Is 2010 the Year for You to Buy a New Home?

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Here comes 2010 and you’ve been tossing around the idea of buying a new home, but you haven’t really looked into it. With the ‘triple-play’ for buyers, it’s worth a look, and I hope you’ll see why!

The Facts:

Here is what the ‘triple-play’ consists of (and I’m sure this isn’t news to most people):

1. Tax Credit – it was a good deal in 2009, but since the new legislation was passed it has opened up the door for the credit to many more. The cap on the income level was raised and now it’s not just for first-time homebuyers. If you’ve owned your primary residence for at least 5 of the last 8 years and purchase a new primary residence,  you could be eligible for up to $6,500. If you are a first-time homebuyer, your credit could be as much as $8,000. That’s a little more than pocketchange but the new deadline to be under contract on a property is April 30, 2010.

2. Interest Rates – interest rates continue to ride lower than ever before. This is a direct result of the government buying mortgage backed securities to ‘buy down’ mortgage interest rates. Without getting too technical, the money that the government had set aside for this is starting to dwindle, and many experts think it may be exhausted by mid-Spring. As we know from history, especially in this industry, there is no crystal ball. But from what we know at this point, the only direction interest rates are going to move is up.

3. Housing Prices – echoing my crystal ball comment from above, if you had asked anyone in 2004-06 whether the housing market would crumble, the majority would have answered ‘No way’. Surprise. I don’t pretend to know what’s going to happen to housing prices in the next year or two. I can’t say whether or not we’ve hit bottom or if we’ve flattened out  and when it will begin trending up. One thing I do know is that by the time we know we’ve hit bottom we will have already been moving upward. The days of flipping a house by the average buyer are gone. If you’re buying a home or property you should plan to hold it for at least five years.

What Should You Do?

First, despite what we’re taught to do in America, find out how much you can spend. We have a tendency to look at what we want to buy before we know if we have the money to actually purchase it. Find a mortgage professional who is a friend or maybe your friends and family have worked with. Otherwise, find a reputable bank or mortgage bank/broker (they’re different) and see if you can get a pre-approval. That pre-approval comes in handy when you’re interviewing your Realtors and certainly when you and your agent put an offer on a property. But most importantly, that pre-approval tells you what you are able to spend. It ensures that you’re not searching for a $600,000 property when you are qualified for a $300,000 property.

Next, remember that just because you’re qualified for a $300,000 home doesn’t mean you should (or even can afford to) purchase at that level. No one knows your financial responsibilities better than you. It’s time to take a conservative approach and determine if you have the resources and reserves to purchase a home.

Simply Put

1. Ask yourself why you want to buy a home

2. Review your savings and current investments

3. Talk with a mortgage professional

4. Interview a Realtor

Is It Time?

It may or may not be the time to buy for you. If you’ve found that you have the ability to purchase a home and it’s a good move for you, that’s great! There are so many factors that you can take advantage of. If you’ve decided that it’s not the right time, that’s great too. You’ve saved yourself some regret down the road if you’ve at least looked into it.

One major point to remember, never let anyone push you into buying. Whether it’s your family, your friends or any professional you may be working with. Home-ownership is a joy that you have to want for yourself.

I’ve met with several clients who have decided that, after investigating their options, now offers them an opportunity like no other. Don’t wait, investigate!

The Home-Buyer Tax Credit – Make it work for you!

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The weather is getting colder in Chicago (despite the last few days of abnormal warmth) and it’s time to get out the winter gear to survive the next few months of snow. BUT: THE GOOD NEWS STARTS NOW!

You may have heard that the Home-Buyer Tax Credit has been extended and also expanded. As with anything that is generated from our government that involves taxes, it can be tricky and confusing to figure out if you qualify. I’m hoping to help you understand what it means and how to put it to work for you.

Starting December 1, 2009, and running through April 30, 2010, the tax credit extension has provided more time for home buyers to take advantage of the $8,000 tax credit. Now, the name, the ‘First-Time Homebuyer Tax Credit’ has been changed to reflect the modifications from the initial tax credit offered.

First, single, first-time home buyers who earn less than $125,000 in adjusted gross income and married first-time home buyers who earn less than $225,000 total, are all eligible to receive the full $8,000 tax credit. For those who make more than those ceilings, there is a phase out scale that provides a portion of the credit up to $20,000 above those limits.

In addition to first-time home buyers, those who have not had ownership in a home for three years or more prior to their purchase of a new home are eligible for the $8,000 credit as well (the same income limits apply here too).

Now for the exciting part! The ‘New and Improved’ tax credit now also provides for those who currently own a home and are looking to sell and buy a new home. The same income limits apply, and the seller must have owned the property for at least 5 years (no flipping here). The tax credit available is $6,500. Not bad! Especially considering that mortgage rates are still low and prices are still very attractive so trading up (or down, you don’t need to buy a more expensive home than the one you sell to receive the credit) is a viable option for many! The only limit is that the home you buy has to be below $800,000 in price.

I have easy to use charts that show all of the terms of the tax credit so contact me if you want more information at www.kevinvaneck.com. I hope that this helped explain how you can use the tax credit to your advantage, and whether or not you qualify.

I have a feeling this winter is going to be different. I’m going to be trudging through the snow with a lot of buyers and sellers. It might be time to get a new pair of boots.