FIRST-TIME HOMEBUYER CREDIT – $8000 for Most Buyers – To Get More “User-Friendly!”
FIRST-TIME HOMEBUYER CREDIT – $8000 for Most Buyers – To Get More "User-Friendly!"
NOW FHA BUYERS COULD TAP FUNDS EARLY AND USE TOWARD CLOSING COSTS PRE-PAID FEES AND ADDITIONAL EQUITY!
In late January the Obama Administration introduced a special income tax incentive to spur first-time homebuyers to purchase their first home. The plan as originally conceived – offer a non-refundable $8000 credit to most first-time buyers with the credit being directly deducted from income tax they owe in 2008 or 2009.
If these first-time buyers are due an income tax refund they would get a larger refund by using the credit.
In other words nearly everyone who would qualify for the credit – subject to income qualification requirements – no more than $75000 for single new homeowners $150000 for married couples buying their first home – would receive 100% of the credit!
The credit would apply only to first-time buyers which the government defines as any single person or married couple who have not owned a home in the last three years so long as they close on their new home between January 1 and December 1 2009.
See the National Association of Realtors Website – Realtor.org – for details on the original program.
Mr. Obama’s tax credit program replaced one in place during the final months of the Bush Administration. The Bush Program offered a $7500 tax credit but this credit would have to be repaid over 15 years through incremental tax payments – or all at once upon sale of the home.
The new program – far more generous! And much talked about . . . for a while!
But unfortunately overall interest – once very strong among our buyer clients coming to our Team for help – quickly waned.
Now a much-awaited modification might help recharge interest according to NAR Online as reported by Robert Freedman.
New guidelines would allow first-time buyers who finance using an FHA-Guaranteed Loan – one of the only remaining low-down-payment options for buying a home today with required down payments of only 3.5% – to receive a temporary "bridge" loan to use toward their pre-paid fees and expenses closing costs and if they desire incremental down payment above the mandated 3.5% minimum. The funds could not be used to offset the 3.5% minimum down payment however.
In addition many local government incentive programs – including the Chicago Tax Smart Program for First-Time Homebuyers – can be used IN ADDITION TO the federal First-Time Homebuyer $8000 incentive.
Today first-time buyers wield considerable home-buying leverage. These buyers offer no contingency on selling their home can close in a definite time frame – most attractive to sellers – and not be saddled with the old mortgage on another property in addition to the mortgage on their new home. Many are able and eager to complete updating and repair work some older homes may require although they will likely leverage their attractiveness to their advantage during price negotiations to strike a better bargain!
Perhaps this tweak will encourage many first-timers to take the home buying plunge!
Time will tell!
DEAN MOSS & DEAN’S TEAM CHICAGO
