Thursday, November 12, 2009

First time home buyer credit extended and expanded

Late last week President Obama signed an extension of the $8,000 first time home buyer credit.

From the Redfin blog:

"...President Obama signed new legislation extending the deadline for the home buyer tax credit into 2010 and expanding it to include current home owners who are looking to buy a primary residence.

The Basic Requirements

You qualify for the tax credit if the:

  • Home you’re buying will be your primary residence
  • Purchase price isn’t more than $800,000

This credit is not a loan; it’s yours, but keep in mind you have to live in your new home for three years. If you sell the home in less than three years, you’ll have to pay back the money.

What’s Changed?

With the new legislation, buyers have more time to find a home and more buyers are eligible for the tax credit:

  • New deadline: To qualify, you need to be in contract with a seller by April 30th & close on the home by June 30th (The previous deadline was November 30, 2009).
  • Not just for first-time buyers anymore: Home buyers who’ve owned and occupied a home for at least five consecutive years during the past eight years are eligible for a credit up to $6,500.
  • Increased income limits: Individuals making less than $125,000 and couples making less than $225,000 are eligible (The limits used to be $75K & $150K).

First-time buyers are eligible for a credit up to $8,000 on homes purchased between January 1, 2009 and June 30, 2010. Qualified homeowners can a credit up to $6,500 on homes purchased between November 7, 2009 and June 30, 2010."

This should help keep sales moving through the winter. But the question is how long will they keep propping up the market before letting it return to "normal".

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patient renter said...

"how long will they keep propping up the market before letting it return to "normal"."

Unfortunately, I think the answer is a long time. This thing wouldn't have even been renewed if it weren't for heavy industry lobbying. There's nothing stopping the industry lobbyists from coming out again next time, and again, and again.

Anonymous said...

At the end of the day, there's only so many buyers, and the gov't and NAR have already pulled forward so many suckers, I mean buyers, that there won't be many left regardlesss of the incentives. Plus all the unintended consequences, like leaving landlords with less renters will come home to roost. I think April is the end of the line, just like cash for clunkers, this has to end.

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Leigh said...

I think the FHA guidelines tighten next month meaning higher credit score and a slightly bigger dp. Add that to the slow winter, and the rush to buy to beat the original dead line and yes, I think we will be seeing the beginning of the end of this propped up housing market.

David hogard said...

Find a good neighborhood. Know the school district and is it a good one if you have kids attending. Is shopping convenient? Is the area growing and can you look forward to appreciation on your house? What’s the area like? Are you next to vacant land that could be a freeway or a new mall in your backyard?

Log your visits to potential houses. Sounds silly, but after you look at several, it can get confusing later on. Write down advantages and disadvantages of each house. Even draw a simple layout sketch to refresh your memory.