First Time Home Buyer Tax Credit...Loan...Gift...What?

President Obama released his budget proposal this week. His plan presents an aggressive follow up to the widely unpopular American Recovery and Reinvestment Act of 2009.

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What affect will this legislation have on the South Metro Atlanta market? Will this legislation help reduce the number of foreclosed homes sitting vacant in our communities? Will families who have experienced job loss, overwhelming medical bills or other financial hardships have any options for housing?

While most home buyers are still trying to unravel the mystery of the "First Time Home Buyer Tax Credit", the president is rallying support for more changes. So what is this tax credit? How does it work? Who is eligible? In a nutshell, the current First Time Home Buyer Tax Credit can be explained, as follows:

For First Time Home purchases on or after April 9, 2008:

- $7,500 tax CREDIT (not money paid at closing) for homes with a sales price of $75,000 or more. If the purchase price is less than $75,000, then the credit will be 10% of the purchase price.

- If the home buyer elects to take the credit, it must be repaid over a period of several years. This is essentially a LOAN given by the government when you file your taxes. There is ZERO interest.

For First Time Home purchases between January 1, 2009 and December 1, 2009:

- $8,000 tax CREDIT (still a credit to be taken when you file your taxes, NOT money paid at closing) for homes with a sales price of $80,000 or more. If the purchase price is less than $80,000, then the credit will be 10% of the purchase price.

- If the purchaser elects to take the credit, they are not obligated to repay it - AT ALL!

Read a more detailed FAQ on the First Time Home Buyer Tax Credit.

Read the details of the First Time Home Buyer Tax Credit changes with the passing of the American Recovery and Reinvestment Act of 2009.

South Metro Atlanta will see benefits from the $500 Million approved for Rural Housing programs. Many houses throughout Henry, Butts and Spalding county qualify for these ZERO DOWNPAYMENT loans simply because they are located in a Rural Area. If you would like to see if YOU qualify for this program, Contact Joe Farro with Premier Capital Mortgage. He is very knowledgeable on the Rural Housing programs and his blog is a great source of continuing information on the real estate and mortgage markets in the South Metro Atlanta area.

Neighborhood Stabilization funds (NSP) have been allocated to the Clayton County, Georgia area. These funds will provide grants through the Community Development Block Grant program (CDBG) that may be used to take vacant and unwanted homes off the market by allowing local governments to purchase, repair and resell these properties. Potential buyers for these homes may qualify for financing that can be provided by local governments through these funds. Once the property has been purchased and rehabbed, individuals and families with incomes at or below 120% of the local median income will have the opportunity to rent these homes. NSP funds used in a responsible manner through neighborhood stabilization programs have the potential to clean up vacant and unsightly foreclosed homes, and provide housing to families who have been affected by the current economic situation.

So with all of the details of the American Recovery and Reinvestment Act of 2009 still being sorted and implemented, what affect will President Obama's aggressive budget proposal have on the real estate market? The National Association of Realtors (NAR) opposes more changes to the mortgage interest deduction provisions of the budget proposal for several reasons as seen at Realtor.org. If you feel strongly for or against the president's budget proposal or any specific provision within, you have a civic obligation to let your elected officials know how you feel.