Important year-end developments…
A couple of important news items for anyone thinking of buying or re-financing a home…
1. The Homebuyer Tax Credit Has Been Extended and Expanded. Now first-time homebuyers can qualify for a tax credit if they have a binding contract on a home in place by April 30, 2010—and they close by June 30. Buyers who have not owned a home during the last three years get a tax credit up to 10% of the home price, up to $8,000.
PLUS… The tax credit is now available to existing homeowners who have lived in the same principal residence for five consecutive years during the eight-year period that ends when the new home is purchased. The same deadlines apply, but the tax credit for these “move-up” buyers is capped at $6,500.
Finally, income limits to qualify are now higher. The tax credit phases out for individuals with modified adjusted gross income between $125,000 and $145,000 and between $225,000 and $245,000 for people filing jointly.
A tax credit is a direct reduction of your income tax. After calculating what you owe, you deduct the tax credit from that amount. As with all tax matters, be sure to consult a qualified, professional tax advisor.
But don’t procrastinate! April 30 isn’t far off and it takes time to find your dream home, so work with a good realtor (I can provide excellent referral if needed). And don’t cut corners. Be sure the new home fits your needs and budget and have a professional home inspection. Save time by getting pre-qualified for a mortgage by contacting me as soon possible.
2. Watch for a Hike in Mortgage Rates. Mortgage rates have been at historically low levels because the Federal Reserve, our country’s central bank, started a huge program to buy mortgage bonds, raising their prices and bringing mortgage rates down. This $1.25 trillion buying program will end March 31, 2010. After that, experts tell us mortgage bond prices will likely go down and mortgage rates will then head up.
Estimates are the 30-year fixed-rate mortgage may get to 6%, versus the 5% and below-5% levels we’ve been seeing. Historically, this is still a great rate, but higher rates do reduce your buying power. A $300,000 mortgage at 5.02% has a payment of about $1,614 per month. At 6%, a payment that size lowers the mortgage amount to less than $270,000.
The critical point: People thinking of buying a home or refinancing need to act now!
Please let me know if I can be of help…. And have a great day!