SellAustinTexas

Some first-time buyers risk losing an $8,000 tax credit if the sale and purchase of a  home is not completed by June 30, 2010.

With the June 30 deadline looming for first-time homebuyer tax credits, many homeowners struggle to close the deal, while many buyers drag their feet at the risk of losing it all.

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The 30 year fixed mortgage rate dropped to 4.72% last week, down from the previous week’s 4.79% and way down from 5.59% this time last year. Mortgage rates moved to new lows with another volatile week in the global financial markets. The primary concern revolves around the outlook for the global economy and the possibility of Europe’s debt dragging the U.S. into another recession.

Greece announced that the emergency loans it received will cover its obligations and help the country avoid defaulting on loans, helping to ease investor fears. For the week, this catapulted the Dow 279 points higher. If the stock markets continue this upbeat trend, we’ll see the demand for Treasuries start to wane, which will inevitably push interest rates higher. Although, with the way the global markets have been lately, that demand for U.S. Treasuries might not let up anytime soon.

It’s also looking highly unlikely the Fed will raise interest rates anytime soon, perhaps even until 2011. The uncertainty in the markets and the slow economic recovery will most likely keep mortgage rates low for a few more weeks.

These low interest rates combined with the high inventory of homes throughout the Austin area, provide the perfect opportunity for all home buyers to take advantage of this fantastic market.

Reasons to Buy a Home Now

The Buyers Market

1.  High Inventory: There is currently a balance of supply and demand that leans in the buyer’s favor. High inventory leaves a buyer with many available choices, and in all price ranges.

2.  Negotiating Power: The high inventory also allows for decreased prices and more negotiating power for the buyer. Not only can a homebuyer find their dream home, but they can do so for a great rate.

Home Prices

3.  Home Prices: Prices have come down a great deal from years past, and will only continue to rise over time.

4.  Interest Rates: With interest rates also at the lowest point in years, a single housing payment is going farther than it did in the past. Interest rates will not remain this low, and are expected to rise again soon.

Tax Savings

5.  Tax Deductions: Buying a home allows for many tax deductions, such as mortgage interest, mortgage insurance and real estate taxes. This means that after taxes, your mortgage payment will be lower than a rent payment would have been.

6.  Tax Credit: The new tax credit for homebuyers has been extended through spring, with an $8000 credit for new buyers and a $6500 credit for repeat buyers.

Personal Savings

7.  Appreciation: Home prices always move upward in the long run, appreciating the value in a home.

8.  Equity: If you have an amortizing loan, each mortgage payment is building equity in your home. It is such a gradual change many people don’t notice it, but it is allowing you savings.

9.  Rising Rents: Rents are expected to continue to rise.

Incentives and Extras

10.  Material and Non Material Extras: With the buyer’s extra sway in negotiations, you are able to ask for things that may not have been previously included, such as material items (like appliances) or non material items (such as a home warranty) as part of the purchase of the home.

11.  Home Improvements: Many sellers are working hard to make their homes move in ready, with extra home improvements and updates.

12.  Maintenance Costs: With updates and repairs before the home’s purchase, a buyer can save money in maintenance along with having a newer looking home.

The Worker, Homeownership and Business Assistance Act of 2009 was signed into law on November 6, extending the $8000 First time homebuyer tax credit for those who put a house under contract before April 30 and close before June 30, 2010.

The act also expands the credit to include a $6500 credit for current homeowners who have owned a home for any consecutive five year period in the last eight years. This last requirement is to accomodate those who may have just recently lost their homes from changes in the economy. The income limits are also changed to include those with higher incomes. 

For more information, you can visit www.federalhousingtaxcredit.com or see the IRS Newsroom release here.

Now is the time to claim the $8,000 tax credit the government is offering to first time home buyers, and those who haven’t owned a home in three years. Buyers must close on their homes before November 30 in order to claim the $8,000 tax credit.  Experts are predicting that with big budget gaps in Congress, the government is not likely to renew this highly successful program.

