If you have recently decided to move from renter to homeowner, you are not alone. First-time homebuyers made up 41 percent of the market, according the National Association of REALTORS®' 2008 Profile of Home Buyers and Sellers. And price declines in many markets around the country have created unique opportunities for those considering home ownership for the first time.
As a homeowner, you have security and stability, the freedom to decorate and remodel, potential to build equity and tax benefits. And with interest rates still at historically low levels - 5.22% for the typical, 30-year fixed-rate mortgage (as of early August 2009), combined with ample inventory, now is a great time to buy.
Plus, there are several incentives and programs available specifically for first-time homebuyers.
First-Time Homebuyer Credit
One program that is a great financial opportunity is the highly publicized First-time Homebuyer Credit, which was part of the Housing and Economic Recovery Act of 2008. This federal initiative allows first-time homebuyers to take up to an $8,000 tax credit, which doesn't have to be repaid, toward a new or resale property purchased prior to Dec. 1, 2009. For new construction, the purchase date is considered to be the date you first occupy the home.
Under this program, a first-time homebuyer is considered to be anyone who has not owned a principal home within the last three years. If you are married, both spouses must meet this criterion. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer. In addition, ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer. You are also eligible to claim first-time buyer status if you owned a principal residence outside of the United States within the last three years.
The actual tax credit may vary depending on the purchase price and your income. The credit is generally equal to 10 percent of the home's purchase price, not to exceed $8,000. In addition, the income limit to receive full credit is $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return.
For complete details, visit www.irs.gov and www.federalhousingtaxcredit.com. As always, consult with your tax advisor on how this tax credit may affect you.
State Programs
Many states also have first-time homeowner programs. Under these programs, first-time homebuyers may be eligible for grants for down payments and closing costs. Some states even offer various tax deductions and credits.
Mortgage Loans
As a first-time homebuyer, you don't have the advantage of using the equity in a previous property to help bridge costs associated with down payment, closing and other fees. Many financial institutions have mortgage products with you in mind. In addition, the Federal Housing Administration (FHA) offers mortgage programs in which your down payment can be as low as 3.5% of the purchase price, and allows most of your closing costs and fees to be included in the loan. Although FHA does not directly loan to consumers, you can work with a FHA-approved lender. For more information, visit www.hud.gov.
Workshops
Besides financial assistance, there are workshops specifically geared toward first-time homebuyers. They provide a wealth of information about the home-buying process, such as how to search for a home, setting up a budget, choosing a real estate professional, loan products, and so on.
The transition from renter to homebuyer is a large step and is arguably one of the largest investments you'll make, so make sure you take advantage of all the assistance available to make the road to homeownership that much easier.
Brandi Wells can be reached at (404) (402-1489). Prudential Colony Realty is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.
Survival Basics In Challenging Markets
1) Stay in communication with your customers. Don't assume you know what they want...now. They will tell you what is changing.
2) Turn off the TV news. The repetition makes it sound worse. Face your fear and let it drive you forward to change.
3) Focus on the positive. What can you do more of that gets the results you need? What can you offer that customers are asking for? New lines, pricing packages, opportunities?
4) Stay in touch with your finances. Don't leave the numbers to your accountant. Budget, expenses, cash-flow, profits.
5) Keep an eye on the negatives too. What is not selling, or as profitable as before? Why? Competition? What could put you out of business? Plan B?
6) Never stop marketing.** Who is your best/ideal customer? How can you reach them? Talk to them. What are they buying and why? What do they need to know that you can help with?
7) Assess what is working every week. (compare to last week, month, quarter, year)
Marketing is Essential, Always
1) Marketing Research. You can do this with your customers and sales force. Where is the market going, and what would make your product better (have greater value)? What's new out there?
2) What does your brand mean to your customers? You need to know, the good and the bad. Can you refine it?
3) The Four "p's". Product, price, promotion, place...Still are key elements... Too often we focus on only product and price, when promotion and place can differentiate more clearly. Pizza- Domino's, DiGiorno's, Chucky Cheese... Advertising message and getting the product are very different. Different customers and each product has its own added value.
4) Refine your advertising message. Focus on your target customer and use their language. A consistent "look" builds brand.
If you are having issues with appraisals, you may want to take some time to get familiar with what the new rules truly cover. NAR Government Affiars has posted a document on concerns about the Home Valuation Code of Conduct. Video details are also available.
About FHFA
The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing and Economic Recovery Act of 2008. The Act created a world-class, empowered regulator with all of the authorities necessary to oversee vital components of our country's secondary mortgage markets - Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. In addition, this law combined the staffs of the Office of Federal Housing Enterprise Oversight (OFHEO), the Federal Housing Finance Board (FHFB), and the GSE mission office at the Department of Housing and Urban Development (HUD). With a very turbulent market facing our nation, the strengthening of the regulatory and supervisory oversight of the 14 housing-related GSEs is imperative. The establishment of FHFA will promote a stronger, safer U.S. housing finance system. As of June 2008, the combined debt and obligations of these GSEs totaled $6.6 trillion, exceeding the total publicly held debt of the USA by $1.3 trillion. The GSEs also purchased or guaranteed 84% of new mortgages. Considering the impact of these GSEs on the U.S. economy and mortgage market, it is critical that we intensify our focus on oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.
Interesting tools for your home:
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It’s not just about buying a piece of property; this is a financial decision that is serious for everyone involved. This significant life event requires understanding and preparation.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
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