Home Buyers Still Waiting
October 9th, 2008According to the most recent information from Trulia home buyers are staying on the fense when it comes to buying a home. Market uncertainty is scaring away people who don’t own a home, particularly those who are in the 18-34 age group previously most likely to buy, says online real estate service Trulia.
More than 70 percent of non-homeowners surveyed say they have no plans to purchase a home in the next year. But the good news is 12 percent of non-homeowners say they expect to buy a home in the next 12 months.
Non-homeowners with an annual household income of $50,000 to $75,000 agreed more strongly (78 percent) on a home being central to achieving their personal American Dream than those with an annual household income of under $49,000 or over $75,000 (51 percent and 53 percent, respectively).
But first time home buyers should NOT wait too long. Now is a great time to go out an buy your first home. Why? Because many buyers think that there is an actual buying season and that our current one is over for this year. This is just not true. What this does is keep your competition for that house away. Your competition just quit looking and buying. This leaves you an open field. Another reason is the tax credit that first time home buyers get when they purchase their first home. 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. As a first time home buyer, you can take the credit on your 2008 tax return if you buy your 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 their 2009 tax return. But don’t wait too long…settlement MUST take place prior to July 1, 2009.
But remember, 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.
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, although repayment will be no more than $500 yearly and payments will not start until 2011. 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.
If you have any questions, please check our First Time Home Buyer’s Knowledge Base. You can also access the First-time home buyer tax credit chart.
Terry Iwaniw
REALTOR Associate
First Time Home Buyer Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1086
http://www.terryi.com/
http://www.snewjerseyhomes.com/
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