In November the President and congress passed an amended extension of the Home  Buyers Tax Credit.  The extension allows for First Time Homebuyers as well as Previous Home Owners to receive a tax credit for purchasing a home.  Below are a few of the guidelines for qualifying for the tax credit.

 Who is Eligible

-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their primary residence may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program. 

Income Limits

Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income is less than $125,000.

-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose adjusted gross income is greater than $145,000 and married couples with a adjusted gross income that exceeds $245,000. 

 Effective Dates

-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010. 

Heating and Cooling Tips

*Set your Thermostat as low a is comfortable in the winter and as high as is comfortable in the summer.

*Clean or replace filters on furnaces once a month or as needed

*Clean warm air registers, baseboard heaters, and radiators as needed;make sure they're not blocked by furniture, carpeting , or drapes.

*Bleed trapped air from hot water radiators once or twice a season if in doubt about how to preform this tasks, call a professional.

*Place heat-resistant radiator reflectors between exterior walls and the radiators.

*Turn off kitchen, bath and other exhaust fans within 20 minutes after you are done cooking or bathing;when replacing exhaust fans consider installing high-efficiencies, low-noise models.

*During the heating season, keep the draperies and shades on your south facing windows open during the day to allow sunlight to enter your home and closed at night to reduce the chill you may feel from cold windows.

*During the cooling season, keep the window coverings closed during the day to prevent soar gain.   (U.S.Department of Energy)

Energy Auditing Tips:

*Check the insulation levels in your attic, exterior and basement walls, ceilings, floors, and crawl spaces. Visit www.energysavers.gov for instructions on checking the insulation levels.

*Check for holes or cracks around your walls, ceilings, windows, doors, light and plumbing fixtures, switches, and electrical outlets that can leak air into or out of your home.

*Check for open fireplace dampers.

*Make sure your applianecs and heating and coooling systems are properly maintained. Check your owner's manuals for the recommended maintance.

*Study your family's lighting needs and use patterns, paying special attention to high-use areas such as the living room, kitchen, and outside lighting.  Look for ways to uselighting controls-like occupancy sensors, dimmers and timers-to reduce lighting energy use, and replace standard (incandescent) light bulbs and fixtures with compact or standard flourescent lamps. (US department of energy)

Stay tuned weekly for more energy saving tips. 

The question keeps coming up, "what is in the future for the real estate market?' No one has a crystal ball, but here are some thoughts. Right now we have a large inventory of homes on the market that are either bank-owned or short sale properties. They are pretty much homes that were purchased through the "0% down or no documentation of income" type loans. We are probably seeing a slow down of those types of homes.

What does the future hold. Research data indicates that the next round of homes coming on the market will be those that were purchased with ARM (adjustable rate mortgage) loans and with the huge jump in interest rates that they include, these will also, to a large part, become bank-owned and short sales.

The general wisdom is if you don't have to sell, wait for a couple of more years. Eventually we will get out of this mess. Meanwhile, if you are an investor, or a 1st time home buyer, now is the time to get serious about purchasing a home at a great deal!

I had the Evaluation done and I am looking forward to the printed results. As it was, it was amazing to see them use a special infrared camera that identified the areas where heat was coming into the house. What an eye opener.

Stay tuned for the results and the energy savings that can be achieved with some simple "fixes".

The signing of the American Recovery and Reinvestment Act, better known as the    stimulus package, contains several positive provisions to energize the housing market.  The stimulus is expected to play a significant role in the recovery of the housing market.

PROGRAM HIGHLIGHTS:

*First time home buyer tax credit was raised to $8000: If you purchase your home between January 1, 2009 and December 1, 2009.  Home buyers must live in the home for 3 years without selling in order to be eligible.  Use of credit reduces the purchaser's income tax liability. 

*Tax credit 2^nd loan option:  If you qualify for the first time home buyer credit and want to use it to purchase your first home in 2009, Idaho Housing has a new program that will allow you to borrower the credit as a down payment on your new home.  Call for details

*Mortgage rates are expected to continue to fall based on the buying of another $200-300 billion of mortgage papers from the GSEs, this will free up agencies to purchase additional mortgages: Falling mortgage rates, as the result of improving liquidity and credit in the mortgage market, will lower monthly mortgage payments for buyers and home owners.

*Fannie Mae has raised its total of investment properties financed to 10: The higher limit means investors can now obtain financing on up to 10 properties versus the previous 4.

*Mortgage Interest deductibility, Real estate tax deductibility, and the $250,000/$500,000 cap on tax free gains were all preserved.  The preservation of these important tax breaks continue to underscore that buying or selling a home remains a great tax  shelter for individuals and families.

*Loan limits up to $729,750 have been reinstated in high cost areas:  This allows borrowers to avoid a higher cost “jumbo” loan and instead allow them to get conforming loans with lower rates.

As always, it is important to check with your professional accountant to know how it applies to you specifically. Here is a basic breakdown for you to review.

First-Time Homebuyer: Someone who has not owned a principal residence during the 36 month period edning with the purchase date of the residence.

Purchase Date: Existing home - Date Title closes; New Construction - Date of occupancy

2009 Credit:

• Lesser of 10% of home's purchase price or $8,ooo
• If sold or no longer the taxpayer's principle residence within the 36 month period following the purchase date of the residence, the full credit must be repaid that year.
• Credit phaseout for modified Adjusted Gross Income about $75,000 to $95,000 ($150,000 to $170,000 for Married Couples Filing Jointly).
• Refundable credit
• Can elect to take credit on 2008 or 2009 tax return. Can use this election to avoid phaseout of credit.

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I believe the answer lies very much in your situation. For those who are renting and have good credit the answer is a resounding "YES". Interest rates have never been lower, and with good credit, loans are still available. And prices of homes have not been this low in a long time.

For those who need to sell a home before purchasing, there are two types of situations to consider. If you do not have sufficient equity in your home right now, then it is probably best to be patient and wait until the market begins to appreciate again. If you do have sufficient equity for a down payment, this now is a good time to consider selling your home and purchasing another home. Although you will be selling your home in a "wholesale" market, you will also be purchasing a home in a "wholesale" market. If you are moving up, you will probably be able to proportionately get a better "deal" than waiting until a "normal" market where you will sell at "normal" market value and purchase at "normal" market value.

Whatever your situation is, if you are considering purchasing or selling, it is important to find a highly qualified Real Estate Consultant that can provide to you the up-to-date market data, and can advise you and protect your interests in the best possible way.

For a free update on the current market data for your neighborhood area, please click here.

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability.  Even though interest rates have gone up in the last six months, they are still near historic lows.  Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life.  It’s important to live in a home that reflects your taste and values, yet is within your financial “comfort zone.”  To that end, it may be more important to lock in today’s relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today’s market.

If you have not owned a home in three years, you qualify as a first time home buyer.  If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for this credit.  Call your friends who just bought a home since April 9th and tell them they may take $7,500 off their tax bill if they qualify.  It has to be your principal residence, so rentals do not count.

The tax credit is 10% of the cost of the home, up to a maximum of $7,500. This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit.  In other words, you take $7,500 off your tax bill.  But there is a catch; the credit you receive now is actually an interest-free loan that must be repaid.

The loan has no interest, and will be paid back over 15 years.  You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment.  You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year.  If you stay put for 15 years, you pay it off with no interest.

What happens if you sell the house?  You pay the balance back at the closing.  So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house.  What happens if you do not make enough money when you sell your house?  They forgive the rest of the debt. 

Other restrictions stipulate that you have to buy your first house in three years before July 1, 2009, not have super high income, not use bond financing and buy anywhere in the US.

If you’d like to learn more about this program, please call me!