This is an oh-so fantastic time for first-time home buyers who were priced out of the market and bidding frenzies of 2-3 years ago to buy their stake in the American Dream. With a knowledgeable, patient and informative agent at your side, to guide and educate you about all stages of the home-buying process, this is the time to take a deep breath and start planning to make your move.
First-time home buyers may also be wondering how their agent gets paid. With the passage of "Buyer Agency" regulations over 10 years ago in most jurisdictions, the law allows an agent to fully represent the interests of their buyer client, upon the signing of a buyer-agency agreement - even though the seller is paying all the commissions! Now how is that for a good deal! Your agent's duty is to you, and they are supposed to promote your interests in all negotiations, from price, to home repairs after inspection, and so on. If you don't sign the buyer agency agreement, the agent showing you properties can still get paid by the seller, but they are not obligated to promote your interests. The agent must be honest with you and can provide you with objective information, but you are "only" a customer at that point, not a "client". Big difference!
You can read more about me and a few testimonials from first-time home buyers and others.
Programs to assist first time home-buyer programs - who will live in the home as their primary residence -- exist in just about every jurisdiction, but they do fluctuate according to what's happening in the financial markets, and may suffer from budget cuts in the near term. Which means that right now, some programs are undergoing changes, or being eliminated. So this guide is not intended to be the final word, just a snap shot of programs that as of this writing (11/20/2008) appeared to be still available. Information is deemed reliable but not guaranteed ... as there are many changes happening quickly!
FEDERAL PROGRAMS
As part of the recent government efforts to stabilize the real estate market, there is a $7500 federal government tax credit available to many first-time buyers. You must close on the purchase by July 1 2009 --- so this is the perfect time to be out looking! To qualify you must earn no more than $75,000 per year (single) or $150,000 (married with joint return). Higher income than that, and the amount of the credit declines. This would come in the form of a tax credit, and if an interest free loan repayable over 15 years. It can be used for fixing up and improvements, new furniture, you name it. The buyer repays it in $500 increments in future years, with no interest, when filing tax returns in later years - or it is repair in full upon sale of the property.
MARYLAND
The state of Maryland offers some programs available in all counties, such as first-time buyer assistance offered by the Community Development Administration (CDA). Buyers with moderate income and moderate credit scores can qualify, and the program is offered through select lenders approved by the state. This can assist with downpayment and settlement costs, and loans can also be 40 year fixed to make the monthly payments more affordable.
Maryland also eliminates 0.25% on the transfer tax on the sale for first-time buyers - it may not sound like much, but on a $200,000 purchase, that's $500 less you do not need in cash for settlement.
MONTGOMERY COUNTY
The Montgomery County Housing Opportunity Commission (HOC) program seemed to have an uncertain fate but is apparently back on track at this time. This program is only available through specific County-approved lenders. I can put my clients in touch with a good lender who works on this program.
In the past, this program has provided several options involving below-market interest rates, only the first of these 3 is available right now, but lets keep our fingers crossed that :
- Below market rate for a 30 year fixed loan, with 0 points
- (A step loan with 0 points, which provides for significantly reduced interests rates for the 1st and 2nd year of the mortgage, then becoming a fixed rate for years 3 through 30, at a very competitive rate.)
- (3% purchase assistance.)
WASHINGTON DC
For properties under $320,000 to be occupied by a first time home-buyer, the DC Tax Abatement program provides an exemption from the DC Recordation Tax of 1.1%, and an allowable credit from your seller equal to 1.1% of the DC Transfer Tax. It also provides a 5 year tax abatement that begins October 1 following your closing or settlement date. To qualify, total gross household income must not exceed $51,660 for 1 person, $59,040 for 2 persons, $66,420 for 3 persons etc,
Washington DC's unique $5000 first time home buyer tax credit (this is not a loan, so it does not have to be repaid like the federal credit) is also still available, having just been renewed in October 2008. It is available to single tax-payers with income under $70,000 (it gets phased out between $70,000 and $90,000) and for joint-filers with income under $110,000 (phased out after that).
The DC government just recently suspened the HPAP program which assisted low- to moderate-income level DC residents with homes purchases. The local association of Realtors is appealing to the Mayor to reinstitute this important program.
AND EVERYWHERE...
There are many more programs out there, in Arlington VA, Prince Georges County MD and the list goes on. Many programs will require the buyer to take a workshop to become more familiar with the home buying process, costs involved, and debt management. There are also non-profit groups such as NACA, the Neighborhood Assistance Corporation of America, that do an outstanding job of assisting the first-time home-buyer.
So what are you waiting for?! Send me an email or call 301-575-4915
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