First-Time Buyer Tax Credit: A Reason to Buy Now

Reprinted, in part, from Daily Real Estate News October 8, 2008

If you've been contemplating a home purchase, the homeownership tax credit that the federal government created earlier this year is a reason to jump off the fence and get into the market. When you combine the tax credit with today’s continuing low interest rates, large selection of for-sale inventory, and low home prices, many of the pieces are in place to buy now.

How the Tax Credit Works:
The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 and targets any individual or household that hasn’t owned a home for at least three years. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9. It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009 you can take the credit on your 2009 tax return. The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so you can get 10 percent of the home price credited against your tax liability, up to a maximum $7,500.

Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.

Any house is eligible as long as it’s a primary residence and is in the United States.

Buyers Have 15 Years to Pay Back:
To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. There’s one restriction on the type of financing that you can use if you plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if you are using below-market interest-rate financing from a public agency or nonprofit that’s funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this won’t be an issue. It’s mainly an issue for low-income buyers using special mortgage financing.

The IRS Web site offers tax-credit guidance in an article that provides answers to many frequently asked questions.

This weekend's Open House

This Saturday and Sunday from 1-4PM I will be holding open a remodeled 1909 Alki-area Craftsman home. This is a two-story home with a finished basement totaling 2350 sq. feet of living space. The 5750 sq. ft lot has a terrific view of the Sound from both the living room and the Master bedroom. To add an element of fun and mystery to the home, there is a secret staircase leading from the living room to the lower level. You really need to stop by just to see it. The address is 5615 SW Winthrop St., just off Admiral Way at 56th Av SW. The home is listed by George Butterfield and Chris Koelling for $650,000. It is also available for rent at $2500/mo. MLS# 28134316

Current loan rates

Troy Chambers, loan officer for Arboretum Mortgage, offers this synopsis of loan rate activity for the week just ending:


Not a Good Week…
This has not been a good week for interest rates. Rates that I quoted on Monday and Tuesday are now undeliverable. Not only are stocks selling off … bonds are down as well. This is not making for a solid mortgage rate market. I truly believe this is a little burp in the interest rates, and before too long they will come back down. Please let me know if you have any questions, or any concerns. I am available at all times on my cell phone at 425-418-5103.

Thanks!


Troy Chambers
Arboretum Mortgage
Phone: 206-720-6628
Fax: 206-860-9340
troy@arboretummortgage.com



Click here to see a table of loan programs and rates.

Open House this evening (Friday!)

This evening from 3-5P (and maybe later) I will be holding open my listing at 4147 37th Ave SW (cross street Genesee) in the Belvidere neighborhood. This estate property is definitely a "fixer" -- a great opportunity for someone who wants to invest "sweat equity." Listed at $362,00, the sellers will consider all written offers.

Click here to see a flyer with more details.

Rewarding the good

For the 14th consecutive year, Prudential is sponsoring its annual Spirit of Community Awards. This unique program provides an opportunity to recognize and reward middle school and high school students who have distinguished themselves through volunteer work in their community or school. State level prizes include a $1,000 award and a trip to Washington, D.C. next spring, accompanied by a parent. The top national award is for up to $5,000.

If you know a student who might qualify and like to apply, please give me a call at 206-708-9800 and I will give you all the necessary details.