If you buy in the next two weeks, our mortgage partner, Joe Brown of Sente Mortgage, can complete most conventional loans by the deadline to receive the tax credit. You can contact him by clicking the on the above link or contact us today with any of your questions. Don’t miss out!

Much of the recent boost to Austin’s housing market recovery has been the tax credit offered to new homebuyers. Now that credit is coming to an end, but the assistance would still be helpful to many people now and in the immediate future. There are many, including the National Association of Realtors, that are pushing to get this credit extended.

Yesterday, Ron Phillips, Vice President of the NAR, testified at a hearing before the senate committee on the tax credit and other issues. You can read the transcript here.

He quotes Arun Raha, chief economist for the state of Washington, who was quoted in the Seattle Times saying: “every 1,000 home sales generate $112.4 million of economic activity with $71.9 million of it directly from home-sale preparation and the actual real-estate transaction. In addition, more than 700 new jobs are created. This is not a balance-sheet bailout, it’s real help for our neighbors and communities.” Phillips continues to point out the ‘trickle-up’ effect, that is, new home buyers allowing current homeowners the chance to purchase another home. As Raha says, “[these] purchases spark a surge of home buying that ripples across the economy and into the future. Most of their purchases are homes that someone else has been waiting to sell so that they, in turn, can purchase another house.”

NAR President Charles McMillan released a podcast on the issue, also available as of yesterday – You that podcast is available here. As he has said, “housing has always led this nation out of economic downturns, and can do so again.”

If you want to help, there is a video and message available along with an easy form to fill out to alert your representatives of your support. Also, it is not too late to take advantage of or tell a friend about the current tax credit and low interest rates for homebuyers.

On Saturday, the Austin Statesman wrote about first time homebuyers taking advantage of the tax credit. The group includes many young professionals who may not have made a home purchase without the incentive, like 25 year old Helen Rodriguez, who says, “it’s the cushion that made me comfortable making this purchase at this point in my life. Without it, I don’t think I would have been comfortable buying.”

Others also include some artists and other creative entrepreneurs, like Tim and Carli Price. They had been house hunting for two years but “could never find anything in our price range that wasn’t ready for a bulldozer,” he says. But after the tax credit, they were able to find an affordable home that met or exceeded all their expectations.

Mortgage companies in Austin are reporting on how many first time buyers the credit is bringing in – about 45% of Sente Mortgage’s loans were to this group, according to Vice President Kenton Brown. “That’s a majority of the purchase activity we’re seeing now.” He says the credit is “creating a trickle-up effect,” that is, allowing home owners to sell their starter homes and move into larger ones.

“Not only does it get first-timers in the market as homebuyers,” says Don Reed, senior loan officer at Integrity Home Mortgage in Austin, “but the tax credit acts as a boost to consumer spending when they get their refund check from the IRS.”

For all the benefits of the tax credit, buyers need to be aware that the deadline is coming and action needs to happen now to take advantage of it. “Don’t dawdle — it takes at least four to five weeks to process a mortgage application and hold the closing,” the Statesman writes. Also, a bump in interest rates is looming: some experts say to expect it next summer, some say sooner. Ed Solter, president of Presidential Mortgage Co. in Austin, is expecting a 1% bump in the first quarter of 2010. Even if legislators were to pass an extension or even expansion of the tax credit, it’ll come paired with higher rates. Now is the time to start your home hunting if you also want to take advantage of these great deals.

The Austin Statesman recently published “8,000 Reasons to Buy,” re-capping a great program that is nearing its end. A lot has been said about the $8,000 Tax Credit, but there are a few things to remember:

1. The credit increases your refund, dollar for dollar. “For first-time home buyers whose income falls within certain limits, purchasing a house, condominium or townhome might make them eligible for a tax credit worth 10 percent of the purchase price of their home, or $8,000, whichever is less. This amount reduces the amount of taxes you owe, or increases your refund, dollar for dollar, according to the IRS. For example, if you normally would have a refund next spring of $100, with a qualifying home purchase your refund could be $8,100.”

