Home Buying in Aurora>Question Details

Dianne Yelm, Real Estate Pro in Aurora, IL

What is your opinion on the new $7500 Tax Credit that the Feds are offering first home buyers?

Asked by Dianne Yelm, Aurora, IL Thu Aug 7, 2008

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Hi Dianne:
I am both a Mortgage Broker and Realtor and have studied this bill as closely as I can. The bailout that they are offering is great if you are successful at convincing the original lender holding the note to take a huge cut (short) in order to refinance the first. Then, the owner has to share their profits with the FHA once they sell their home! It's a sliding scale but it never goes away - they will always have at least a 50% obligation to the FHA on the profits of their sale.

The $7500 tax credit is tricky because it has to be paid back over a 15 year span. The Buyer will not get it in time for their closing so it's really not helping the Buyer up front to secure a loan. But, it is Interest Free money so as long as the Buyer is aware that it has to be paid back, it's not a bad deal. The method of repayment is of question at this time. They may collect it in your tax return; they may not. I'm not sure about that yet and I don't think congress is either.

Good luck
1 vote Thank Flag Link Thu Aug 7, 2008
I have looked into this incentive and it is actually really great! It is for first time home buyers and is paid back over 15 years with zero interest and claimed on your tax return. When you sell the property, in whatever time frame you wish, the buyer only has to pay back the remainder to the IRS IF you have no appreciation.

Check with a mortgage broker to see which types of loans apply. FHA is the best at the moment. You can even get up to $35,000 to fix up a home you buy now. That is financed into your mortgage amount. You have to purchase the property as a primary residence.

Best regards,
Sandra Potter, CRS, GRI
Prudential Colorado Real Estate
360 S. Monroe St., Suite 500
Denver, CO 80209
spotter1997@msn.com
0 votes Thank Flag Link Tue Aug 19, 2008
Does anyone know how they decided on the dates of April 08 - June 09? I closed on a house on Feb 29th, 08 which means I don't qualify. It sucks for me ! If anybody has any information on how they came up with this and not making the credit retro to the beginning of the year.
0 votes Thank Flag Link Tue Aug 12, 2008
Most people don't live in a home for 15 years. When the owner sells in 5 years, they will need to shell out about 5K on top of the 6% real estate commissions. It will help ensure that the owner leaves with little or nothing. It may be a good thing, it removes incentives for moving. I have noticed that people are better workers when they're trapped under their houses. They just can't move and get a different job anymore.
0 votes Thank Flag Link Tue Aug 12, 2008
Anything that will stimulate the market is a positive.
0 votes Thank Flag Link Tue Aug 12, 2008
Say you have not owned a home in the last 3 years, and you buy one between now and June 30, 2009. You file your 2009 taxes and get a tax credit of up to $7,500. That money can be used for anything you choose, and you repay it interest-free over the next 15 years. If you sell the home before 15 years are up, the money is repaid upon the sale.

That's an interest-free loan and home ownership instead of renting. It's a good thing.
0 votes Thank Flag Link Tue Aug 12, 2008
It's not a cure-all, but I do think it is a nice bonus for those who qualify, especially if they are just getting by.
I think everyone taking advantage of it has to be sure and be well informed of the pay-back provision, if you don;t take time to understand it, the reality of it later could be bitter sweet
0 votes Thank Flag Link Sat Aug 9, 2008
Personally I think that it is going to be helpful in stabilizing the real estate market. Moreover, the additional support for Fannie Mae and Freddie Mac, which are other provisions in the legislation, will help to avert a further down slide.

I also support tightening regulations on mortgage brokers to help avoid the widespread predatory lending practices that are now being prosecuted. Many borrowers were told at the last minute at the closing table that the fixed rate mortgage for which they had applied and been approved was "pulled at the last minute" and that the borrower was being offered a ARM loan. Of course, they were sitting there with their moving truck on the way to the new house. When those ARM loans escalated above the initial teaser rates, and property values declined, they were upside down in a mortgage they could no longer pay. These situations have fed the short sale and foreclosure problems. Granted, we also had over investment because flipping had been so profitable for several years. At any rate, there are many affordable homes right now, and the $7500 credit should increase the buyer pool, reduce inventory, and gradually stabilize the market. What is your opinion?

Have you read the Barron's Magazine article about the Case-Shiller Report on the real estate market? It is quite scholarly and easily available online. They predict mid 2009 for the beginning of recovery. Read the reasons why.
0 votes Thank Flag Link Thu Aug 7, 2008
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