Cash Reward For Buying a Home in 2009: $8,000 IRS Tax Credit

$8,000 IRS Tax Credit

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the First Time Buyer Tax Credit passed in 2008, this First Time Buyer Tax Credit does not have to be repaid. A tax credit is not an income tax deduction. It is a reduction in income taxes owed.

$8,000 Home Buyer Tax Credit at a Glance:
* The tax credit is for first-time home buyers only.
* The tax credit does not have to be repaid.
* The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
* The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
* Single taxpayers with incomes up to $75,000 and married couples with incomes up to$150,000 qualify for the full tax credit.

For a qualified first time buyer, this tax credit can be compared to receiving a cash reward for buying a home. The cash reward is received when filing the 2009 income tax return. Most first time buyers utilize most all of their savings when purchasing a home. Wouldn’t it be advantageous to have $8,000 to replenish the savings account after the home purchase, have the money available to replace the older, less efficient furnace in the home purchased or replace the exterior siding? Perhaps paying down the outstanding mortgage balance, and saving even more money over the term of the mortgage? There are numerous options and opportunities this tax credit provides.

Mortgage interest rates are historic lows. Most areas have experienced an adjustment in home values. Uncle Sam has decided to give qualified first time buyers a cash reward for purchasing a home! If purchasing a home is something you are considering, explore all the available options whether you are looking to live in Iselin, New Jersey or any other city or state.

For more detailed information on the $8,000 First Time Buyer Credit!

Buyers: Be Prepared When Making a Contract Offer

Some Preliminary Information

Be it the real estate market in 2009 or any other real estate market for that matter, the structure of a real estate purchase contract offer can be the difference in it being accepted or rejected. No, the offering price is not the only factor in negotiating a contract to purchase a home.

Regardless of the number of pages in the sales contract, a contract offer can be broken down into 3 separate parts which can be important to the seller: price, terms and conditions. Each has to be satisfactory in order to obtain seller acceptance. In some situations, full price offers are not acceptable due to the buyer’s terms and conditions in the contract offer. There are instances when contracts get accepted and signed even though the offer is lower in price than other competing offers, but is more favorable for the seller in terms and conditions.

What then is the secret in preparing and submitting a contract offer to buy real estate? This is where the value of an experienced Buyer’s Agent is with providing assistance in preparing and structuring the contract offer to purchase in a manner that does not create questions or concerns for the seller and their listing agent when it is presented to them.

There is more to purchasing a home than just looking at houses, whether the home is in Iselin or Colonia, New Jersey, in Middlesex County or any other state for that matter.

The first step toward purchasing a home is obtaining Mortgage Pre-Approval from a reputable Mortgage Lender(Read Mortgage Pre-Approval versus Mortgage Pre-Qualification), and be sure a copy is included with the contract offer. Why? The first question to be asked by the seller and listing agent at a contract presentation will be “Does the buyer have Mortgage Pre-Approval? And this is where the benefit of a Mortgage Pre-Approval letter provides advantages over a standard Pre-Qualification letter.

Secondly, there is no cardinal rule that there must be some fixed amount that a seller will negotiate from their asking price. Home buyers need to obtain factual sales information about the market area, and section of Town, they are considering buying in before submitting an offer. While it is very likely that sale prices have declined in the past few years, they have not dropped equally in all Towns and in all neighborhood locations.

Remember Economics 101 from Grammar School: “What’s true of the whole may not be true of the parts”. That is what I am referring to here. Real estate values are local, and various factors influence market value such as buyer demand, amount of homes for sale, mortgage rates, local economic conditions and so on and so on. As important, similar design and size homes may differ in value due to condition and improvements.

In preparing a contract offer, it is important that a buyer obtain a Market Analysis for the property being considered. A report like this can be prepared by the buyer’s agent and it should contain information comparing similar properties which are active on the market for sale, homes which expired and did not sell in the past six months, under contract sales and closed sales in the past three months. This information should also provide the asking price history and days on market before sold. With a report like this, a buyer can then have a better understanding of the real estate market and be better prepared when submitting a contract offer.

It is highly recommended that buyers obtain a blank contract of sale and addendums early in the home searching process. Contracts can be intimidating to many buyers. It would be much better to review the contract documents in advance of making a contract offer. Making a contract offer is an important decision. Being properly prepared is the first step toward making a successful contract offer.