2. It takes little effort.  ”It’s money in your mailbox,” as one agent says. She likens the amount to 4% appreciation in value on a $200,000 home.

3. Now is the time to find a house. You need to have closed on a house by the deadline, and loan approval is taking four to six weeks, as the Statesman reports. The house should be under contract by later this month.

4. There are more reasons to buy a home now, not just the tax credit. “Interest rates are at a historic low. Because the market has dipped, you will be buying at a lower price point instead of a higher one,” says a 28 year real estate veteran.

Other sales promotions and tax breaks exist. For instance, Freddie Mac is offering to pay 3.5% closing costs and offers a two year warranty on Freddie Mac owned homes. For this program, you need to have made a first offer on a home before October 30.  You must first contact a buyer’s agent for this program to be valid.

Texas and Austin both offer unique first time homebuyer programs, as well.

If you have any questions about buying an home and are interested in looking, talk to your real estate agent today.

The AP/Austin Statesman article “For young people, recession’s downside is eased by deals of a lifetime“ tells the story of Daniel Lee, a 30 year old salesman in Scottsdale, who  earlier this year stopped dining out and scrapped his vacation plans to invest every spare dollar he had. “This is like buying a swimsuit in the fall or a winter jacket in the spring,” he says, “get in while it’s a good deal.”

Many young people are finding it a great time to start investing and thinking of purchasing a home. They’re the group that may not have had much money in the markets or retirement plans, and have been renting while they work. They are able to invest at prices we may never see again.

Home prices are down an average of 30% nationwide, interest rates are down significantly, and there’s also that tax credit for new homebuyers. All those together, new homebuyers accounted for 45% of home sales at the end of July, a bulk of those buyers being between 25 and 34. According to the Census Bureau, only 39% of adults under 35 are homeowners, where 80% of adults under 55 are.

Cost of living is down – the Consumer Price Index has dropped 1.5%, and many goods and services have dropped even more. This frees up some money that may have not been otherwise available. Like Daniel Lee, if you can budget carefully and factor in some additional challenges for young people, like the high unemployment rate in that age group and the increased education costs, you still have an opportunity to really take advantage of some of the great deals available and set yourself up to make even more.

“This is a historic time,” says George Jaramillo, a 30 year old business analyst in Atlanta, who has recently purchased three homes. “It’s a great opportunity to make some great gains in the future.”

Says Ann Seiden, 28, who bought a Phoenix home for 15% under asking price: some people are casualties of the recession, “and there are those who have kind of seized on the opportunities in it.”

There are currently some great federal programs for first time home buyers (defined also as those who haven’t owned a home in three years), but often less publicized are the State and even City homebuyer programs. In Austin, Texas, specialized loans and other forms of assistance are offered at both those government levels. Here is a snapshot, along with a couple helpful resources.

Texas Mortgage Credit Program

A Mortgage Credit Certificate that is a dollar-for-dollar reduction against federal tax liability. Allows you to claim a portion of mortgage interest each year; valid as long as you live in that residence. For those who qualify.

Texas First Time Homebuyer Program

Offers two types of below market loans for qualifying first time buyers, one giving the option of down payment assistance with a slightly higher interest rate. For those who qualify.

You can learn more about both these Texas programs at the Texas Dept of Housing and Community Affairs.

DPA: The Down Payment Assistance Program

Eligible for qualified first time buyers purchasing a home within Austin City Limits, DPA offers zero interest loans.

-       Standard DPA: Up to $10,000 deferred, 0% interest loan for 10 years. Additional 1,000 for those with a Texas Mortgage Credit Certificate, and additional $4,999 for those with disabilities. Loan is forgiven for those who remain in the house for 10 years.

-       New Shared Equity DPA: Up to $40,000 in deferred, 0% interest loan for 30 years.

For more details on these loans, visit the DPA website.

The Dave Murray Team can assist you in any of your questions if you’re looking to purchase your first home in the Austin area. You can begin your search and reach us for any further information at www.DMTX.com.