End of home buyer tax credit unlikely to deter local real estate buyers

Trends in Rockdale underscore national survey data showing consumers more concerned about home prices, interest rates and unemployment

Conyers, GA—The expiration of the 2010 Home Buyer Tax Credits on April 30 is unlikely to put off Rockdale residents looking to purchase homes, according to Prudential Colony Realty. This reflects the results of a new Prudential Real Estate and Relocation Services, Inc., a Prudential Financial, Inc. [NYSE: PRU] company, national survey which reveals that consumers believe now is a good time to buy and are confident that home prices will rise. The survey of 1,000 Americans between the ages of 25-64 with at least $35,000 household income was conducted during April 15-20, 2010.

In the national survey more than 90 percent of consumers believe that the home buyer tax credits have helped both first-time home buyers and the U.S. housing market overall. Among consumers actually shopping for homes, 65 percent believe that the end of the tax credits will have little or no effect on their interest in purchasing a home.

While consumers remain unsure about the direction of the housing market, the survey reveals that they are optimistic about real estate values with 46 percent of consumers expecting real estate prices in their area to increase over the next year. Just 12 percent expect prices will decline. Over the next five years, 79 percent expect real estate prices to increase, with 20 percent expecting that prices will increase substantially.

“The federal home buyer tax credits clearly played an important role on a national and local level,” said Brandi Wells, Prudential Colony Realty. “The survey data shows that overall consumers believe the market has hit bottom and are more optimistic about the future.”

Survey respondents identified concerns about rising mortgage interest rates and unemployment as the most important factors affecting their decision to purchase a home, along with more stringent lending criteria and fewer mortgage-backed securities purchased by the Federal Reserve. The expiration of the tax credits placed lowest on their list of concerns. Among those who have recently purchased a home, 61 percent cited low mortgage interest rates as “very important” to their decisions – an amount greater than either the tax credit or even cheaper prices. The 66 percent expecting interest rates to rise underscores potential headwinds for the market.

Despite the significant downturn in the real estate market, the survey underscores that the dream of home ownership and the perception that owning a home is a good investment remain intact. Among current renters, 75 percent still believe owning their home is a better long-term choice for their needs than renting. The majority of consumers also believe that homeownership is a better investment than individual stocks or bonds (75%), mutual funds (72%), or savings accounts (74%).

“While the tax credits clearly helped stimulate the market, the more pressing concerns of people looking at homes in the Metro Atlanta area are the availability and cost of financing, as well as if they will have a job,” added Brandi Wells. “Despite the market downturn, consistent with the national survey data, the majority of our clients are more confident and, importantly, continue to believe that owning a home is a good investment.”

The Prudential Real Estate Outlook Survey was conducted online. The margin of error is+/- 3 percent. A more detailed breakdown of the data is available, as well as supporting charts and visuals, at www.news.prudential.com.

Prudential Real Estate and Relocation Services, Inc. is Prudential’s integrated real estate brokerage franchise and relocation services business. Prudential Real Estate franchises are independently owned and operated. Companies are selected based upon outstanding performance records, high levels of customer service and shared business values with those of Prudential. Prudential Real Estate is one of the largest real estate brokerage franchise networks in North America, with nearly 1,700 franchise offices and approximately 60,000 sales professionals in the franchise Network as of Dec. 31, 2009.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $667 billion of assets under management as of Dec. 31, 2009, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth. In the U.S., the company’s Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential’s businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit www.news.prudential.com.

Several factors might leave prospective home buyers who don’t purchase a property now wishing they had taken action sooner! RISMEDIA, March 24, 2010—Buying a home is one of the biggest decisions an individual can make. So it’s understandable that one considering a home purchase may take their time to avoid rushing into such a large financial commitment. However, several factors might leave prospective home buyers who don’t purchase a property now wishing they had taken action sooner.

The Expanded Home Buyer Tax Credit Could Chase Away the Winter Blues and everything you need to know about the extended and expanded tax credit.

By Ken Trepeta, Director, Real Estate Services Print Article

RISMEDIA, January 7, 2010—As we begin 2010, both real estate professionals and home buyers have something to look forward to and more importantly, take advantage of—the extended and expanded home buyer tax credit.

Originally created in 2008, the home-buyer tax credit has evolved from a $7,500 credit, which had to be repaid by the home buyer over the course of 15 years, to an $8,000 tax credit with no repayment required in 2009. Now, for a limited time in 2010, the $8,000 home buyer tax credit will still be available to first-time home buyers and certain current homeowners will also be eligible for a $6,500 credit.

To help everyone better understand the extended and expanded home buyer tax credit, here are some highlights of the changes.

Who can claim the credit?

