Have you been looking for a home? Thinking about it? It is your first home (or have you not owned a home in 3 years)?
STOP! Stop looking & considering. Start FINDING one.
If you are a first time homebuyer, you must close on the purchase of your first home by the end of November* to earn a tax credit of up to $8000. Note that this is a CREDIT not a deduction. If you are expecting a refund, it will increase your refund by the amount of your credit. If you will owe taxes on your 1040, your taxes will be reduced by the amount of the credit and you will receive a refund if due. Before I continue, as with any tax advice here or from any source that is not your trusted professional, you should review this with your trusted professional to apply to your situation.
First time home buyers (and those that have not owned a home in the last 3 years) can claim a tax credit of 10% of the purchase price of their primary residence. The maximum credit is $8000 and there are income limitations on who can claim.
MORE EXTRA GOOD NEWS - If you buy your home in time to claim this credit, you can amend your 2008 tax return even though your purchase may be in 2009! This will get the money in your hands sooner!
*So, why less than 3 months left if the clock stops at the end of November? Because you must CLOSE your purchase by then. It generally takes 30 days from offer to close (although we can perform faster in many cases).
Let me know if you have any questions that I can help with.
Tim Epps
918-528-4010
tim@myfairway.net
You will hear about options like:
Event will be held Saturday, April 25, 2009 from 10AM to Noon.
You will be out in time to attend open houses and find your new home!
Call or e-mail TODAY to register – Seating IS limited!
918-528-4010 or Tim@MyFairway.net
Brought to you by:
Tim Epps - Fairway Independent Mortgage - 918-528-4010
Dean Dretske - Keller Williams Realty - 918-340-8303
John Buchanan - Country Financial - 918-481-6900
From the Wall Street Journal – February 11, 2009. Page D1
By MARY PILON
For years, even as her friends bought huge houses in the expensive Phoenix market, Elizabeth Child remained a renter.
But in January, the airline customer-service agent and her boyfriend closed on their first home. The three-bedroom, two-bath house, complete with granite countertops and a pool, had been listed for $340,000 in late 2007, but the couple bought it for $220,500. "Six months ago I didn't think I would own a home," says Ms. Child, 27 years old. "And now I do. It's so perfect."
Mark Peterman for The Wall Street Journal
Elizabeth Child and William McGeary were able to buy their first home after prices in Phoenix dropped sharply.
The housing bust is creating a new group of winners: first-time home buyers. People who sat on the sidelines -- often watching wistfully as their friends became homeowners -- are suddenly in a position to grab some great deals. Indeed, first-time home buyers made up 41% of all buyers at the end of 2008, up from 36% in 2006, according to a recent survey from the National Association of Realtors.
The new buyers are being lured in by home prices that are down about 25% from their peak levels in mid-2006, according to the S&P/Case-Schiller Index. In some markets, prices have dropped even further -- slumping around 40% in Phoenix, Miami and Las Vegas. Lower mortgage rates have also helped make real estate more affordable, and as houses languish on the market longer, more homeowners are willing to negotiate. With Congress considering plans to sweeten a tax credit for first-time home buyers, the picture could get even brighter.
"Buyers are now coming back into those hard-hit markets to take advantage," says Lawrence Yun, chief economist for the Realtors' association. "It's a buyer's market."
Related - Developments blog: Frequently asked questions on the home buyer tax credit
Ululani and Scott Larson looked for a house in the Seattle area several years ago, but held off from buying, deterred by the high prices. "I felt like we were missing out, because everyone knows it's the American dream to buy a home and build equity," Mrs. Larson says.
The couple was shocked to discover recently that they could afford a four-bedroom home in Federal Way, Wash. The assessed value of the home in January was $400,000, Mrs. Larson says. Their offer of $315,000, with a down payment of $15,000 was quickly accepted by the relocation company, which had had the property on the market for six months. "Honestly, I didn't think we'd get as nice of a house as we did," Mrs. Larson says.
Of course, would-be buyers need decent credit scores and the money for a decent down payment. Also, finding the right property can be a challenge for first-time buyers, who tend to be seeking less-expensive homes. The typical first-time buyer purchased a home costing $165,000 last year, according to the National Association of Realtors. Yet some of the best bargains right now are in luxury condos and sprawling single-family houses.
"The disproportionate McMansion inventory doesn't work," says Shari Olefson, a real-estate lawyer who works in southern Florida. "Even if you qualify for the loan, there are huge overhead costs to buying a larger home."
Still, real-estate agents and mortgage lenders are banking on first-time buyers to help stimulate the otherwise dreary housing market. Many are holding workshops and information sessions designed specifically for first-time buyers, addressing federal and state tax incentives for homeowners, local prices and ways to take advantage of low mortgage interest rates. Tim Epps, a mortgage adviser in Tulsa, Okla., runs rent-vs.-buying simulations for would-be buyers and recommends that other prospective buyers do the same long-term calculations.
Mr. Epps and many mortgage lenders recommend that buyers come up with as big a down payment as possible, even though Federal Housing Administration loans will allow some first-time buyers to enter the market with as little as 3% down. (Hud.gov has more information about FHA loan programs designed for first-time buyers.)
"Even if [a home owner] loses some paper equity, in the long run, there are some tax benefits," says Mr. Epps, referring to the deduction for interest paid on mortgages and the credit for first-time home buyers.
Mark Peterman for The Wall Street Journal
Elizabeth Child bought a home once listed at $340,000 for $220,500.
The $7,500 tax credit for first-time buyers, which Congress passed last year, has had little effect on the market so far. Because the credit has to be repaid, buyers are viewing it as another loan, industry experts say. But the stimulus package that Congress is working on is likely to repeal the provision that requires buyers to pay the credit back and possibly enlarge the tax credit as well.
For many buyers, the biggest question is whether to hold out for even better conditions. Historically, recoveries in the housing market are slow, and most experts expect the prices to stay low for some time. That means people can take their time shopping for the right property, real-estate experts say.
John Stratton, an agricultural engineer in Lisle, Ill., was serious about buying last summer but held off from making a bid. Some of the money he planned to use for a down payment suffered losses from mutual-fund investments. He's also waiting for prices in his area to go down further. "I can do better investing in things other than real estate," he says. "Right now, I'm not diving in."
Patience can pay off. Jen and Drew Rocky spent over a year tracking their prey before the price was right. In the summer of 2006, they saw the four-bedroom, 2½-bathroom home of their dreams in Sherman, Conn. The asking price was $565,000, "completely out of our price range," Mrs. Rocky says.
But they didn't give up. The Rockys kept driving by the vacant house. They had online alerts to notify them of changes in the property's listings. They went to town hall to research the home's public records. As they suspected, the home was in foreclosure. "There were liens all over the place," Mrs. Rocky says.
They bought the home in December 2007 for $410,000. "I felt so vindicated," Mrs. Rocky says. "We got a good deal, but I'm sure there are even better deals out there."
Write to Mary Pilon at mary.pilon@wsj.com
Tim Epps