Thirdly, buyers should be completely aware of their personal finances and the total costs of purchasing a home. Buying a home involves down payment, expenses occurred during the purchase, such as mortgage application fee, inspection fees, and closing costs. It is important for buyers to obtain the estimates related to transaction expenses and closings costs. When a buyer is not properly prepared for expenses like these, they could have an affect on exactly how much a buyer has for the down payment which then could affect how much is needed in a mortgage to complete the purchase.

Buyers should be educated and informed when making an offer to buy a home.

Surprises are for birthdays, not buying a home!

"The Contract Offer: What Price to Start With" will be posted shortly

Searching For a Home or Selling a Home in Middlesex County, New Jersey

Closed Real Estate Sales Data

Obtaining reliable current information is a very important aspect of searching for, or selling a home, in Iselin, New Jersey or any part of the County or State. I am providing Sales Data from the Middlesex County Multiple Listing System for one family homes and condos/townhouses comparing closed sales in 2009 to 2008.

This type of information can help you see the factual average trends of real estate sales and sale prices in particular Towns of interest as compared to reading about regional or national statistics.

Real estate is local. If you are thinking of buying or selling a home in Colonia, the real estate market there may not be same as in Edison or Woodbridge. Real estate values vary from Town to Town, and from one neighborhood or section of a Town to another.

While statistical information is important to review, knowing the average sale prices is just part of the process of understanding the current trends in real estate values for a particular location, especially when buying or selling home. Other important information to obtain would be the comparison of closed sales from one year to another, the comparison of active homes on the market to sold and closed sales and a list of recent homes which were taken off the market unsold, commonly referred to as expired listings.

Obtaining local, reliable real estate information is extremely important to home buyers and home sellers, especially in a real market like this one in 2009. Obtaining this type of information, and more information about a particular area, is not difficult. Most all real estate agents can provide it. However, it is the interpretation of this information and data which becomes even more important in making home buying or selling decisions. And that leads to another very important consideration in buying or selling a home, selecting the REALTOR to help.

Providing MLS information and statistics is easy. However, it is the interpretation of that information which separates the abilities and value of one agent to another.

For home buyers, find a REALTOR who has recently sold homes in the desired areas of your home search, is very familiar with market values and continually shows various homes in the price range and area desired. Lastly, select a REALTOR who is not hesitant to provide all the real estate statistical information pertaining to the home purchase decision.

For home sellers, find a REALTOR who has recently sold homes in the surrounding area, is very familiar with market values and continually shows various homes in the price range and area the home is located.

Lastly, select a REALTOR who is not hesitant to provide all the real estate statistical information pertaining to the home selling decision.

Click Here to View 2009 Closed Sales Comparison Chart for Middlesex County, New Jersey.

For More Detailed Information, Click Here.

I am a REALTOR®.

A REALTOR® is a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® (NAR) and who abides by its Code of Ethics.

I am a Member of the Middlesex County Association of REALTORS®, New Jersey Association of REALTORS® (NJAR) and the National Association of REALTORS®.

Equally important to the Code of Ethics that all REALTORS® must abide by is the fact that these Trade Associations are the premier advocacy groups for private property rights for both the consumer and real estate licensees.In case you missed some important news affecting private property ownership, I am providing Press Releases issued by the New Jersey Association of REALTORS®.

February 27, 2009

New Jersey REALTOR® Oppose Obama Plan To Slash Mortgage Interest Deduction.

The New Jersey Association of REALTORS® (NJAR®) today said President Obama's budget proposal to reduce the amount of mortgage tax deductibility for families earning over $250,000 will negatively impact housing and economic recovery efforts in high cost areas like New Jersey.
"While New Jersey enjoys the second highest household median income in the nation, our taxpayers also bear the heaviest state and local tax burden in the country," said NJAR® Executive Vice President Jarrod Grasso, RCE. "In a high cost state like ours, reducing the amount of mortgage interest a family can deduct from their taxes will have a devastating impact on housing recovery efforts and limit many people's ability to achieve the dream of homeownership."

