If the timing wasn’t right for you to take advantage of the 2008 tax credit, perhaps there is still hope.  The 2008 law gave home buyers who hadn’t owned a home in the last three years the right to claim an $8000 tax credit on their 2009 federal income tax return if they bought a home between January 1 and December 1 of 2009.  That law is due to expire at the end of November.  If you are a first time home buyer and you don’t have a purchase agreement written on a home at the time you are reading this, it’s probably too late to take advantage of the 2008 tax break.

Congress is debating several versions of a possible extension of this tax credit law.  One version would award the tax credit to anyone who purchases a home, not limiting it to first time buyers.  Another version would phase out the credit, extending the $8000 credit through April 1^st of 2010.  Then the credit would be reduced to $6000 if the home were purchased between April 1 and July 1; $4000 between July 1 and October 1 and then $2000 through the end of December 2010.  A third version would increase the credit substantially, to $15,000.  So you can see there is still a lot of discussion and no final decision as of October 28, 2009

There have been reports of fraud in connection with this tax credit including claims for the tax credit being submitted by children and by persons who are recent home owners. In addition, some have critiqued the tax credit stating that most of the people using the credit would have purchased a home anyhow.  Other sources state that the refund accounted for at least 20% of the purchases this past year.  In other words, people bought homes because of the refund who ordinarily might have waited.

When we do have a final answer, it will be published here.  In the meantime, if you have questions and need answers, come to our class.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

We are living in unprecedented times.  Not since World War II when our government enacted a special loan program for the returning soldiers through the Veteran’s Administration have we seen such a sweet plum for first time home buyers.  Last year, the Housing Recovery Act of 2007 offered first time home buyers a $7500 tax credit if they bought a home after April 8, 2008 and before January 1, 2009.  However, the credit was not a true credit; it was an interest free loan.  If you claimed the credit, you needed to repay it $500 a year over 15 years.

This year, in the Housing Recovery Act of 2008, Congress sweetened the pot.  The tax credit was increased to $8000 and the repayment provision was dropped.  Yes, that’s right.  If you are a first-time homebuyer and you buy a home after January 1, 2009 but before December 1, 2009, you can claim the tax credit of $8000 or 10% of the purchase price of the home, whichever is less.

I had a student attending our seminar for First-Time Homebuyers ask if I thought this provision would be extended yet one more year. It depends.  The provision was an attempt to put a stop to the rapid drop in home prices and create a new “floor” for the housing market.  In our area, the tax credit has accelerated home purchases.  Home sellers, however, are still hesitant to list their home for sale because of the huge price drops of the last three years.  So slowly, houses are being taken off the market and inventory is dropping.  If there is not a glut of low cost housing on the market in November, my guess is the tax provision will not be extended.

However, there it is, right now.  TAKE ADVANTAGE OF IT.  Never before have low prices, low mortgage rates and a great tax credit come together to make this the best time to buy a first home in the last 50 years.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

It’s like this:  You are out there, looking at a certain city and every home in that city that fits your price range.  And nothing really looks good.  You’ve looked at 50 or more homes, written an offer on one or two, and the offers were not accepted because you were in competitive bidding.  Someone else got the home.

Does this really happen?  Yes, it does.  I had a couple come to our First Time Home Buyer Class just a week ago…a nice young couple.  They explained that they had been looking at homes for two months.  They had looked at 70 homes in the cities they liked and written two offers.  The offers hadn’t been accepted and they were still looking.

Problem Number One:  Your budget doesn’t match the housing costs in the city you really like.  The Twin Cities, a 13 county area, includes more than 100 cities.  Each city has its own unique housing market.  In some cities, houses are a little less expensive and in other cities, they cost more.  If your budget is limited, ask your Realtor to advise you as to the cities that are most likely to have affordable housing.  You may have to change your search area to find affordable options.

Problem Number Two:  There is a lot of competition for the lower priced homes.  There are investors who want to buy these homes as rental properties.  There are folks like you with tight budgets that want to keep their housing costs lower.  If you have a limited budget, make sure you and your Realtor get out to the home within one day of it going on the market.  The only way to find a nice home is to be the first one there.  This is a little more work for you, but assures that you will see some nice homes, not just the homes that have been on the market for 3 months and rejected by all the other buyers.

Problem Number Three: You are not clear on what you need and want.  You drift from home to home waiting for the right “feeling” to occur.  Instead, take some time to sit down and write down three things your new home HAS TO HAVE.  Don’t waste your time looking at homes that don’t have these three things.  Now those three things can change over time, as you shop and become educated on your options.  But be very clear on what is important.

Have some hope.  There’s a home out there for you that’s just perfect.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.