a home or homes for sale in the Frisco, homes for sale in Plano, homes for sale Allen and homes for sale in McKinney area TEAMDECELL is who you need to call.  TEAMDECELL sells homes in the Frisco, Plano, Allen and McKinney Area primarily.  They are your home town experts and offer excellent customer service.  214-975-3210

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.  Location plays no part in the qualification, so even homes in the West Frisco, Frisco and surrounding areas qualify.

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:

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

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.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

For more information on finding a home in the West Frisco, Frisco, Plano, McKinney and surrounding area contact Team Decell.

Final Score: $8,000 for Homebuyers

There’s a nice windfall for some homebuyers in the economic stimulus bill. First-time buyers can claim a credit worth $8,000 - or 10% of the home’s value, whichever is less - on their 2008 or 2009 taxes.

A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision.

The National Association of Realtors, NAR, reported that the pending home sales index increased 3.2% in March to 84.6 from a level of 82.0 in February. This is the second straight month of gains in the index. The index is now 1.1% higher than its reading of 83.7 in March of 2008. The increase in contract signings in both February and March suggest existing homes sales are nearing a bottom. Increased affordability created by lower prices and low mortgage rates is underpinning demand. Also, first time buyers are entering the market with the support of an $8000 tax credit. Recovery in the broader economy will be predicated on recovery in housing.

INFO THAT HITS US WHERE WE LIVE  The best housing news we’ve seen lately is that homes now are very very affordable. In fact, the National Association of Realtors reported that homes haven’t been this affordable since they began calculating their Housing Affordability Index in 1970. This measures the degree to which a typical family can afford the mortgage payments on a typical home. When the median family income is the same as the income needed to qualify for a mortgage for the median priced home, the reading is 100. The preliminary Housing Affordability Index for February was 173.5, meaning the median family income is 73% higher than necessary to qualify for a loan on a median priced home. The highest previous number was 154.8, back in 1972.

This historic level of home affordability is the result of both historically low mortgage rates and reduced home prices. First time homebuyers also benefit from an $8,000 tax credit if they close on their purchase before December 1, 2009. If inflation happens, as some fear, buying now is particularly smart, as you wind up paying back your mortgage with devalued dollars. Bottom line, this is a terrific time to buy a home.  If you would like more information regarding the Frisco Market and buying or selling a home please contact TEAM DECELL at 214-975-3210 or go to their website at www.teamdecell.com.

In an effort to stimulate the economy and revive the housing market, Congress has enacted legislation providing a tax credit for first-time home buyers.  The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principle residence on or after January 1, 2009 and before December 1, 2009.

1.  The tax credit is for first-time home buyers only.   The Law defines “First Time Home Buyers” as a buyer who has not owned a principal residence during the three year period prior to the purchase.  For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

2.  The tax credit does not have to be repaid.  This is a true tax credit, however, home buyers must use the residence as their principal residence for at least 3 years of face recapture of the tax credit amount.  Certain exceptions apply, contact the IRS for specifics.

3.  The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000. 

4.  The $8,000 home buyer tax credit can be combined with the MRB home buyer program.   What Does Mortgage Revenue Bond - MRB Mean?  A funding source for home mortgages. Mortgage revenue bonds help low- and middle-income first-time home buyers by offering long-term mortgages at below-market rates.

5.  Prospective home buyers who believe they qualify for the tax credit are permitted to reduce thier income tax withholding.  Reducing tax withholding (up to the amount of the eligible credit) will enable the buyer to accumulate cash by raising his/her take home pay. 

For additional information contact Brian McCauley with Waterford Financial @ 214-975-3218 or e-mail to Brian@waterfordlending.com.   For real estate related questions go to www.TEAMDeCell.com.