Would You Like $8,000? Buy a Home. Soon!
To stimulate the economy,
Washington juiced up the stimulus plan passed last year in February. Two
benefits for FTHBs (First Time Home Buyers) were that the amount of the tax credit was increased from up
to $7,500 to $8,000. And, more importantly, the amount of the credit does not
have to be repaid!
To qualify for the credit the individuals buying a home cannot have owned a
home in the last three years. So, while the credit is discussed as a credit for
first-time buyers, anyone who has not owned a home in the last three years is
eligible.
There are income limitations to fully qualify but they are quite liberal.
Single tax filers earning up to $75,000 and joint filers earning up to $150,000
based on modified adjusted gross income can earn the full credit. A partial
credit is available for those earning up to $95,000 and $170,000
respectively.
The amount of the tax credit is based on a percentage of the price of the
home, specifically 10% of the purchase price, up to $8,000. This means if
someone purchases a home for $70,000 their credit would be $7,000 and if the
amount of the home purchased is $100,000, the credit would max out at
$8,000.
Note! The deadline to take advantage of this opportunity is November
30, 2009. Close in December, and you just lost $8,000.
Homes Have Never Been More Affordable
FTHBs are leading the way,
taking advantage of one of the best home buying opportunities ever, providing
support for the real estate market. As indicated earlier, FTHBs have accounted
for as much as 53% of purchases for any month this year.
Who can blame them? In short, no one. Home prices have fallen to levels not
seen in years and interest rates hit their lowest point ever. This combination
led to the highest home affordability ever recorded.
The National Association of Realtors® tracks what is known as the Home
Affordability Index. The Home Affordability Index is arrived at as a function of
both median home prices, available interest rates, and median family income.
The index represents the amount of monthly income that is required to pay a
mortgage payment. In 2005, approximately 23.3% of a family's monthly income was
required to carry a mortgage payment. With falling home prices and interest
rates, the percentage of monthly income required to pay a mortgage payment is
now approximately 15%.
This means that for a family at the median income level purchasing a home
priced at the median income level, the monthly mortgage payment has declined
nearly 36%! This is great news for anyone shopping for a home today.
You can take advantage of the low down FHA program, and combine it with this tax credit!
Get Busy, Time is Short!
In order to take advantage of both the
available tax credit and low interest rates, anyone going into contract should
strive to have their purchase agreement not later than mid-October. This will
allow some time cushion in the event anything pops up in the purchase process
and still allow for closing in time to take advantage of the available tax
credit.
Home prices have fallen to levels not seen since the start of the decade in
many parts of the country, interest rates are still near all time lows, and the
availability of free money from the IRS all mean that the time to act is now. It
is always easy to look back and identify times people should have acted, and
this could well be one of those times people will look back and say, "Wow, I
should have bought a home in 2009!"
Brought to you by:
Liane Thomas, REALTOR(R)
The Thomas Group, Keller Williams Realty
Serving Corona, Norco, Riverside, and surrounding communities
www.AllCoronaHomes.com
951.454.3805
