Tag Archives: buyer credit

The Tax Credit Extension Has NOT Been Extended

Updated July 1 – Now the bill has passed both the House and the Senate, and is headed for the President’s desk.  Provided you were under contract by April 30th, you would NOW have until September 30th to receive the buyer credit rebate.  Whether you like the credit or not, it looks like it’ll be extended.

As far as I can tell, the only people this really helps is buyers who have been waiting on short sales to close.  Short sales often take a notoriously long time to close, and so a buyer who went under contract on, say, March 3, might still be waiting for closing papers.  Perhaps there are some other buyers who for one reason or another weren’t able to meet the June 30th closing deadline, but my guess is that this extension will most help short sale buyers, and hurt the deficit.  Oh that’s right – we can just print more money, it’s fine then.

At least, not yet. Maybe. We’ll see.

In another case of “will they/won’t they”, we’re watching Capitol Hill to see whether or not the homebuyer credit – you remember that, don’t you? – will have the June 30th deadline extended. Under the original bill, a buyer had to be under contract by 11:59pm April 30 2010, and close by 11:59pm June 30 2010, in order to receive up to $8000 back in the form of a first-time buyer credit (or $6500 for an existing homeowner).

Because of the supposed impact it had on the real estate market, and because lenders are so jammed up trying to get these loans through before June 30th, an amendment to the American Jobs and Closing Tax Loopholes Act of 2010 was introduced that would extend the deadline to close these loans to September 30 2010.

Note – The amendment has not been passed into law. Both the Senate and the House have passed it, but because they amended the amendment – don’t you love government? – they have to work on amending the amendments … or something like that.  Nevertheless, if you weren’t under contract by April 30th none of this applies.  But don’t fear – there are still good deals out there.

Honestly, I was kind of hoping we were done with this tax credit thing.

Brandon Nicely Reminds Us – Again – About the First-Time Tax Credit

A question came in for Brandon Nicely on the blog over the weekend from Josh.  He wrote:

Q: Brandon, what problems have you seen first-time buyers experience in applying for their tax credit?

A: By now, most everyone has seen the basics of the tax credit:

  1. Sign a contract by April 31st, and close by July 1st
  2. If you haven’t owned a home for the last three years you’re eligible for up to $8000 back, and up to $6500 if you’ve owned your principle residence for 5 out of the last 8 years
  3. No repayment necessary if you live in the house for at least 3 years
  4. You can file an amendment to your 2009 tax return, and get the funds this year

That stuff’s simple.  But some of the information on the tax credit is not quite as clear.  Here are some other points to remember:

  1. You must file IRS Form 5405 with your tax return, and attach a copy of your settlement statement
  2. Must close on the new home before claiming the tax credit on your tax return
  3. It must be a primary residence (no second home or investment properties qualify)
  4. Properties purchased from a family member, or in-law, do not qualify

Feel free to call or email me if you have further questions, or need help obtaining the credit!

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Brandon is a branch partner at Alcova Mortgage.  He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order.  You can reach him at brandon@alcovamortgage.com, or 877-552-7150.

Why You Shouldn’t Wait To Use the First-Time Buyer Credit

We passed the first-time buyer credit, and it went so well we did it again, but with a twist.  This time, we offered up to $8000 back to first-time buyers, as well as another $6500 for people who were “moving-up”.  Again, here are the details

As we wind down to the expiration of the credit, I thought it might be a good reminder for folks.  If you’re going to utilize the credit, it’s probably not in your best interest to wait to close until April 30 2010 to close.  In fact, I’ll be recommending to clients that they close right around tax day … fun, right?  Tax Day AND spending hundreds of thousands of dollars on a house?!  Do I know how to party or what?

Seriously, don’t wait until the last minute.  Delays always happen, including the day of closing.  Waiting until April 30th at 4:00pm to close only to find out that the loan wasn’t funded and you won’t be able to close until the following week is at a minimum an $8000 mistake, and that’s only if the seller doesn’t hold you liable for expenses incurred on their end.  And don’t forget that the two busiest times of the month for a closing attorney are (1) the end of the week, and (2) the end of the month.

Yatzhee – April 30 2010 is both a Friday and the end of the month.

If you’re a first-time buyer and you want to meet this deadline, email me or call me and let’s talk about how to get started.  There’s still time, but we need to get moving.

What the Buyer Credit Extension Means for New River Valley Home Sales

The tax credit extension has been signed into law, and now people far and wide are wondering if it’ll create a Monopoly-like run on buying properties and collecting checks.

2988469720_3b28068648I was thinking today about how the tax credit extension might affect home buyers in the New River Valley, and I’ve come to the conclusion that there really is no clear answer to that.  I know that I’ve worked with a lot of first-time buyers this year, and several of them have said that they would not have purchased if the $8000 was not available to them.  For that reason, I know that it had an impact in our area – but that credit was limited to just first-time buyers.  This new credit, signed by the President on Friday, provides for up to $8000 for new homeowners, and up to $6500 for people who are changing homes (some restrictions apply).  With the stroke of a pen, we’ve opened up pretty substantial credits to the entire real estate buying market.  Will it take?