“First-time home buyers” who purchase homes between November 7, 2009 and April 30, 2010 are eligible for the credit. To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

For current homeowners purchasing a home during the same time frame, they are also eligible for a tax credit, so long as the home being sold or vacated was their principal residence for five consecutive years within the last eight. To elaborate, it must be the same home; it is not enough that they have been homeowners for five consecutive years, they must have been in the same home for five consecutive years.

Another key point is that the existing home does not need to be sold. One must, however, occupy the new home as a principal residence and do so for three years or risk recapture of the credit. Also, the new home does not need to cost more than the old home despite the concept that it is directed at “move up” buyers.

How much is the credit and what are the income limits?

The maximum allowable credit for first-time home buyers is $8,000 or 10% of the sales price, whichever is less. For current homeowners, it is $6,500 or 10% of the sale price, whichever is less. Under the extended home buyer tax credit, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum credit.

The credit decreases for single buyers who earn between $125,000 and $145,000 and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit deceases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income – over $145,000 for singles and over $245,000 for couples – are not eligible for the credit.

What are the deadlines for qualifying for the credit?

Under the extended home buyer tax credit, as long as a written binding contract to purchase a home is in effect on April 30, 2010, and the deal is closed by July 1, 2010, one can claim the credit.

Will the tax credit need to be repaid?

No, the buyer does not need to repay the tax credit if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale. Another provision of the law waives the recapture provisions for service members who receive orders that require them to move.

Are there any other critical provisions?

-There are three provisions people should be aware of:
-There is an $800,000 limitation on the cost of the home
-The purchaser must be at least 18 years old on the date of purchase
-For a married couple, only one spouse must meet this age requirement and dependents are not eligible to claim the credit

Finally, as an anti-fraud measure, purchasers must attach documentation of purchase to his/her tax return claiming the credit. Normally this would be a copy of the HUD-1, but could include other documents memorializing the settlement.

As with all tax matters, responsibility for complying with the tax code belongs to the taxpayer. Real estate professionals should recommend that their buyers consult their tax professionals to ensure eligibility for the credit and the proper way to claim the credit. For more information including the required IRS forms please contact the Internal Revenue Service at 800-829-1040.

Ken Trepeta is the Director, Real Estate Services for the National Association of REALTORS® Real Estate Services program.

For more information, visit www.realtors.org/res.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more top headlines on RISMedia.com, be sure to see:
Consumers’ Anticipated ‘Smart Spending’ of Home Buyer Tax Credit Will Aid Recovery
5 Steps to Creating a Successful Marketing Plan

Read more: http://rismedia.com/2010-01-06/the-expanded-home-buyer-tax-credit-could-chase-away-the-winter-blues/#ixzz0c2ZlGEJR

Washington – — The Obama administration has now put out the official word: Starting soon, first-time home buyers nationwide will be able to turn their $8,000 federal tax credits into cash for use at closing if they use Federal Housing Administration mortgage financing.

But in its final guidelines to lenders and home buyers issued May 29, the Department of Housing and Urban Development clarified that purchasers obtaining FHA loans through private lenders will have to invest at least some of their own funds – whether from personal savings or gifts from relatives – in the form of a minimum 3.5 percent down payment.

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In other words, you’ll need equity in the house to participate. This won’t be a zero-down plan, with one exception: If you obtain your FHA loan through one of the approximately 10 state housing agency “tax credit monetization” programs, you’ll be allowed to pay for your entire down payment with the help of a bridge loan provided by the agency. Those bridge loans generally are low-interest or no-interest short-term second liens secured by the property, and convert into second mortgages if they are not paid off with the proceeds of the tax credit.

For FHA lender-supplied cash advances, you’ll be able to use the $8,000 credit – or whatever size credit you qualify to receive – for settlement fees, escrow charges, higher down payments or to “buy down” your interest rate to cut monthly payments.

How will this all work in practical terms? How do you apply? Here’s a quick guide:

To start, you’ll need to qualify as a first-time purchaser under the generous definition permitted by Congress – that is, you cannot have owned a principal residence during the previous three years, and your household gross income cannot exceed $95,000 for single taxpayers or $170,000 for married couples filing jointly.

To get the process rolling, you’ll have to write a contract on a house you can afford to buy and apply for a mortgage through an FHA-approved lender. That shouldn’t be difficult, because there are more than 12,000 lenders with that designation. Large banks or bank-affiliated mortgage lenders are more likely to be geared up for the program in the near future, according to industry experts. Home builders, who have advocated credit monetization programs for months, are likely to be major participants. But get moving on house shopping as soon as possible, since the tax credit program requires all eligible purchases to be closed no later than Nov. 30.

