NEWS FLASH!! Homebuyer Tax Credit has been extended for 1st Time Buyers and expanded to include Current Homeowners who want to move!
Did you hear today’s news that government has passed an extension to the 1st Time Home Buyers Tax Credit AND have added another credit for current homeowners.
Here are some details that are the same for both segments of the bill:
- Both segments of the bill will be for transactions that go into contract between the date that Obama signs (Nov 6) thru Apr 30, 2010. The transactions must close prior to Jul 1, 2010.
- Income limits have been increased to $125,000 for singles, $225,000 for married couples.
- Limit on the price of the home is $800,000.
- Purchaser must attach documentation of purchase to their tax return.
Details for 1st Time Buyers
- Can receive up to $8,000 ($4,000 married, filing separate)
- Cannot have owned a home (principal residence) for the past 3 years
Details for Current Homeowners – NEW!
- Can receive up to $6,500 ($3,250 married, filing separate)
- Must have used their current home as principal residence consecutively for 5 of the previous 8 years.
- The new home you buy doesn’t have to be more expensive than the home you’re selling. In other words, you can downsize if you want.
While many 1st Time Buyers took advantage of the tax credit this past year, there was nothing to help the move-up market because those 1st Timers often bought REO, short-sale or foreclosed homes. The National Association of Realtors® and numerous real estate bloggers begged and pleaded for help with homes in the upper prices since they were often just sitting on the market.
This new program will benefit higher-priced buyers as well as help sell homes in the higher price ranges.
If you’re a higher-priced buyer, should you act now? Naturally, only you can decide that, but here are some things to consider:
- Interest rates have been hovering around 5%. Bernanke is watching for signs of inflation. If inflation begins to creep up, interest rates may be allowed to increase to stem inflation. They know that this could slow real estate’s recovery, and they really need the real estate market to improve, so it will be a tough decision.
- If this new bill works as we hope it will, increased demand may actually cause prices to rise somewhat.
- If you were thinking of putting your home on the market next year, you may want to move up your timing to take advantage of these tax credits both for you and for the appeal to your buyers.
- Also, if buyers act on this program by April, that may mean that demand will be lessened (exhausted) by the end of April. If demand decreases afterward, so will your potential price.
A 1-point interest rate increase will cost you far more than waiting for prices to decrease further
For instance in the example below, a $200,000 price with 3.5% down at a current interest rate of 5%, would result in a mortgage payment (P&I) of $1,036. At 6% interest, the payment would be $1,158. Over 30 yrs, that will cost you an additional $43,772. Even if the price comes down $10,000 to $190,000 but the rate increases to 6%, your monthly payment would be $1,100, costing you an additional $22,928. If the price increases just 5% and the interest goes to 6%, then you would pay an extra $179 per month.
| Home Price |
$200,000 |
| Price Chg |
-5% |
No Chg |
+5% |
| New Price |
$190,000 |
$200,000 |
$210,000 |
| 3.5% Dwn Pmt |
$6,650 |
$7,000 |
$7,350 |
| Mtg Amt |
$183,350 |
$193,000 |
$202,650 |
| P&I at 5% Int |
$984.59 |
$1,036.41 |
$1,088.23 |
| P&I at 6% Int |
$1,100.10 |
$1,158.00 |
$1,215.90 |
Naturally the higher priced the home, the greater the savings. Notice that the money coming from Uncle Sam hasn’t even been included in the above data. Interested or want more info? Give me a call and we’ll get your home on the market.
View comparison chart to the 2009 Tax Credit
Read FAQ’s for New Tax Credit
Copyright © 2009. Elaine Reese, Real Living HER. Reproduction of any portion of this blog post or the images is prohibited by the Digital Millennium Copyright Act. If this post is being viewed on any site other than www.ReesesPiecesOfRealEstate.com then the material has been stolen without permission. Violators will be reported.
Ana winds prevail, although I’m not sure. I do know that when we rounded a curve on the freeway east of LA, we saw mile after mile of probably hundreds of tall turbines. Some were turning while others were stopped. I learned later that whether they rotate or not, depends upon the demand for electricity.
House of Representatives Passes Health Care Reform Bill
This blog is for real estate and I intend to keep it that way. I don’t intend to turn it into a political blog but since our government is making decisions that affect the real estate industry, I’m finding that to keep you up-to-date on the real estate industry, I should advise you of those changes that impact your ability to own and keep your home long-term. I like to read “both sides” so I can be a better informed citizen.
Last night, the House passed a Health Care Reform bill. This morning there has been much discussion on Facebook and Twitter about the good or bad of the bill. I’m still trying to sort it out and determine how it will affect me. Maybe you’re trying to do the same thing.
So far, I’ve found a couple links … I’m sure there will be more, and as I find them I’ll add them here.
Here is an interactive map from the New York Times of how the Representatives voted by state. You can click over the map to see how your representative voted.
Here is a Wall Street Journal summary of some key points to the bill. Read through it to decide how it will affect your own life.
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Posted in Central Ohio, Commentary, Media, Newspaper
Tagged central ohio real estate market news, health care reform bill