I am closing on a house and I should gross 110k for 2009. I have lived in two separate homes deeded to me and my ex (I believe the mortgage on the second home was in his name only) for the consecutive years of 2000-2005. Do I qualify for any of the tax credit?

Congratulations on the new home first of all, that is fantastic news.

The tax credit has been both extended and expanded. According to the new tax credit limits, single household income limits have been raised from $75,000 to $125,000 and joint filers from $150,000 to $225,000, so your income would not be an issue. Additionally, homes with purchase prices up to $800,000 are eligible for this tax credit, so this would also encompass your new home.

My only concern would be the residency issue of your previous homes. You mention living in two residences for the years 2000 to 2005, one of which you believe is in your ex’s name. In order for you to qualify for the tax credit of $6,500 now being offered to homeowners who are not first-time purchasers, you must have lived in the same principal residence consecutively for 5 of the previous 8 years. If that is the case, you can count on Uncle Sam for a $6,500 credit.

Hope this is helpful and best wishes in your new home Marie!

Christina Rordam is a REALTOR® for Exit Realty Central in Orlando and Baldwin Park, FL.

Are you interested in having a qualified REALTOR® answer your questions? Click through to Ask a REALTOR® now.

Are you a REALTOR® who would like who like to answer consumer questions? Click through to become an Ask a REALTOR® participant.

With the economy the way it has been in the past year, banks are less likely to give loans than they were previously, although the market is better now for buyers. Will buyers with less than perfect credit have opportunities to refinance their debt and be considered eligible for a home loan for first-time buyers?

The last thing we want to do is to allow people to buy a home just because it sounds good on the  news. The reason we are in the mess is in large part because our Congress decided it didn’t matter what someone’s credit was, as long as they were breathing, they should and could own a home. We see where that got us.

As a country and as individuals, we need to take responsibility for our actions. That means, we need to be as certain as possible that we can afford a home before we buy it. We can’t blame everyone else when we should never have applied for a home loan in the first place. So while I agree that banks have gone too far in the other direction, we have to use common sense and not approve people just because it’s the nice, politically correct thing to do.

No matter your age, race, religion or any other description you care to use, if you can’t demonstrate a strong ability to afford your mortgage and the other expenses associated with home ownership, if you don’t have a history of paying your bills on time and of not getting into too much debt versus your annual income, then you should not be buying a house. The American Dream may have and may still be home ownership, but that doesn’t mean it’s an American right. Earn what you have rather than being given what you have. You’ll be better for it and so will the economy.

Tim McBrayer is a licensed Realtor in the Triangle specializing in North Raleigh, North Carolina Real Estate. He is an Eco Broker and serves on the Green Builders of the Triangle education committee.

Are you interested in having a qualified REALTOR® answer your questions? Click through to Ask a REALTOR® now.

Are you a REALTOR® who would like who like to answer consumer questions? Click through to become an Ask a REALTOR® participant.

Is there a scenario in which a first-time home buyer would prefer an adjustable rate mortgage over a standard or FHA loan?

The simple, short answer is yes.  In my mind, ARMs are a wonderful cash flow tool to utilize in today’s world especially when homes are appreciating in value.

If, you, the buyer:

1) Can afford a normal 15 or 30-year fixed rate loan and plan accordingly

2) Have a way to invest that extra cash flow to be saved on a monthly basis  into something that will give you a better return on your money than tying it up in your home

3) Believe that liquidity is important, for whatever reason

4) Know that you can not just go and spend that extra, saved money without it coming back to roost in the long haul

Then, I think there is an argument to be made fo the fact that an ARM still might make sense for you. But don’t look at it as if it is free money because your required monthly payment is less. You could end up in the same unfortunate situation that played a large role in creating today’s environment.

Dave Congdon is a Broker Associate Islands International Realty in the Brevard County, FL area.

Are you interested in having a qualified REALTOR® answer your questions? Click through to Ask a REALTOR® now.

Are you a REALTOR® who would like who like to answer consumer questions? Click through to become an Ask a REALTOR® participant.

To recap the top stories in real estate during 2009, we reached out to our  friends in the blogosphere and in the media. Not surprisingly, respondents agree with David Kres of Buyers Brokers Only, LLC who says, “2009 will go down in history as the year of the first-time homebuyer.” Supported by the tax credit and low interest rates, first-time buyers had an unprecedented showing in 2009 and helped to boost the struggling economy with their aggressive approach to the market.

Although first-time buyers were this year’s big stars, the drama surrounding  foreclosures and short sales almost stole the show. Mary Shanklin of the Orlando Sentinel and Martin Wolk of MSNBC agree that foreclosures, and the problems created by them, were among the most important stories of 2009. Coined “toxic assets” these homes were either sitting vacant or creating a flurry of paperwork as first-time buyers and investors competed to find the deal of a lifetime. Due to defaulting loans,  foreclosures in 2009 helped cause the financial collapse, but by year’s end had become the most sought after properties. 

