Listen Up, Orlando First Time Buyers

Maybe you have heard so much about the $8,000 first time homebuyers credit that you don't even listen any more. But if you are in a position to buy an Orlando home right now it is time to listen up: the tax credit is about to expire on November 30. Since processing your loan, appraisal, and paperwork for the home takes longer these days, October 15, or to be safe, even October 1, is the deadline. Only those who have closed on their homes before December 1 can claim the credit.

You know the basics of the credit: you can get up to $8,000 or 10% of the value of the house for your purchase. Did you know though, that the credit is good on a variety of single and multipurpose dwellings, including mobile homes? Maybe your first home is not what you want in the long run, but all you have to do is live in it for three years. You can sell it and apply the equity toward the downpayment on your next home.

At the moment in Orlando, there are plenty of bank owned properties up for grabs. If you want to buy them, renovate them, and flip them, the credit is not for you. But if you buy one, you can use the $8,000 credit in conjunction with a 203K loan to renovate a primary residence where you will live for three year before you sell it or rent it out. If you want to be a landlord, you can buy a two family now, live in one suite, and convert the other to rental property in three years.

In general, homes are affordable. Recent figures from the Orlando Board of Realtors indicate that the median sales prices in Orlando is $128,000. The affordability index is now 193% which means that a family earning $52,535 can afford to buy one the 8,964 selling for up to $257,142. For first time homeowners, the index is 137.5%. First time homebuyers with a median income of $35,724 can buy one of 5,629 homes in the MLS. Home prices are 36% lower than in August 2008.

As a new homeowner, $8,000 can help you in many ways.

Since you have to claim it as a credit, the $8,000 in cash will help you get the things you need for your home and subsidize your first few mortgage payments. Cash is often tight when you move in. Who wouldn't like to have Uncle Sam buy new drapes, put on a deck, or re-landscape the yard? Or who wouldn't like to transition from an apartment to a home with a cushion of money?

Knowing that $8,000 is enroute can help you get more home than you planned. It is never a good idea to buy more home than you can comfortably afford, but the credit can effectively bring down the cost of the home so you can buy a home at the upper end of your price range. Since many lower-end homes are going quickly in Orlando, it is to your advantage to be able to look at a wider price range of properties. Since many homes are already priced to sell at incredible prices, you can still plan on lowering your total lower cost by $8,000 when you apply this credit to the principle.

If you need the money toward a down payment, there are several ways to do use it for this purpose. As a result of a new policy change announced in May, 2009, you can have the credit monetized for any part of your down payment over the3.5% required by FHA or can use it toward closing costs. You can also go to a state housing agency, certain non-profits, or certain lenders to have the credit monetized via a bridge loan or second mortgage to be repaid when the credit comes back. If you are short on your down payment or need help with closing costs, the credit could help you now.

Need a home? Have questions? Janice Petteway and the Exit Results Real Estate can show you the best properties in Orlando and other Central Florida cities.