What Was The First Time Home Buyer Tax Credit?

In an effort to stimulate the housing market which was severely weakened in many parts of the country the US Government enacted a temporary tax credit initially available to first time homebuyers, and then expanded to offer the benefit to repeat home buyers who had owned their home for a certain number of years. Eligibility was based on the purchase price of the home (which was required to be used as a primary residence), the income of the borrowers, and previous home ownership. The tax credit was equal to 10% of the purchase price of the property, up to $8000 for first time home buyers, and $6500 for repeat home buyers. The tax credit expired on April 30, 2010, meaning that to qualify for the program buyers must have a home under contract by that date, and the closing must take place by June 30, 2010. There is an exception in place for members of the military who were on extended duty outside of the US for at least 90 days between January 1, 2009 and May 2, 2010. These individuals may qualify for a one year extension. Consult your tax advisor and real estate professional for details.

What should prospective buyers do now that the home buyer tax credit has expired?

Without the incentive of a tax credit of several thousands of dollars would be buyers may be wondering if they missed their window to purchase a home. Won't they have to pay much more for a property now? Not necessarily. It is important to consider all of the other factors that can work in a buyer's favor. Some of these include:

• Depreciated Real Estate Markets - If home prices have fallen in the area where you are thinking of buying you might be able to save a substantial amount by buying while prices are low. No one can say for sure when real estate values will be at the low point, and when they will start to rise again, but your real estate professional can help you make a decision about when to buy that you are comfortable with.
• Foreclosure and Short Sale Opportunities - Unfortunately, sometimes homeowners end up in a position where they can no longer afford their mortgage payments. This results in foreclosures and bank owned properties on the market, as well as short sales, where the bank agrees to take less than the amount owed as repayment for a mortgage loan, and the buyers are able to sell the home at a discount and avoid foreclosure. These homes are generally priced well below market value and can be a real bargain for a new buyer.
• Seller Paid Closing Costs - In an competitive buyers' market where there are many more homes for sale than people looking to purchase homes some sellers pull out all the stops to set their property apart. One way they can do this is to offer to pay a portion of the closing costs, this can amount to several thousand dollars in savings for the buyer. Many mortgage programs allow seller paid closing costs up to a certain percentage of the loan amount. Check with loan consultant for specific requirements.
• 100% Financing Options - Save on your up front costs by taking out a no money down mortgage to buy your home. There are still 100% loan options available for those who qualify include VA loans and USDA rural housing mortgages.
• Low Mortgage Rates - Don't overlook the great deal you get when you finance your home with a low mortgage rate. If rates were to increase 3% over where they are currently it would result in a homeowner paying more than $140,000 in additional interest over a 30 year loan on a $200,000 loan amount. That is enough to purchase another home in many areas.

To learn more about the benefits available to home buyers call American Financial Resources at 800-316-9508 to speak to one of our expert loan consultants. You can also complete the short quote request form on this page, or get started online.