Fall could usher in a new era for home buyers

       October begins one of the favorite seasons for many. Fall usually ushers in plenty of lovely sights and even sounds — leaves crunching beneath our shoes, for example.

       This year, fall could also usher in a new era for individuals and families. New federal programs should make buying a new home easier than ever.  In the article on this page, we talk about the new first-time home buyer tax credit that will give many a head start to

homeownership. If you or someone you know would be a good candidate to own a home (maybe your children or grandchildren?), I hope you will read the article on this page and pass it along. This is an opportunity that will not last. If they want to get this great new tax credit, home buyers must purchase before June 2009. Call me if you want more information. I’ll be happy to help!

 

Susan Maxwell    (772) 486-4642

Feds stuff the home buyer piggy bank

       If you are thinking about buying a home, the U.S. government is ready to stuff your piggy bank with $7,500, but don’t delay.  The program ends next summer.

       The federal housing bill signed in July by President Bush gives first-time home buyers a $7,500 tax credit as a head start to home ownership.

       According to the terms of the Housing and Economic Recovery Act, first-time home buyers will get a tax credit of 10 percent of the purchase price of a home up to $7,500. That means if you buy a new home any time from April 9, 2008 to June 30, 2009, you get up to $7,500 off your taxes.

       That can mean a lot to the average wage earner.  A couple earning a total of about $90,000 a year, typically pay about $10,000 in taxes if they do not itemize. Under the provisions of the current bill, the wage earner couple who buys a home during this period, would get to subtract $7,500 from their tax bill.

       However, the credit is not a pure gift and it is really more like a zero-interest government loan.  Homeowners will be asked to pay back the credit during a 15-year period.  Each year, they will be required to repay a small percentage. For example, if a homeowner qualifies for a $7,500 tax credit, he would repay the credit at $500 a year beginning with their 2010 tax return.

       But even considering that homeowners will repay the $7,500, this adds up to big savings over the life of the mortgage.  After all, if they had to finance $7,500 over 30 years at 7 percent interest, a homeowner would pay more than $8,000 in interest.

        It’s easy to qualify for this unique credit. To be classified as a first-time homeowner, you must not

have owned a home in three years.  You must take the standard deduction on your income taxes (meaning you must not itemize).  In addition, you must buy a home between April 9, 2008 and June 30, 2009. (Notice that some who bought homes in 2008 are eligible for this tax credit.)

       According to the National Association of Home Builders, first-time home owners make up about 40 percent of the entire market.

       Existing homeowners also get something in the housing bill. Homeowners can expect to get a $500 to $1,000  tax deduction if they don’t itemize their taxes.

                 According to the NY Federal Reserve, there were 116 million total housing units in June 2008. About 50 million were prime mortgages, 37 million were rental units, 26 million had no mortgage, leaving a total of 3 million subprime mortgages

                 Subprimes  represent only 2.6 percent of the total housing units. About  17 percent of subprimes were in foreclosure.

                 Subprime mortgages in trouble represent less than 1/2 of 1 percent of all housing (0.44%).

How many loans are actually ‘subprime’?

Susan and Gabe’s October 2008

Susan Maxwell and Gabe Sanders, Premier Realty Group, 2 N. Sewall’s Pt. Rd., Stuart, FL 34996