Real Estate News & Updates from the Monadnock Region
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$7,500 Tax Credit for First Time Buyers – what is it exactly?

December 10th, 2008 | Posted by Dick Thackston in Buying Tips | Real Estate News - (0 Comments)

I’ve had a number of Realtors and potential home buyers question me about the Government sponsored $7,500 tax credit for fist-time-homebuyers and I want to try to correct any misconceptions….The credit is not a product or program of any type of financing. It’s a tax credit.

It doesn’t matter whether a borrower finances a property purchase or pays cash.

When a buyer purchases a home as a first time home-buyer between now and June 30, 2009 they are possibly eligible to take a one-time tax credit on their Federal Income Tax Return to the maximum of $7,500 ($3,750 for a single buyer). For example after a buyer determines that he will get a refund of $1,500 on his tax return and he qualifies for the full $7,500 credit, he will now get a refund of $9,000 on next years tax return. Conversely if that same buyer owes $1500 in taxes and he qualifies for the full credit he would get a refund of $6,000 ($7,500-$1500 owed). Buyers will need to check with their tax prepares to determine eligibility. We have informed you about this program so that you can market this to first-time-homebuyers in the interest of helping you sell more homes. It is not a financing program of ours or any other lending institute. Again, it is strictly a government initiated program to allow first-time-buyers to be eligible for this credit on their tax returns. I have attached a chart from National Association of REALTORS that you may be of use to understand the credit and how it may be applied.

NAR $7500 Tax Credit Chart

NAR $7500 Tax Credit Chart

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Mortgage Market and Financial Update December 09, 2008

December 9th, 2008 | Posted by Dick Thackston in Real Estate News - (0 Comments)

Jobs (or the lack thereof) were on the minds of Americans last week. 533,000 employees were let go in November, the worst monthly result since 1974. Today’s unemployment rate of 6.7% represents 10.3 million Americans that are out of work, an increase of 3.1 million idled workers in the last 12 months. Congress listened to the pleas of the nation’s largest auto makers for a $34 billion lifeline last week, coming to no immediate agreement. The best that may be offered from Washington this week is a $15 billion short-term compromise, providing life-support for 60-90 days to an industry that is near collapse (source: Department of Labor).

Fed Chairman Ben Bernanke’s comment was succinct: “More needs to be done.” Speaking last Thursday, Bernanke talked of the urgency for additional federal programs to slow the rate of home foreclosures in the USA. 7% of mortgages in the country are currently at least 1 month late with a payment. One expense that continues to decline in cost for consumers is the price of gasoline, down yesterday for the 81st consecutive day (source: Mortgage Bankers Association, AAA).

Bond investors are watching to see how low Treasury yields can drop this week. The yield on the 10-year note fell to 2.56% last Thursday, a level last seen in March 1955 (source: USA Today).

Notable Numbers for the Week:

1. HOUSING RELIEF – President George Bush signed a housing bill on 7/30/08 that will insure up to $300 billion in mortgages. The bill allows up to 400,000 homeowners to refinance their existing mortgages into new 30-year fixed rate mortgages backed by the government. A qualifying homeowner has to be spending more than 31% of his/her monthly income on the mortgage payment and be currently living in the house (source: USA Today).

2. TARP – The $700 billion “Troubled Assets Relief Program” (TARP) was signed into law by President Bush on 10/03/08. The $700 billion was divided between $250 billion to be allocated by the Treasury Department into bank purchases, another $100 billion to be directed by President George Bush (as needed) and $350 billion to be allocated by our next president (i.e., Barack Obama) in 2009 and beyond (source: Congress, Lincoln Journal Star).

3. SWEETENERS – In order to win Congressional support of the TARP bill, $150 billion of tax incentives were added to the legislation, including changes to the Alternative Minimum Tax law (source: WSJ).

4. BUYING TROUBLED ASSETS – The Fed announced on 11/25/08 a program (“Government Sponsored Entities Purchase Program”) to buy $600 billion of mortgage-backed securities and debt from Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Home Loan Banks (source: Investment News

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