Fall Is In The Air...almost

I love the fall- it's my favorite season. I love the way the trees and plants display their fall foliage like so many peacocks' plummage and the cold crisp mornings that give way to mild sunny days. I like the smell of fireplaces burning in the evenings when I walk my dog. I like the idea that's it fleeting- soon all of the leaves will be gone, the mild afternoons replaced with cold snowflakes, my flip flops replaced by Keenes and I will once again don my hoodies. I will change from beer to red wine and an occasional coffee with Baileys or the like....so as I see it fall heralds huge change.

And with fall comes a change in the the federal government's first time home buyer incentives, actually the end of the program. The program that provides the tax credit is set to expire on December 1st 2009. This means that we are effectively nearing the end of the time during which a buyer can place a property under contract and reasonably expect to close on the property prior to November 3oth. Given new lending rules, most transactions will take 45 days to close and as the deadline gets closer, quicker closings will become less likley. With all of that said, I know there has been some confusion about how the credit works so here is what I know:

• First time home buyers can receive a credit of up to $8000 on their federal income tax. The credit is equal to 10% of the purchase price of the home, (which can be a condo- it is not restricted to single family homes). The maximum amount is $8000. So you have to spend at least $80,000 to get the full credit.


• Once the purchaser has closed on the property they will receive a certificate which they can use to amend their 2008 income taxes and the refund will typically be sent to them in around 2 weeks.


• Once the check is received it can be used in any way the purchaser wishes.


• For those people who are struggling with downpayment money, FHA only requires 3.5% of the purchase price as down payment and it is often possible to get a seller concession for additional closing costs that the buyer will incur.

There is talk of both extending the program into next year and expanding it to include all homebuyers not just first timers, but to my knowledge it has not yet been ratified. If you can, take advantage of this once in a lifetime deal, because the way I see it, even if you buy an $80000 property you can come out ahead , with a little planning. You put $2800 downpayment, you ask the seller to pay all of your closing costs, another $2800 or so, and you net $5200 with which to fix up your new pad or buy some cool new furniture or take a vacation. And all of that is not to mention the yearly income tax credits related to the interest on your loan, or the potential for equity gain. I see it this way: You can go on paying rent, paying down someone else's mortgage or you can buy a home, get the IRS to give you money for doing so, know that every time you make a payment you are paying down the principal amount of your mortgage, and you can take income tax credits every year so that your net income is higher. And with a little bit of luck perhaps you will start gaining equity after the markets begin to thaw. If you are thinking about buying or you have questions about the first time home buyers credit- don't hesitate to contact me or one of the other professinal realtors at Cygnus Real Estate.

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