The first quarter of 2010 is a dynamite time to purchase a home! Low interest rates and once-in-a-lifetime tax credits are sweetening the pot. And you don’t have to be a first time home buyer for tax credits anymore.
The Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) was signed by President Obama on November 6th, 2009.
This bill extended the $8,000 first time home buyer tax credit, which would have expired on December 1, 2009.
Home buyers now have until June 30, 2010 to close escrow on a qualifying home purchase. But, (and this is important) a binding contract must be entered into on or before April 30, 2010.
First time home buyers may receive up to $8,000 (or 10% of the home’s purchase price).
If you are not a first time home buyer, there is now a $6,500 credit available if you purchase a home as your residence.
There is a limit of $800,000 on the price of the home, and you must be over 18 in order to qualify. Income limits also apply. Eligibility phases out at $225,000 to $245,000 for married filing jointly.
It is best to check with your CPA or tax preparer to make sure that you can get the credit.
Then call me, and let’s find your dream home! There are still a few foreclosures and sales with great deals.
If you have missed a mortgage payment, a clock is ticking that can take your home away from you. Even with the extra safeguards put into place to help people keep their homes, foreclosures happen. Everyday.
As a Realtor, nothing is more frustrating than to get a call from a homeowner that has waited too long. “My house is set to be sold at a trustee’s sale this week. I need help.” At this point there is nothing a Realtor can do. An attorney may be able to help stop the sale, but only if there is a good legal reason.
Make every attempt to talk to your lender before you miss a payment. Many banks have added additional staff. New options may be available, even if you had called before.
If you have already missed a payment, chances are the bank will start calling you. Pick up the phone! Open your mail, return the calls. The bank or lender cannot help you if you don’t communicate with them.
A Realtor can help you explore your options. You can authorize a Realtor to speak to your lender on your behalf. Most Realtors do not charge a fee unless they facilitate the sale of your home. If you have no equity, the bank (not you) pays the Realtor fees on an approved short sale.
Communication is the key. Most foreclosures can be stopped if action is taken early on. Talk to your bank, talk to a Realtor, talk to an attorney. Don’t let the clock run out on your home.
There is a huge reason why Chico real estate will continue to stay stable though the winter. The first time home buyer tax credit of $8,000 has been extended though April of next year.
On top of that, other buyers may be eligible for a $6500 tax credit. This credit is brand new, and has not been available in the past.
There are some great deals out there while there are still some short sales and foreclosed homes on the market. Add to that super low interest rates, and there may never be a better time to buy a home.
The federal tax credit for home buyers was signed into law by President Obama Friday, Nov. 6. The tax credit, which was set to expire Nov. 30, has been extended through April 30, 2010 with a 60-day extension if a binding contract is in place prior to deadline. It also was expanded to include existing homeowners who have lived in their primary residences for five consecutive years out of the last eight years.
First-time home buyers still may be eligible for a tax credit of up to $8,000, while existing homeowners may receive a credit of up to $6,500. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
Click here for a list of frequently asked questions.
Click here for information specifically about the eligibility requirements for existing homeowners.
More info
A few years ago, a first time home buyer was able to buy their dream home on the first go-round. Even if it was a little too expensive, they could stretch into a loan to pay for it. For some it worked out, but for many it has led to disaster.
In today’s market, a buyer has to qualify for their loan. It is back to the basics. The loan is connected to the amount of income coming in, the down payment and the credit scores.
Before starting to shop for a home, a buyer should have a complete loan package submitted to a lender. The lender will then be able to explain how much they can afford to pay for their house. Once this process is complete, then go shopping.
In Chico, a first time buyer may not be able to get their dream home right away. But, they can opt for a starter home. Maybe one that needs some fixing, or that can be added on to over the years.
It may be worth the work to buy a short sale or REO. The 8000 tax credit is also a great incentive to get that first home now.
Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today, as published in the New York Times:
- Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
- Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
- Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
- Include a maintenance budget. Even new homes need upkeep and repairs.
- Buyers who can’t afford their dream home now should opt for a starter home where they can save money each month for what they really want.
- Consider a property that can be expanded and improved down the road when money is available.
- No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.
Source: The New York Times, Ron Lieber (09/12/2009)
A recent article in the San Francisco Chronicle reminds us that Californians who lose their homes in a foreclosure, short-sale, or deed-in-lieu of foreclosure this year could be hit with a state income tax on canceled or forgiven debt.
The state did agree to follow the federal guidelines of not taxing the phantom income for 2008, but as far as I know they have yet to sign a bill to cover 2009.
A state law that temporarily exempted many homeowners from this tax at the state level expired at the end of last year. Attempts to revive it have not been successful.
The state law was similar to a federal one that exempts many homeowners from federal tax on canceled mortgage debt. The federal law remains in effect through 2012.
The state-tax hit could be substantial and the rules are complex. People in mortgage trouble should consult a qualified tax professional.
To read the full story, please click here
You can also read more from the California Franchise Tax Board.
