A Reprieve for the Procrastinator

We’ve been advising people interested in the $8,000 first time home buyer tax credit to get things done early to avoid the rush expected to occur the end of this month, which was the deadline for the tax credit. Well, if you are one of the ones who have been putting this off and were about to lose out, you have just been given a second chance. Last week the first time home buyer tax credit was extended and new tax incentives were added for many of you who currently own a home.

The first things you need to know are two important dates. The first is April 30, 2010 and the second date is June 30, 2010. The first date is the date you must have a signed contract on a house in order to be eligible. Then, with the signed contract in hand, you must close on the house and take possession by June 30, 2010.  Congress has gotten a little smarter this time in explaining the timing. We’ve been encouraging buyers to write a contract prior to the end of September in order to be able to get a loan secured and closed by November 30, which is just two short weeks away.  The process of buying a house is not the same as buying a car or other product; if you are serious, you simply cannot wait until the last minute, unless you have enough cash to buy a house.  So, write a contract before April 30, 2010 and close by June 30, 2010.

If you are a first time home buyer (or you have not owned a home in the last three years) then you still may qualify for the $8,000 tax credit. The income limits have actually increased, as has the maximum purchase you can make for your first home.

For those of you who own a home, you can now participate in the recovery as well. If you have owned a home for five of the last eight years, then you are eligible for a $6,500 tax credit from the IRS and US Treasury. So if you have owned your home for five years, sell it and close on a new home no later than June 30, 2010, to be able to get a tax credit.

Sounds easy right? For most of us that means someone has to buy our house before we can buy another house and get our tax credit. In these economic times that has not been as easy as it was a few years ago. So if you own a home and are interested in trying to take advantage of this, you need to GET STARTED NOW!!! Call your favorite real estate agent and see what the process is to get your house listed. 

A couple of other good things have happened. The income limits have increased, so more people can participate. The income limits for the plan that was to end this month were $75,000 for a single person and $150,000 for a married couple, with the tax credit being phased out completely at $95,000 for singles and $170,000 for married couples. The new limit has increased so that if you are single and make less than $125,000 or are married and your income is less than $225,000, you can qualify for the full credit. Like the previous version of the plan, the phase out for the credit occurs if your income is up to $20,000 over the limits, and if you make more than $145,000 as a single or $245,000 as a married couple filing jointly, you will not qualify for the tax credit. Most of us, though, will qualify.

If you couple that with the fact that 30 year fixed rate mortgages are still being quoted at or near 4.75% and 15 year mortgages close to 4.25%, I cannot imagine a time in the future when the home buying stars will be better aligned. Home prices are flat, interest rates are the best they’ve been in years and you can get money from the government too.

If you want more information, the National Association of Home Builders has a website, www.federalhousingtaxcredit.com, which is a great source of information about the programs for first time buyers and current homeowners.

For the past 40 years the staff at The Groce Companies has helped consumers in central North Carolina design, build and secure financing to build or buy their homes.  If you need assistance, please call (919) 775-1497, and we’ll be glad to help. You may also visit our web site, www.grocecompanies.com, where we are posting this series of articles.