Bringing the Dream of Homeownership Within Reach

The Basics: 2009 First-Time Home Buyer Tax Credit

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.
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.

"Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission."

Real Estate...is it time to buy?

There are two obvious reasons that investing in Real Estate right now is a brilliant idea. These reasons apply to both the purchase of homes and investment property.

Everyone knows the age-old investment philosophy, “buy low and sell high.” Real Estate investments are taking a beating in the media right now. No one is talking about investing in Real Estate. That means that the demand is down and prices are low. Creating an ideal “buy low” time for Real Estate investors.

Why would anyone be selling now is a really good question with an easy answer. People need more space or they need to downsize, people move for jobs, people retire, people want to cash out, people want cash in, people make bad decisions then need to sell something to pay off debt, just to name a few.

The fact is, that there is currently inventory on the market at good prices and even more inventory not on the market but available if you go looking for it.

At the same time there is growing talk of inflation. It is not just talk. Without going into all the economic factors and indicators, they all line up to reveal impending inflation. What does inflation mean? It means that the price of nearly everything is going up. It means you buy less for your money. Your paycheck buys less. The price of oil and gas is driving the price of everything higher. Your dollar used to buy a loaf of bread. Now it takes a dollar and a half. Inflation spreads to all hard goods.

Between 1981 and 1984 there was a period of rampant inflation. House prices in most of the country rose by fifty to a hundred percent. This was during a recession. Interest rates were at those record highs you always hear about, 15% to 20%. And house prices rose dramatically.
A loosening of lending restrictions that created a flurry of home buying followed that period which drove prices even higher.

Is this beginning to sound somewhat familiar? Instead of the high interest rates driving up inflation and creating the demand it is the cost of fuel, tightening of lending criteria, and concern over the liquidity of the secondary market wholesale buyers of mortgages that is creating pent up demand. That, fueled by inflation should create a significant increase in home values.

A strategy to winning in this market is to become savvy enough to understand that this is very likely a perfect time to be buying property. Real Estate investments are taking a beating in the media right now. No one is talking about investing in Real Estate. That means that the demand is down and prices are low. So the first obvious reason that investing in Real Estate now is that prices are low.

Remember this, Real Estate markets are cyclical. They always get better and they always get worse. (source of information for this post:BrokerAgentProfessional, an independent Real Estate Publiction).

It is only a Buyer's market if you buy!

IT'S ONLY A BUYER'S MARKET IF YOU BUY!

I have been asked by Homes & Land Magazine, Orlando/Central Florida edition, to write an editorial to be published in their up coming edition. Since we have seen such a tremendous transition in the last few years in Real Estate across the country, I have decided to write a short general description of the different types of Real Estate Markets. This is my article as it will appear.......perhaps it will help you.

IT’S ONLY A BUYER’S MARKET IF YOU BUY!
UNDERSTANDING REAL ESTATE MARKETS

Buyers and Seller’s continually have to adapt to changing market conditions and determine the type of real estate market that exists. Although there are many variations and twists that affect the current market, basically real estate markets fall into three categories. Whether you are a buyer or seller you should always consult a Realtor® to help you understand where the current market falls and develop the best strategies to achieve your goals.

Neutral Market
Neutral markets are balanced. Typically, interest rates are affordable and the number of buyers and sellers in the marketplace are equal. Good buys exist in neutral markets, but no particular conditions exist that favor buyers or sellers.

Buyer’s Market
A buyer’s market exists when there is a surplus of inventory…….more houses for sale, than buyers. Buyers have many homes to choose from, and not each home for sale will sell. Smaller numbers of buyers will result in fewer sales which can alter prices. In this type of market buyers have more negotiating power, prices tend to fall and homes take longer to sell.

Seller’s Market
A seller’s market exists when there are more buyers than available inventory. In this type of market there are fewer homes available then buyers. Generally home prices rise higher than they normally would and homes sell quickly.

CURRENTLY WE ARE IN A REAL ESTATE SLOW DOWN……or Buyer’s Market
Homes are taking longer to sell. Homeowners facing a financial hardship do have options prior to selling or losing their home that they could explore. For owners behind on their mortgages, the first option is to try to find a way to catch up their payments. Borrowing from relatives or asking the lender to refinance the mortgage is among the options. Many lenders may be willing to extend the term of the mortgage, add any delinquent payments to the loan principal or adjust the interest rate to make current payments easier to maintain. In a stagnant real estate market with declining sales and inventory growth sellers must find a way to stand out from the competition, many looking to Short Sales or Auctions.

Short Sale
A short sale could be when the net proceeds are not enough to cover the mortgage obligations and closing costs, such as property taxes, transfer taxes and the broker’s commission and/or find themselves in pre-foreclosure stages. We are currently experiencing a rising trend throughout Florida… and the number of sellers facing financial difficulties being clearly on the rise in all price brackets. At the same time, a decline in sales prices over the past two years has left some sellers with little or no equity in their homes—sometimes called an “upside-down” sales situation. However just because sellers are behind on their mortgage or are having financial difficulties doesn’t automatically make the short sale an option. A short sale involves the seller’s negotiating this option with their lender and this type of transaction is a lot more work to successfully complete, it should always be handled by a professional Realtor®

Auctions
There are two types of real estate auctions: Reserve Auctions and Absolute Auctions. In an Absolute Auction the property is sold to the highest qualified bidder with no limiting conditions on the purchase price. A Reserve Auction is one in which sellers establish an undisclosed Reserve bid or minimum price at which they will sell the property. They are not obligated to execute a sale unless the bid reaches this Reserve. The Auction Company, very often working with the listing Realtor, will market the home and hold Open Houses prior to the actual auction, creating more exposure for the home and hopefully resulting with a qualified buyer.