The rush to buy was due to a miraculous combination of factors. Interest rates continued to stay low, setting records as they fell against speculation. Low priced foreclosures and the high inventory of homes on the market brought prices down to, dare I say, affordable levels. Even the luxury home market saw steep declines as “sellers of luxury homes began driving their prices way down – some with price reductions in the millions,” says Kelli Hart of the OC Register.

Home sales continued to drop throughout the year until the Fed stepped in and passed the $8000 tax credit for first-time homebuyers. Then home sales shot straight up, according to Kay Severinsen from the Chicago Sun Times, to their highest levels in more than two-and-a-half years. REALTORS® Sonya Loose and Timothy McBrayer along with Kristin Schott of the OC Metro, all agree that the tax credit is one of the most important stories of 2009.

The impact all of these significant events will have on 2010 has yet to be seen. “The big unknown for 2010 is whether all the private and public efforts to strengthen the market can be sustained in the face of what will probably be rising interest rates,” says Les Christie of CNNMoney.com. With the tax credit extended and expanded, the hope is that 2009’s momentum will carry into next year and the real estate market can continue to aid in our country’s economic recovery.

-Naj Alikhan, Social Media Moderator, REALTOR.com®

The home buyer tax credit- which originally only applied to first time home buyers who had until the end of November to take advantage of the $8,000 tax credit- was recently extended to April 30, 2010 and expanded to include buyers who have already been homeowners.

While first time homebuyers who are purchasing a home- new or resale- are still eligible for the $8,000 tax credit, homeowners who have lived in their current home for at least five consecutive years within the last eight, and who want to purchase a different home, qualify for a different $6,500 tax credit.

To qualify for the $8,000 tax credit, first time home buyers must purchase a home on or after January 1, 2009 and on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. A limited exception exists for certain contract for deed purchases and installment sale purchases. See the IRS website for more detail. The law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010. The purchaser has until June 30, 2010 to close.

To qualify for the $6,500 tax credit, homeowners who are purchasing a new home must do so between November 7, 2009 and April 30, 2010, and they have until June 30, 2010 to close.

There are income limits for claiming the tax credit which are as follows: 

For sales occurring  after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return. The phase-out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

For more information on the home buyer tax credit, visit FAQ: Am I Eligible for the Tax Credit?, posted on Move.com’s Home Finance section.

According to a national survey commissioned by Move.com, one in six (15.4 percent) home buyers are considering saving up to buy a new home within the coming year. We asked the Ask a REALTOR® team to give us more insight into what these buyers can expect in 2010.

What extreme measures should a buyer be willing to take in order to buy a home in 2010?

Lora Davis: “Buyers, in many cases, will still be looking at short sales and bank owned REOs as the best values in 2010. Being willing to put in a little “sweat” after closing will get them the best buys. Many bank-owned and short sale homes need cleaning and refurbishing. Looking beyond the surface to potential will reap rewards in the long run.”

Steve Jackson: “The only ‘extreme’ measures that I would counsel my buyer clients to use in 2010 would be using ‘extreme’ caution…not to get caught up in the rush to buy ’something/anything’ just to get in under the tax credit deadline. I am of the opinion that the buyer must have clear and realistic goals regarding why they are buying, why they are buying NOW, what they are buying, how they are buying, and the list goes on.”

Michael Bunch: “Buyers need to seriously consider taking a manageable loss on the sale of their home to unload it so they can move up and work the percentage decreases in value to their benefit. Also, they might be able to get into a neighborhood that was out of their price point and probably soon will be again.

15.7% of buyers are looking for investment properties. What advice do you have for these buyers?

Sheri Moritz: “I work with a large number of investors in our market and have found the most valuable thing that most lack is knowledge and reality. I have yet to come across a new investor that tries to flip a house to find that it was much more than they thought they were going to be getting into. This is not a ‘learn-as-you-go-along’ type of venture, unless you have an extremely unlimited amount of money. Do as much research as possible and have contractors that you can trust who will give you realistic estimates of what repairs will cost and how long it will take to complete them. Then add about 20 percent  in dollars and 40 percent more in time.”

 
Deb Madey: “Investors need to clearly study and define their objectives. Once they have clearly identified the target criteria, an investor needs to identify, act, and move forward or away from possible properties quickly. If a property fails the criteria, move on. If it meets the criteria, do not agonize over insignificant personal perks a property lacks. A first-time homebuyer purchasing their primary home can and should focus on the details that make a house a home. Perceptive investors know their targets, make offers and walk away at pre-determined thresholds.”

Are you interested in having a qualified REALTOR® answer your questions? Click through to Ask a REALTOR® now.

Are you a REALTOR® who would like who like to answer consumer questions? Click through to become an Ask a REALTOR® participant.

