Without knowing your specific situation and qualifications, I can't tell you whether or not it's a good time for you to buy your first home right now or not. Besides, without knowing me, would you believe me anyway?
What I would like to do is give people who are on the fence about buying their first home in South Jersey, whether it be in Mount Laurel, Marlton, Moorestown or in the surrounding towns some food for thought.
Are you aware of the Housing & Economic Recovery Act of 2008? More specifically, the First Time Homebuyer Tax Credit (section 3011)? If not, here are some of the attractive highlights of this bill. (Disclaimer: Always seek the advise of your Tax Advisor regarding your situation and how this Bill might effect you.)
- First Time Homebuyers may be eligible to receive a $7500 tax credit (or 10% of the cost of the home, whichever is less). This "credit" is basically a no-interest loan that you repay a portion of (6.67% of credit) each year for 15 years. If you sell before it's repaid, then the remainder is due upon the sale of that home.
- Even if you've owned a home before you may still qualify. If you (and your spouse) have not owned a principal residence in 3 years previous to the purchase, then you may qualify.
- This credit is good for purchases on or after 4/9/2008 and before 7/1/2009. If you've already purchased your first home this year, make sure you tell your tax advisor about this credit.
- There are income limits. The full credit is available to individuals with adjusted gross income of no more than $75,000 or $150,000 on a joint return. The credit phases out above those caps: $95,000 and $170,000 respectively.
- If you buy a home after 12/31/2008 it might still be possible for you to get the deduction with your 2008 taxes. This was taken from the bill:
- "Election to Treat Purchase in Prior Year- In the case of a purchase of a principal residence after December 31, 2008, and before July 1, 2009, a taxpayer may elect to treat such purchase as made on December 31, 2008, for purposes of this section (other than subsection (c))."
The possibility that you could buy a home in 2009 and get this credit with your 2008 tax return is significant! Again, make sure you consult your tax advisor before making any assumptions about how this bill will effect you.
Another important factor for those that are on the fence relates to FHA and their downpayment guidelines. FHA is an excellent source for financing for many first time homebuyers because qualified buyers could get an FHA loan with just 3% down. That will change as of 1/1/2009. FHA will then require 3.5% for a down payment. For all the information you need about FHA financing, I encourage you to visit Jeff Belonger's blog. He's an FHA "Guru."
You may want to check my math, but an increase of .5% amounts to an additional $875 for a $175,000 purchase. The additional amount might not make a huge difference to you, but it is a piece of the puzzle and it just might be the final piece for you to have a complete picture of why now might be the time for you to get off the fence.
To find out if now is the right time for you to buy and take advantage of the opportunities that exist in this market, give me a call or send me an email. I'd be happy to discuss your options and help you determine which side of the fence would make the most sense for you.
Besides, sitting on the fence is really uncomfortable isn't it?