The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010 and the home purchase is completed by June 30, 2010 will qualify.
A major change is the income qualification level. For sales occurring after November 6, 2009 and prior to April 30, 2010, the Act establishes new income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns. The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.
The Worker, Homeownership, and Business Assistance Act of 2009 has also established a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010). The Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns in order to be eligible for the tax credit.
Spring is a great time to sell your house. It is important to get your house in tip top shape to sell in this historically slow housing market. Selling in this environment requires the house be priced right and sellers pay attention to detail so that their house competes best in the market. A recent RisMedia article highlights some tips for making your house the one that sells quickly versus sitting on the market for an extended period of time. For more information read the article Best Tips to Get Your House in Tip Top Shape. As always, Paul Lauschke & Associates’ agents are available to help. For more information, visit our website.
As many of you may now be aware, under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before December 1, 2009 may receive up to an $8,000. People can claim the credit on either their 2008 tax return due April 15, 2009 or on their 2009 tax return next year. There are other filing options. To read more about these options read the IRS article “First Time Homebuyers Have Several Options to Maximize New Tax Credit”.
In summary, it is an excellent time for first time homebuyers to take advantage of the Tax Credit, low interest rates and the price of existing homes, as well as, Madison County Community Development and Alton City home ownership program funds in buying their home.
In today’s economic environment many homeowners are facing the real threat of losing their homes and out of desperation may grasp at any solution to remedy their problems. Beware of potential mortgage rescue scams. These companies will claim they can save your credit rating and home by working as an intermediary and collect upfront fees for services it never provides. The Illinois Association of Realtors recently published an article outlining this type of scam and consumer remedies. The article also includes Mortgage Fraud/Foreclosure resources. These include talking to your local lenders, real estate agents and/or attorney.
Many individuals may look at moving to a new house or apartment as a huge undertaking, especially the first time. Having moved four times in 20 years, I think the following article from Rismedia(http://rismedia.com/wp/2008-08-08/5-big-mistakes-consumers-make-when-moving/) could prove helpful. The 5 big mistakes include:
- Getting a quote over the phone or internet
- Waiting too long to line up a mover
- Misrepresenting what you are moving
- Paying a deposit up front
- Finding a mover based upon price rather than reputation and service
Another area overlooked is insurance against damage to your possessions. You should probably check with your insurance agent to determine the extent of damage that your homeowner’s insurance would cover or not cover. Then ensure that you understand the insurance provided by the mover. Typically they provide insurance based on the weight of the item versus the value. If this is the case you may want to consider additional insurance to protect your possessions.
In addition, it doesn’t hurt to contact the Better Business Bureau to get feedback about the movers you are considering.
Buying a home can be stressful, especially for the first time buyer. Keep in mind some of these tips to make the process as stress free, and potentially fun, as possible.
Find an agent you can be comfortable with. Your home is a big financial commitment, and at times an emotional one. Therefore it’s critical to have a skilled Realtor that is a good fit with your personality.
Understand there is not a right time to buy or to sell. If you find a home now, don’t try and second guess interest rates or the housing market by waiting longer. You risk losing the home of your dreams. The housing market typically doesn’t change that fast to make that much of a difference in price and a good home, priced right won’t stay on the market long.
Don’t ask too many people for their opinions. It may be natural to get input from people, but too much input from too many people will make it harder for you to make a decision. Take the time to focus on the pros and cons of the house to help you focus on your priorities and needs and not on emotional buying.
Understand that no house is perfect. You may find the right location but the yard is too big or too small. The kitchen might be just right but the bedrooms are a little small or the roof needs to be replaced. Again make a list of your priorities and focus on what is most important to you and not on the minor issues.
Be a cautious negotiator by trying to get a good value versus trying to get an extra low price or refusing to come off your selling price. You run the risk of losing your dream house or your buyer. Negotiation is a give and take process and needs to be taken in relation to the overall picture.
Remember to evaluate the entire house including area noise levels, location to amenities, surrounding houses, schools and other aspects that can impact your quality of life.
Plan ahead and get pre-approved for a loan so that you are looking at houses that you can afford. You don’t want to look at houses that cost more than the bank would be will to lend. You probably won’t be satisfied with a house that cost less with less amenities but is a house that you can a mortgage for from your local bank.
Factor in costs for home inspections and ongoing maintenance. Whether you buy a new home or older home there will be costs. Don’t forget to budget for normal wear and tear items that will need to be repaired.
Accept the fact that there may be some buyer’s remorse and that it will pass.
Buy a home because you love it and then think about appreciation. While homes have appreciated over a long period of time that is no guarantee. Remember why you bought it and accept that it is your comfortable and safe place to live.
For the second year in a row, Realtors® report that exterior remodeling projects return the most money as a percentage of cost, as detailed in the 2008 Remodeling Cost vs. Value Report.
On a national level wood decks and siding replacements returned more that 80 percent of the project costs upon resale. Other high return improvements include window replacements, kitchen remodels, bathroom remodels and attic-to-bedroom conversions. Least profitable remodels included home offices, sunroom additions and back-up power generators. For more information go to www.realtor.org to read the article “Curb Appeal Matters Now More Than Ever, Say Realtors®.”
New information regarding development funds that are available to provide a portion of the minimum down payment and closing costs. The full information is below. If you need assistance or have questions about these programs, please contact me.
Rick Lauschke Madison County Community Development
Homebuyer Program
Many homebuyers are not aware of the existence of community development funds that are available to help a homebuyer purchase a home in Madison County. The Madison County Community Development Homebuyer Program is designed to assist low-income households, one time only per household, in purchasing a home in Madison County. The income figure that will be used to determine eligibility is the gross household annual income to be received by the household during the next 12 months. Income guidelines are as follows:
Anticipated Annual Household Income*
36,900 for Household Size ONE
42,200 for Household Size TWO
47,450 for Household Size THREE
52,700 for Household Size FOUR
56,950 for Household Size FIVE
61,150 for Household Size SIX
65,350 for Household Size SEVEN
69,600 for Household Size EIGHT
* Please note these income levels are subject to change by the department of U.S. Housing and Urban Development.
Madison County Community Development will provide a portion of the minimum down payment and closing costs. The total maximum amount of assistance provided by Madison County Community Development shall be $5,000 for households at or below 50% of median income, or $3,000 for households at or below 80% of median income. Financial assistance from Madison County will be offered in the form of a forgivable loan. Some of these loans will depreciated at a rate of 20% per year and others from MCCD’s IHDA grant will be pro-rated on a monthly basis over the 5 year period. A lien will be filed for the amount of the assistance.
The property being purchased can be an existing or newly constructed home that will be used as a principal residence. It may be either a detached single-family dwelling or condominium. This program will not assist in the purchase or inspection of rental property, manufactured or mobile homes. The maximum value of the property being purchased must not exceed the program limit of $213,750.
The program will only provide assistance only with the involvement of an approved participating lending institution. I encourage the homebuyer to contact an approved area lender. These lenders have the HOMEbuyer application package and will work with you to determine eligibility, as well as, submit the necessary paperwork to get approval.
As a homebuyer you will be required to have one year clean credit, two years steady income and a copy of your most recent pay stub. There are other requirements of this program, such as home inspections, insurance, escrow accounts, homebuyer counseling, etc. Your approved local lender will be able to walk you through the requirements necessary to be approved for this assistance. I strongly encourage each homebuyer to check into this program.
For more information you can contact Madison County Community Development at 618-692-8940.
As you may be aware, a housing rescue bill was passed and signed into law in July 2008. What you may not be aware of is it includes a $7,500 “tax credit”(not to be confused with a tax deduction) for first time homebuyers. While it is termed a “tax credit”, you can look at as an interest free loan that will have to be paid back over a 15 year period($500 per year). If you bought a house after April 9, 2008 and before July 1, 2009, you may be eligible to take advantage of this tax credit. To qualify, you must satisfy these conditions:
The home much be purchased as a primary residence.
You must not have owned a primary residence in the last three years. For couples, both individuals must not have owned a primary residence in the last three years. You can still qualify for the tax credit if you have a vacation home(s) and/or rental properties.
Must not be a non-resident alien as defined by the IRS in Publication 519.
Individuals must have a modified adjusted gross income of less than $75,000 annually and couples MAGI of less than $150,000 to qualify for the full amount.
The phase out range begins at $75,000 and ends at $95,000 for individuals, $150,000 and $170,000 respectively for couples.
The home must be closed between April 9, 2008 and July 1, 2009.
No mention of a credit score or history requirement, but knowing that will help when it comes to getting a mortgage.
To keep it simple the tax credit is 10% of the home’s sale price with a maximum of $7,500. You can claim the credit (difference between tax credit and tax deduction) on taxes filed in 2008 or 2009. The repayment terms are that you have to start paying back this loan within two years and you make equal payments over 15 years. When you sell your home, any profits will go first into paying off that loan. If you sell at a loss, the difference will be forgiven. You want to be cautious about this as the loan forgiveness could and probably will create additional income for you
The following link http://www.federalhousingtaxcredit.com/faq.php#21, has some frequently asked questions.