Do not pass Go, do not collect $200.  I don’t think so.  I’m not trying to be the pessimist, I just don’t think $6500 is going to make someone decide to buy a new house.  It will certainly help those who have sold their homes and are looking for new ones, but they would have been looking anyhow so the $6500 is just a nice little Christmas bonus.  Overall though, I think we’re likely to look at the extension after it’s expiration date in 2010 and say that the $8000 tax credit for first-time buyers continued to be well utilized, but that the “move-up” component of the extension didn’t hit a home run.

My two cents … that’s why they pay me the big bucks to write this blog. 🙂

What do you think?  Will the extension in its’ new form have an impact, or will buyers still buy simply because they needed to buy anyhow?

Photo from woodleywonderworks.

Will The $8000 First-Time Buyer Credit Be Extended?

As we countdown to the expiration of the $8000 first-time buyer tax credit, the question everyone seems to be asking is “are we going to see the credit again?”  As I was speaking with a seller tonight, it was one of the questions he wanted to ask, and I’d bet at least once a day for the last few weeks has someone stopped me to ask whether I’ve heard that the first-time buyer tax credit will or will not be extended.

I’ve just gotten off the phone with the Obama administration, and I’m pleased to announce … that I don’t know.  A fortune teller would be just as qualified as any of the rest of us, at this point.  And I don’t mean to make light of the situation, either, it’s just that no one can say with any certainty3820338564_cc17aabffc about what’s going to happen, and so we’re just gazing into our crystal balls, waiting for the sign. But here’s what I DO know:

  • the credit has had an impact, both locally, regionally and nationally.  And buyers are reporting that they’re already seeing their credit check – one client, who closed in July, told me in August they had received their check and put in new kitchen countertops already.
  • mortgage rates are still VERY low, as lenders continue to offer incentives to buyers.  I saw a 30-year fixed rate today at 4.85%, and local lenders are offering competitive rates with low fees.
  • existing home sales rose again in July, making that the fourth straight month we’ve seen that since 2004.  This was driven in part by foreclosures being taken off the market, but that’s still inventory that’s being taken off the shelf and put back into play.

And here’s what I think will happen:

  • in my opinion, we’ll see the credit returned, in at least a revised form, and soon after the November 30th deadline.  It can’t be argued that the tax credit has had an impact – according to the IRS, that bastion of transparency, 1.4 million individuals have taken advantage of the tax credit, and somewhere I read as many as 350000 homes purchased year to date used the credit.  350000 homes, 1.4 million individual … I don’t know how the numbers add up, but there you go folks.

3475906797_3c4d28c22bSo when I look at my own crystal ball, I see a new revised – and far-reaching – credit being installed shortly after the November 30th expiration; I just don’t think that the administration will ignore the increased pace of the housing market in 2009 since the tax credit was announced.  Sure, nationally there are still pockets of problems, and I think we’ll see more to come, but housing will not lead this recovery anyway, I don’t think – it’s just one component of a much larger economic engine.  Jobs seem to be where all the attention’s being focused right now, so if I had to bet I’d say that employment will be the driver on this recovery bus.

I know that many people disagree saying that the tax credit further taxes an already exploding budget, and that it boosts sales but not the economy.  Calculated Risk is one of those, and they’ve got some uber-smart people … I see that, I really do, it’s just that we won’t know the true impact of the credit long-term for years to come, when we know whether or not people were able to hold on to their homes despite job losses and rising costs (health care, anyone?).  In the short-term, and foreseeable future, the credit looks to have pumped consumer money – not government funds – back into banks, and taken housing inventory off the market.

That’s a win, in my book.  It’s a rock and a hard place when you consider how much our government is spending on all kinds of initiatives, but improved consumer confidence in one sector will begin to improve consumer confidence in other sectors.  What do you think – have we improved the housing situation, or made it worse?

Thanks for the photos.

$8000 First-Time Home Buyer Credit Has An Expiration Date

That’s right, the first-time home buyer credit has an expiration date, and it’s rapidly approaching.

My web designer doesn’t like it when I get real fancy and install too many things on this site, as I have a tendency to break things and make more work for everyone, but I did add a ticker to the right side of the blog a few days ago that I wanted to point out.  It looks like this:

Hard to miss, right?  It’s right there along the right side of the page, and it’ll keep dialing down until, well, we’ve run out of time.

I’ve said before I wouldn’t bet on the credit being extended, but I think I’m going to retract that.  I’m betting it WILL be extended, in a revised form, as I think it’s hard to argue that it hasn’t gotten people moving on buying a home.  What that credit will look like who knows, but I think it’s likely we’ll see First Time Buyer Credit 2.0 be announced in the next couple of months.

For the procrastinator’s out there – of which I am one, thank you very much – you’ve got over 100 days left to take advantage of the buyer credit … what’s the rush, right?  Keep in mind that in order to find the right house, it’s gonna take some time – only once have I had buyers who bought the first house they saw.  Once you’re under contract, expect that it’ll take 45-60 days (and with lenders tightening their wallets 60 might be more likely) to get to closing, so suddenly you’re looking at less than half the time currently remaining on the clock as of the time of this post.

Time is of the essence, so let’s get started.