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Good News for the Upper end Homes)(Up to $800,000 and how this new tax credit was designed to assist Upper-end homes

The Christian Science Monitor suggests that the $6,500 credit may help to move houses in the higher price ranges, because the tax credit now applies to residences priced up to $800,000. The majority of homes sold during the initial tax credit program were priced at under $300,000. Only 20% were priced between $300,000 and $400,000

Since its inception in 2008, close to a million and half people have filed for the home buyer tax credit. However, despite whatever economic stimulation it may have caused, and regardless of what its costs in lost tax revenues may have been, legislators have signaled that this is likely to be the last time the tax credit will be extended.

The extension of the home buyer tax credit is official now. The $8,000 home buyer’s tax credit will be extended and the new $6,500 homebuyer’s incentive tax credit will begin. The bill is expected to be signed by President Obama on Friday, November 6, 2009. The same bill also provides a tax break for businesses that lost money, and extends unemployment benefits for another 20 weeks.

The $6,500 home buyer tax credit applies only to people who have previously owned their homes for at least 5 years and are planning to purchase a new home by or before April 30, 2010. For those who previously owned a home and purchased another one this year, the tax credit will not apply. It won’t start until the bill is signed, and it is not retroactive. So if you closed on that new home today…sorry, you’re not getting anything from the government except the standard IRS refund based on your mortgage payments and property taxes.

Most people are likely to claim the $8,000 or $6,500 dollar tax credit in their 2009 tax returns. But, an immediate refund is available to those who amend their 2008 tax returns. This time around, in order to avoid fraudulent refunds, the IRS will require those claiming the tax credit to attach proof of their new home purchase. Also, all purchasers must prove that they are over 18 years of age.

The new homebuyers tax credit also expands the income limits for buyers. The adjusted gross income limit for single taxpayers to receive full benefits has risen to $125,000, and to $225,000 for joint income tax payers.

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation. For  list of FAQ, you can click on this link and you should be able to resolve your question.http://www.federalhousingtaxcredit.com/2009/faq.php#1

Video with Joey Mure’ part 2; Can a Parent Co-sign on your loan and not effect your $8000 Tax Credit?

http://www.youtube.com/watch?v=2Bp6pgUPxXM

Also, Joey talks about the time frame you need to be aware of if you plan on taking advantage of the tax credit.   Also, Great info on USDA loans and what you need to know.

How do I get my $8000 tax credit and do I have to pay it back?

Simply put, if you normally get a tax refund from the IRS, you can expect to get your homebuyer credit IN ADDITION to the amount of your usual refund. If you don’t get a refund normally and don’t owe the IRS anything either, you’ll get a check for your full homebuyer credit. If you usually owe the IRS money, your homebuyer credit will be applied to the amount you owe and you will get a check for the difference (or no check at all if what you owe is more than the credit). And NO, you DO NOT have to pay this credit back!

If you are thinking about taking advantage of the tax credit, you better hurry!!

Working backward from the closing date, here’s my thoughts on timing …

Nov 30 – a Monday: The absolute last day when the home MUST be closed, title transferred, mortgage funded & wire receipts received. Waiting to close on this date means that absolutely NOTHING can go wrong! Now, there will be people who wait till the last minute, so consider how busy the title companies will be. Maybe you’ll get in their schedule and maybe you won’t.
Nov 23-25 (Mon-Wed): Closing on these dates should be a much safer option as some “slop” factor is built-in, however, remember that is Thanksgiving week so title companies may not work on the 27th.
Nov 16 (Mon): The new MDIA rules requires that lenders must submit the final closing costs to the buyer for review 7 days in advance of closing. This means the loan needs final underwriting approval and all HUD-required forms be completed by Nov 13 so they’re ready to give to the buyer on the 16th.
Oct 14 (Wed): Lenders are wanting 30-days once the go-ahead is given to order an appraisal. Underwriting can’t occur until the appraisal is received and hopefully is at or above the purchase price. Since appraisers and underwriters are going to very busy with all the last minute requests, that 30-day may be extended to 45-days, as some lenders are already requesting.
Oct 12 (Mon): The inspection contingency portion of the Purchase Contract should be removed so the buyer can advise their lender to proceed with ordering the appraisal.
Sept 28 (Mon): The buyer should be in-contract on a home, ready to have their home inspections scheduled.
Between now and Sept 28, the buyer will be meeting with their selected lender, obtaining & providing the required paperwork to become pre-approved for a mortgage, so they know what price of home they can shop for. They should also be selecting and meeting with a lender. Most likely the lender will be able to give a “first blush” idea of the home price with a pre-qualification. That information can be used with the Realtor® to begin searching the MLS system for homes meeting the buyer’s criteria with the “expected” price range.

Depending on how much free time the buyer has available from their work schedule to view homes, the buyer should be starting this process in the next few days. Give us a call to get started. YOUR TIME IS UP!