New Push to Extend Tax Credit

Okay, this is a long one but necessary.....

By Kenneth R Harney

It's one of the biggest unknowns bugging would-be buyers of houses and condos this summer: Will Congress let the $8,000 nonrepayable tax credit for first-time purchasers expire as scheduled 14 weeks from now? Or will the credit get a second life and be extended for another six to 12 months, taking pressure off buyers, realty agents and settlement companies?

That's an especially urgent matter if you're a buyer just starting to shop and you see entry-level prices bottoming out or rebounding. The tax credit statute requires buyers to fully close on their purchases -- not just be under contract -- no later than Nov. 30. This doesn't leave a lot of leeway for people who haven't yet decided on a specific house and who haven't nailed down mortgage financing.

The whole process of negotiating offers, signing sales contracts, applying for a loan and completing the closing can easily extend for two months -- or a lot more if things get off track.

Given the rapidly approaching deadline, what's the likelihood that Congress will blow the whistle and allow at least a little extra time? Here's a quick overview: Though Congress technically is on its summer break, most members of the Senate and House use part of the August recess to meet with and listen to constituents back in their home districts.

This year, the two biggest housing trade groups -- the 1.2 million-member National Association of Realtors and the National Association of Home Builders -- are spending the month mounting unusually intense grass-roots lobbying campaigns to make the case for extending the credit, and maybe even expanding it.

Delegations of home builders and realty brokers already have begun descending on district offices, delivering what Jerry Howard, president and CEO of the builders association, calls "the hard economic facts" -- the numbers of houses sold in each congressman's district that are attributable to the tax credit; the economic ripple effects on local businesses, manufacturers and service industries; new jobs and income; plus the additional tax revenues that all this activity will help produce for local governments.

On a national basis, according to economists at the National Association of Realtors, anywhere from 300,000 to 350,000 additional sales of houses will be stimulated this year by the credit. Each home sale generates about $63,000 in downstream "ripple effects" elsewhere in the economy, they say -- sales of furnishings, appliances, lawn mowers, landscaping, renovation materials, plus moving expenses.

If you accept the numbers -- and some analysts consider them a stretch -- this means the housing credit provides a powerful, immediate stimulus bang for the buck. Failure to extend what may be one of the most effective pieces of the Obama administration's 2009 stimulus legislation would cost jobs, economic growth and tax revenues, the housing groups argue.

There are some early signs Congress may be getting the message. Bills already are pending in both houses to extend the credit for another year. Senate Majority Leader Harry M. Reid (D-Nev.), whose state has been among the worst hit by the housing bust, reportedly now favors an extension of the credit. Sen. Chris Dodd (D-Conn.), chairman of the Senate Banking Committee and in a tight race for re-election next year, is co-sponsoring a bill with Georgia Republican Johnny Isakson that would raise the credit amount to a maximum of $15,000. Meanwhile, both the Realtors and the builders are pushing not only for extension of the credit, but for broadening it to cover all home purchases in 2010.

But can any of this happen before the Nov. 30 deadline? The key complicating factor here is Congress' heavy load of higher-profile, pressing issues that will get attention before anything else in September and October: health care reform, climate change and energy, financial system regulatory reform and a new Consumer Financial Protection Agency, among others. On top of that, a tax credit extension would cost billions in lost revenues.

In the end, however, given the political economics of the housing credit, the odds favor some sort of extension, probably later rather than sooner. Don't bank on a bigger credit, however, or broadening the concept to cover all purchasers next year.

If you are eligible for the first time homebuyer tax credit and are looking for a house in Gilbert, Phoenix, Laveen, Surprise or another city or town in Maricopa or Pinal counties, contact Marie Zubkoff at 480.233.7051 or Andrew Walsh 602.527.2639 with US Preferred Realty.Visit us at http://YourGilbertHome.com Thank you!

Count down to Tax Credit Elimination

ALL FIRST TIME HOMEBUYERS MUST CLOSE BY MIDNIGHT NOVEMBER 30, 2009.

Well, that is if you qualify for, and want to take advantage of.... the $8,000 tax credit for purchasing a home. In past posts we went over some of the qualifications for the tax credit such as:

1) You cannot have owned a home in the past three years.
2) Income requirements cannot exceed $75,000 if single and $150,000 for married.
3) The credit is worth 10% of the purchase price of the home up to a maximum credit of $8,000.

Now, what does the December 1, 2009 due date mean? Well it means that your home must CLOSE on or before midnight of November 30, 2009. OR YOU LOSE THE CREDIT.... Make sure if you are presenting offers that you allow a few days to a week for minor delays... Do not risk $8,000! Because you cannot get an extension unless Uncle Sam gives it to everyone.

Exactly how much time does that leave you if you have not even started to find a home? Well let's work backwards. Say to be safe you allow the closing two Fridays before the deadline. That makes it November 20th. Now once the property is found you need an average of 45 days to close. So let's figure the under contract date to be October 6. So if your home is to be under contract by October 6, that allows about seven weeks from today to find your home. Certainly plenty of time for you to find an agent, obtain financing from a qualified lender, and start looking. But, you do not have time to sit on the fence to determine whether or not you want to continue renting for another couple months before looking while you wait to see what the market does.

So, it's time to contact that qualified agent. Marie Zubkoff at 480.233.7051 or Andrew Walsh 602.527.2639 with US Preferred Realty. Visit us at http://YourGilbertHome.com Thank you!

First Time Homebuiyer's Tax Credit -CLOSING COSTS

The first-time homebuyer tax credit can be used to pay closing costs or an additional amount over the required 3.5% down on an FHA loan. HUD has strict guidance and regulations on this so you must contact your lender for direction as to how the loan from the tax credit would be repaid and when. Using the tax credit for this purpose is done through what is considered to be a bridge loan or personal loan. For more information on the $8,000 tax credit uses in Arizona, contact Andrew Walsh or Marie Zubkoff for our recommendation of lenders and to ultimately purchase your property here in the valley of the sun.

Buyer's Guide

If you are a new buyer in the market, please go to the buyer's page of our website http://www.yourgilberthome.com/contactform.asp and fill in your name, email and request a buyer's guide. We can email one right over to you! There is a ton of great information for you to start familiarizing yourself with the purchase of a home in Arizona. You may also contact Marie Zubkoff 480-233-7051 or Andrew Walsh 602-527-2639 directly.

Buying with Adult Children qualifies to get the tax credit

An interesting article by June Fletcher was written in the Wall Street Journal. It is a July 17 article titled "Buying A New House When Adult Children Live At Home". A quick insight on getting a first time homebuyer's tax credit of up to $8,000 when an adult child purchases the home with their parents. Please read the article here http://online.wsj.com/article/SB124784227511558327.html. If you have your own questions about the $8,000 tax credit, please contact your CPA. If you do not know of one, contact us and we can refer you to a qualified CPA. Don't let this opportunity pass you by.

Making Home Affordable

Are attempting to see if you can refinance your home or do a mortgage modification under the Making Home Affordable Program? Please visit this website to help http://www.makinghomeaffordable.gov/ First you will need to verify your loan is owned by Freddie Mac. You can do this here http://www.freddiemac.com/corporate/ and click on the link on the lefthand side. If you have any questions regarding either of these programs, please call us immediately.

Would be homebuyers cautious as layoffs rise

A new poll shows that the biggest reason potential homebuyers are not prepared to buy?... Fear of losing their job! Please read the full article by Alan Zibel here http://hosted.ap.org/dynamic/stories/H/HOUSING_TRENDS?SITE=AZMES&SECTION=HOME&TEMPLATE=DEFAULT