REVISED for the extension (see new post below)
If you are or have a friend who is thinking about buying a home and taking advantage of the $8,000 first-time home buyer tax credit, then there are some facts you need to know, and we need to talk today. Especially since everyone and their little brother/sister knows about the current affordability index… more on that below. And this isn’t just information for my real estate clients in Northern Virginia, but for any home buyer out there across the USA!
Home Buyer Tax Credit info you should know:
- There is a deadline: Have a contract by May 1, 2010 and settle before July 1, 2010
- The income caps for the full $8,000:
Individual Filers with a modified AGI of $125,000
Joint Filers with a modified AGI up to $225,000
- First-timers are defined as someone who has not owned a home in the last 3 years
- Primary residence only (main home)
- A fast transaction from contract to closing is 30 days
- Most lenders suggest giving FHA loans a 45 day window
- The Fairfax County Courthouse is closed for Memorial Day.
- If rates change, your lender may have to give you a new estimate with a new review period.
So your strategy needs to start right now because I am seeing multiple offers on many places as buyers are rushing to beat the Home Buyer Tax Credit deadline. Work the time frame backwards for a minute because the big “crush” on mortgage companies will probably come at the end of June (code for delays). I am going to feel a bit uncomfortable if settlement is after the 19th and will advise you of the risk. With many loans today being of the FHA variety, lets move back another 45 days meaning you need a ratified contract by early April!
So what is this affordability index?
Prices are down about 15% since last year, and 30-year fixed rates that were at 6.5% last year are now lower than you may think. For example Curt Gilbert at Bank of America sent me a rate sheet on 10/30/2009 showing an FHA rate at 5.00% with 0.50 points. Conventional financing to $729,000 has rates close to 5.00% too.
For IRS details, (I will update this)
Time is passing quickly and we should be discussing a game plan right now or you may just miss the Home Buyer Tax Credit for 2010. My contact information is on the Contact Me page.
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- Question: Will the tax credit be extended to 2011? (rerockstar.com)
Doug, Thanks so much for sharing this information. I have been thinking about buying, but never actually got on the ball. The explanation you provided about the time it takes to get the paperwork done means that if I want to take advantage of the tax credit, I need to get moving!
Thanks again
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Good information! One of the things that caught my eye about the new and improved tax credit it the cap on the purchase price of the home — $800,000. Now, it can be argued that if you can afford to buy a home over $800,000 you don’t need a tax credit…and that might be right. In this area, though, there are lots of homes that won’t be elegible.
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