Decision Time Draws Near for First Time Buyer's Credit

Decision Time Draws Near for First Time Buyer's Credit

While the economy continues to show signs of improvement and many housing markets are beginning to heat up, scores of would-be buyers are still waiting on the sidelines for further positive housing trends. But for first-time buyers, time is running short on the federal government's $8,000 tax credit.

Though the official expiration date of the credit is December 1, in reality on-the-fence buyers will need to make a decision one way or the other fairly soon. The reason: in order to qualify for the credit, the home purchase must close by December 1st. Merely having loan approval, an accepted offer or a signed contract won't be enough to qualify for the Housing and Economic Recovery Act.

Decision-Making Timeline - While each transaction is unique, closing a real estate deal is no speedy matter. On average, closing takes place 45 to 60 days after the date that the contract is signed. In order to meet the December 1st deadline, this would mean having a signing date in late September or early October. Those who consider the tax credit an important incentive but are still unsure about entering the market will need to make a decision one way or another before many more summer days pass.

To have any chance at finding a home and having an offer accepted by early October, buyers will want to wade into the home buying process right away. The immediate steps include making a final list of desired home attributes, scouting favorite neighborhoods and areas, starting the mortgage pre-approval process and beginning the home search process online.
Potential for Delays - Buying a home is a complicated process, and it is not unusual for purchases involving first-time buyers to take slightly longer than those involving experienced buyers. Some of the delays that first-time buyers may face over the coming months:

1. Competition with Other Buyers: While home may be selling at a lower rate than in years past, in many areas changes in inventory have created extremely competitive buying environments.
2. Foreclosures or other homes with greatly lowered asking prices are particularly sought after, and in many cases investors are very active in the marketplace.

3. Disclosures & Contingencies: The seller is obligated to disclose any material facts about the property, including any property defects or any lawsuits regarding claim to ownership on the property. Disclosures can stall negotiations and delay the contract signing depending on their nature and severity. Contingencies (written clauses in the sales contract that give protection to both the buyer and the seller of a home) can also result in some delay in negotiation, particularly if the contingency requires the seller to make specific repairs.

4. Appraisal: The lender will arrange for appraisal of the property, which will include a thorough inspection of the home's interior and exterior. The appraiser's report will describe the physical characteristics of the property and comparable property values will be used to determine the value of the property. If the appraisal of the home's value is lower than the agreed upon sales price, the buyer's chance of loan approval can be in jeopardy. In addition, recently added rules for appraisers have been causing some delays based upon anecdotal evidence.

5. Loan Approval: While interest rates remain advantageous for buyers, lenders are being much more fastidious during the approval process. Obtaining pre-approval can help prevent many delays.

6. The Holiday Season: Buyers who submit an offer in mid-fall may likely run into another roadblock to a pre-December 1st closing date: the approaching holiday season. Closing a real estate sale requires the work and attention of a number of professionals; from real estate agents to attorneys to bankers. Like many Americans, it is not uncommon for individuals in these fields to use up vacation time in the last few weeks of November. Securing a closing date during Thanksgiving week may be something approaching miraculous.

7. Additional Delays for Short Sales and Foreclosures: Buyers who make an offer on a short sale property or bank-owned foreclosure may find that it takes a significantly longer time to receive a reply than expected. Overall, buying these types of properties is a longer process than buying homes listed on the market by individual owners.

Key Elements of the First-Time Home Buyer Tax Credit:

The tax credit only applies to first-time home buyers. The law defines a "first-time" buyer as any buyer who has not owned a home within the previous three tax years. For married couples, the homeownership history of both individuals must meet this qualification.

The tax credit is only available for homes purchased between Jan. 1, 2009, and Dec. 1, 2009. For the purposes of this credit, the purchase date is the date when closing occurs and the title to the property transfers to the new home owner.

As long as the property is purchased by a qualified buyer for use as a principal residence, any type of home, including single-family detached homes, townhouses, condominiums and manufactured homes can qualify for the credit.

The tax credit does not have to be repaid provided that the buyers use the home as their principal residence for at least three years.

The full tax credit is only available for individuals with an adjusted gross income of up to $75,000 and for married couples with a combined adjusted gross income of up to $150,000. The tax credit phases out for anyone above those income thresholds.

The tax credit applies for up to 10 percent of the home's purchase price, with a maximum of $8,000. For example, a first-time buyer of a $50,000 home would be eligible for a tax credit of $5,000 while a buyer of a $150,000 home could receive a tax credit of a maximum of $8,000.

The 2007-2009 Recession is Over

The 2007-2009 Recession is Over

We received this from our broker it is very interesting.

This is the statement this morning from Dennis Gartman, one of America’s leading and respected economists. He was the leading economist that stated in 2007 that America had entered the recession in December, seven months before the Federal Government acknowledged that fact. He is now saying the recession ended in July 2009. He does emphasize that we will have a couple more months of “bad news,” but all indicators are indicating upward movement.

He uses the following indicators:
1. Jobless claims began dropping in March and have dropped each week from 658,000 to the present 584,000.

2. The nation’s unemployment rate dropped in July to 9.4%, a slight decrease from June’s 9.5%, but still an extremely positive sign.
America’s industrial production has now reversed itself and is on the increase again.

3. America’s housing market is now under going dramatic improvement. June 2009 was the best reported month in years, and a similar report is expected for July 2009.

4. America’s home prices are stabilizing in some parts of the country.
Recessions almost always end in July – beginning with the Great Depression of the 1930s that ended in July.

* Dennis Gartman has correctly identified the start and end on America’s recessions for the past 35 years. His expertise is well respected.

On a side note, the major concern for the future will be rising interest rates. The huge issue of debt by our Federal Government is unsustainable and it could force interest rates to rise. The United States experienced the same scenario in the early 1980s recession when the government issued massive debt, and shortly thereafter home loan interest rates jumped from 6% to 14%. All predictions indicate that this recession will not have such a huge spike. Further, there is no change in interest rates expected for the remainder of 2009.

Buyers and sellers need to be aware that the Fall of 2009 is a great time to sell and buy real estate.

Open Houses August 9, 2009

Come over and check out these great listings!

Open House 2-4 PM Sunday Aug. 9th

608 Wellington Rd., Coppell & 9001 Laredo, Irving

This is your opportunity to view these wonderful homes. We look forward to seeing you tomorrow.

I'm Back.....

I'm Back......

The past few months have been very busy in the Hoenig house. Rita had two surgeries in May on the same knee! All my extra time has gone to helping her by cooking, cleaning, shopping, taking her to doctors and therapy. I please to say she is healing nicely and walking again.