homebuyers

The Homebuyer Tax Credit is Extended and Expanded

The bill signed into law today by President Obama, extends an $8,000 first-time home buyers’ tax credit that was set to expire at the end of this month. The credit will apply to all house contracts entered into before April 30, 2010, and closed by June 30.  The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

Purchases Covered

The $8,000 credit for first-time homebuyers has been retained.  The law also creates a new $6,500 credit for existing property owners looking to sell their home and buy another during the same period of time.  The plan allows homebuyers who have lived in their residence at least five of the last eight years to receive a $6,500 credit.  The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible.

Income Limits

Couples earning as much as $225,000 a year and individuals earning up to $125,000 would qualify. That is up from the current $75,000 limit for individuals and $150,000 for couples. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

Goldman Sachs Group Inc. said in a research note yesterday that the credit probably spurred 200,000 home sales that otherwise wouldn’t have occurred.

“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

homebuyers

Credit Market Makes Economists Nervous

Interest rates are low and home prices are down, but banks continue to be stingy with loans.

At the height of the housing boom, seven out of 10 mortgages were approved. At the end of 2008, only five out of 10 got the green light. During the boom years, homebuyers could qualify for the cheapest rates with a credit score of 660. Today, they need 740 or better.

“Banks are going to be in a defensive posture for several years. Most borrowers can’t meet their criteria,” says Christopher Whalen, managing director at research firm Institutional Risk Analytics.

Consumers cut back borrowing by $21.6 billion from June to July, the biggest drop since the Federal Reserve began keeping records in 1943. That made some analysts nervous.

The reduction in borrowing could slow the economic recovery, says David Olson, president of Access Mortgage Research & Consulting.

“If they cut back, it would be catastrophic,” Olson says. “We could have a second downturn.”

Source: The Associated Press, Stevenson Jacobs (09/17/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob