New First Time Home Buyer Credit signed into Law Today
The President has signed this bill today November 7, 2009. This is now law. This bill will impact how homes for sale in Everett are marketed. Because prices are so low I think some sellers will increase their prices by the amount of the credit, maybe even more. If I had a home for sale in Everett I would probably up the price by $10,000 just because. Because the credit is refundable and will almost cover the entire down payment for a home priced up to $250,000. If you go with an FHA mortgage you only need 3.5% down. Working backwards you find that if the home costs less than $228,571.43 I actually get in for ZERO down. Smart sellers will see that and up their prices. To smart buyers this also means I can cover most or at least ½ of the down payment up to about $450,000. Whether this promotes sales for just hurries a sale that would have taken place remains to be seen. What our economy really needs are jobs.
Here is how the new bill will work and effect homes for sale Everett. The new rules will take effect today November 7, 2009.
1) The first time buyer’s credit will stay at 10% of purchase price with a max of $8000. This is a refundable credit which means you get if even if you paid no taxes. By the way 41% of all workers don’t pay federal income taxes.
2) The definition of a first time buyer is no principle home ownership in last 3 years.
3) If you are a current home owner and are buying another principle residence you can qualify for up to $6500 in a new credit.
4) The definition of a current home owner is having lived in a principle residence for 5 consecutive years out of the last
5) The credit is extended to all purchases signed by April 30, 2010. The deal must close by July 1, 2010.
6) Income limits are increased to $125,000 single and $225,000 married.
7) Cost of home no more than $800,000. Thought how you can afford an $800,000 home on $125,000 per year is beyond me.
8) To cut down on fraud you must attach a copy of the closing document (HUD-1) to you tax return.
Knowledge of the provisions of this new law can help if you have a home for sale Everett. Because a FSBO usually doesn’t have a realtor behind them they really need to know this stuff.
Just a couple of comments aside here. This has only tangential value but it illustrates what the government is doing to the American economy and the real estate industry in particular. Just like the tax credit here HVCC was designed with the highest intentions. But the law of unintended consequences has taken hold. I wonder what will happen because of this credit .
1) HVCC was created to cut down fraud. HVCC means Home Valuation Code of Conduct and applies to how appraisals are done. This really has crippled the real estate business. It has consistently brought in low ball values on homes. This has crippled the refinance business just when we need the ability to refinance ARM’s that are going thru the roof. This forces homes into foreclosure when they didn’t have to go. I have a blog post on HVCC on my web site.
2) HVCC was designed to stop fraud but it hasn’t. Fraud is up almost 50% over the same month one year ago.
3) HVCC has killed the conventional mortgage business. Almost all loans are FHA mortgages or VA mortgages. This is because they don’t have to use the HVCC guidelines.
Anyone who thinks the government can help is blind to these facts. Barney Frank, Chris Dodd and Andrew Cuomo are responsible for this fiasco. So far almost everything the government has done has hurt the consumer. Why doesn’t that surprise me?
Some FAQ’s for the new First Time Buyers Credit law sign today.
Q: Must the new home cost more than the old one.
A: No, So a current home owner can sell down and still qualify for the $6500 credit.
Q: I am a first time buyer but made more money than the “old” credit allowed. My contract will close November 20, 2009. My income now qualifies can I get the credit?
A: Yes. The new law is retroactive with all facets of the law now signed.
Q: I owned a home for 10 years and lived there the whole time. I sold it 2 years ago and have rented since. If I buy can I qualify for the new $6500 credit?
A: Yes if your income qualifies. Also you stated that you had lived in the home at least 5 consecutive years out of the last
If you have a home for sale Everett or you are a FSBO take note that this law should help you. I hope this answers most simple questions.
