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Countdown for the Home Buyer Tax Credit
By Ken Montville
As most home buyers in the US know, the US Government has extended its original first time home buyer tax credit of $8,000 and expanded it to include existing home owners who can collect $6,500 as a tax credit. Believe it or not, the parameters of the tax credit are pretty liberal. It seems that the Government is really trying to stimulate the housing market. As a Realtor, I'm all for it. For example, "first time home buyer" is anyone who has not owned a home within the last three years. The existing home owner is someone who has owned a home as a primary residence for 5 consecutive years out of the past 8. So, you can actually be renting as the result of a job relocation or, virtually, any other circumstance and still qualify for the $6,500 if you previously owned a home. There are a couple of income restrictions at the top end and a sales price restriction but for the vast majority of home owners or first time buyers, this tax credit is free money. Now, Here's The Catch There is a deadline. You must be in a legally binding contract by April 30th with a settlement date no later than June 30th. Lots of time, right? Let's look at the calendar. There are 111 days between today (1/9/10) and April 30th when the ink needs to be dry on a contract. During that 111 days, there are 31 days of Saturdays and Sundays - weekends. There are also two legal holidays - Martin Luther King Day and President's Day. That leaves 78 days to look for a house and get it under contract - a little over two months. Now, I'll be the first one to tell you that Realtors work on the weekends. There are also many mortgage professionals that will work on the weekends. However, new Federal mortgage guidelines that affect the Good Faith Estimate that mortgage professionals provide (probably the topic for another post) may preclude a lot of weekend activity for them. The bottom line is that although April 30th sounds like a long way off...it really isn't. If you or someone you know is in the market to buy a house or buy their next house (first time or existing home owner), there isn't a ton of time to search, get pre-approved for a mortgage, negotiate the terms of the contract and let the ink dry in time to collect either the $8,000 for first-timers or $6.500 for current home owners. Something to think about. |
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Good information, Ken.
These programs should help the economy and they might not be repeated anytime soon.
Thanks for sharing.
Frederick
CONTRIBUTOR'S REPLY
My thinking is that Congress will probably not extend the tax credit again. Of course, anything can happen and April 30th is still a little over 3 months away. However, if people depend on that, they may be disappointed.
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