In most markets, factors like price declines and high inventories have given buyers the upper hand. Now that the tax credit has been expanded to move-up buyers, there are even more buyers competing for desirable properties. First-time buyers can take their time finding the right home, but move-up buyers face a balancing act when buying a new home while simultaneously selling their existing one.

Anthony Licciardello blogs about moving-up and selling at the same time:

“Here is what usually happens: Many folks will look at homes for months until they find the home they like, make an offer, and if the homeowners accept it,  decide it’s time to sell.  Usually, that requires getting the absolute highest price for their house in less than 2 weeks.

The reality of this sale coming together are about the same as a herd of buffalo charging down the street, in a hail storm, between the hours of 5 and 7 pm, on the second Tuesday of the month, on an even numbered calendar day. While some might call this a sale on contingency, I wouldn’t. This is a sale on absolute luck.”

Licciardello continues his post with a list of questions that every move-up buyer should ask themselves. Banking on the sale of your current home to help pay for your new home can really put a strain on your timeline. Licciardello recommends using a qualified REALTOR® and an attorney to help you balance these complicated transactions

Click through to read Anthony Licciardello’s full post.

Sign up for a free Featured Blog on Realtor.com today.

The $8,000 home buyer tax credit has kept potential buyers on the edge of their seats all week as it passed through the Senate on Monday, then the House on Wednesday. It has been officially extended and expanded, as President Obama has now signed it into law. The extension is only until April of 2010 but that’s still enough time for first-time buyers to close on their dream home. The expanded tax credit also includes current homeowners as well.

Jim Starwalt blogs about the extended tax credit:

“November 6, 2009: President Obama has signed into law today the bill that has extended and expanded the home buyer tax credit.Congress passed a bipartisan measure this week extending the $8,000 home buyer tax credit to April 30, 2010.

Additionally, more buyers are now eligible to take advantage of the home buyer tax credit, which includes a $6,500 tax credit for buyers who are current home owners and have lived in their home for five of the past eight years.”

The tax credit has helped give the economy a boost by raising home sales. The hope is that this year’s sales momentum will continue into next year. With the extension and expansion finally a reality, all of the would-be buyers who thought they had missed their opportunity to get a great deal in real estate can get back to their home searches.

Click through toread Jim Stalwart’s full post.

Sign up for a free Featured Blog on Realtor.com today.

REALTORS® have the unique opportunity to work with  young buyers as they make one of the most important purchases of their life. Unfortunately, many of these first-timers are unfamiliar with the costs and requirements to purchase a home.  Oftentimes when they do learn, it seems like too daunting of a task to undertake. As a Realtor, you can help make their home ownership dream a reality by pointing them towards programs that can assist them in their efforts.

Joe Cline blogs about counseling and down payment assistance programs:

“Many first-time homebuyers make the mistake of underestimating how much it will cost to purchase their new home. They assume that the financing process will take care of everything and they won’t have to pay a penny out of pocket in order to get into their home. There are real estate agent fees, down payments and closing costs that will be associated with buying a home.

With a first-time home buyer grant, you can get help with these costs as part of the services sponsored by the Austin Housing Finance Corporation, which is a division of the Austin city government. The down payment assistance program (DPA) will help with purchasing a home by granting a specific amount of money to be used as a down payment for a home.”

Down payment assistance counseling programs can vary from city to city and state to state. As a part of knowing your local area, a Realtor should learn where a buyer can find these resources and what is needed to take advantage of them.

Click through to read Joe Cline’s full post.

Sign up for a free Featured Blog on Realtor.com today.

First-time home buyers have just seven weeks to find and close on a home to qualify for the $8,000 federal tax credit before the November 30 deadline. REALTOR.com® recently conducted a survey that looked at common concerns associated with taking advantage of the first-time home buyer credit.  Forty-five percent of respondents interested in buying a primary residence as a first-time buyer said lack of properties in their price range would have a great deal of impact in their ability to take advantage of the credit, while 34 percent cited some impact and 20 percent said no impact at all.

Another significant challenge first-time buyers face today includes the potential for a lengthy process related to search and closing.  On average, first-time buyers search 12 weeks to find a home, while closing can take up to 60 days, depending on individual circumstances and local regulations.  When asked what kind of impact running out of time to qualify for the tax credit would have on their ability to use the federal credit, 35 percent said some impact, 31 percent said great deal of impact and 30 percent said no impact at all.

Interest rates, which play a major factor in affordability, remain low, at 4.92 percent last week for a 30-year fixed rate loan, according to Freddie Mac.  When survey respondents were polled on the difficulty of obtaining finance, 43 percent said it would have a great deal of impact in their ability to use the credit, 32 percent said some impact while 23 percent said no impact at all.

–Pierre Kacsinta, REALTOR.com®