President Obama's budget proposal would limit the tax rate at which high-income taxpayers, those whose family income is $250,000 ($200,000 for singles) or more, to 28 percent for itemized deductions. Even though the proposal would apply only to households earning $250,000 or more, home prices across the board would fall as home buyers discount the value of the deduction in their purchase offers. This will lead to a drop in all home prices because a fall in home prices at the top end will eventually filter down to lower priced homes.

"At a time when both our federal and state governments are grappling with massive budget deficits and attempting to jumpstart our economy, this is exactly the wrong message to be sending," added Grasso. "Discussing President Obama's ill-advised plan will be at the top of our agenda when the NJAR® leadership team heads to Washington, D.C. next week. We are hopeful New Jersey's congressional delegation will see how this approach will undue the work they have already done to revitalize the housing market and work to change it."

The NJAR® leadership team will visit Capitol Hill in Washington, D.C. next week to discuss key issues that have an impact on property owners and the real estate industry, including the proposed cut in the mortgage interest deduction.

March 10, 2009

Corzine Budget Proposal is an Assault on Property Owners.

Today, to a joint session of the New Jersey Legislature, Governor Jon Corzine proposed the state's spending plan for the upcoming year. This year's budget proposal was an attack on property owners. Property owners took a major hit when he declared his goal to eliminate the property tax deduction next year on state income taxes for everyone but seniors.Amongst the drastic cuts Governor Corzine announced was a 2 percent reduction in municipal aid, which is used to offset property taxes. He also stated his intention to gut the property tax rebate program. Property tax rebates would be maintained at current levels for seniors, the disabled and those earning less than $50,000 a year. Households

Stimulus No-Brainer For Ailing Housing

April 1, 2009
Home News & Tribune
By Jarrod C. Grasso, RCE

The writer is the executive vice president of the New Jersey Association of Realtors.

Pundits and partisans alike are fiercely debating the benefits of the recently enacted federal stimulus bill, formally known as the American Recovery and Reinvestment Act of 2009. There is one thing they can all agree upon: the stimulus bill provides enormous incentives for families looking to purchase a home, especially for first-time home buyers.

In fact, the provisions incorporated in the new stimulus bill coupled with the rock-bottom mortgage rates make this the most advantageous time to buy a home in recent memory.

The best-known and probably most-powerful provision of the stimulus program is the $8,000 federal income tax credit that the bill extends to families or individuals who purchase their first home before Dec. 1. This tax credit would wipe out nearly half of the entire federal income tax obligation for a family with a combined income in the range of $100,000.

Unlike the previous $7,500 tax credit, new home purchasers who take advantage of these tax benefits are not required to pay them back to the federal government. In short, the new tax credit is both larger and more taxpayer-friendly. Like the previous tax credit, however, its full benefits are limited to individuals earning as much as $75,000 and couples earning as much as $150,000. The credit is phased out for filers earning more than those amounts and is reduced to zero for individuals earning more than $95,000 and married couples earning more than $170,000. It is available for first-time buyers, anyone who has not owned a principal residence three years prior to their purchase. There are other important benefits included in the stimulus bill that are particularly helpful for home buyers.

The stimulus bill, thankfully, preserves the 2008 limits for loans issued through the FHA, Fannie Mae and Freddie Mac. The loan limits mean that these critical lending agencies are authorized to issue loans in most New Jersey counties of up to as much as $729,000 or $440,000, depending on the loan program. These loans are stable, too, as Fannie Mae and Freddie Mac are backed by the government. These generous lending limits are critically important in New Jersey, where housing values are typically above the national average.

A portion of the American Recovery and Reinvestment Act authorizes the expenditure of an additional $2 billion on programs to stabilize and preserve neighborhoods where foreclosures have taken place. The program provides grants to states and municipalities to address problems that can occur when entire neighborhoods are decimated by foreclosures. These funds can be used to purchase, repair and resell abandoned properties.

The neighborhood stabilization aspects of the stimulus bill would also allow state and local governments to make loans for the purchase of distressed properties by low- and moderate-income individuals. Neighborhood stabilization programs like this can help to bring qualified families and individuals into the housing market while at the same time guard against the blight that can occur when neighborhoods are plagued by abandonment and foreclosures.

The stimulus bill also provides vast incentives for energy conservation, weatherization and the use of other green technologies. The bill provides tax relief and accelerated depreciation for small businesses and others who invest in energy conservation and the use of alternative energy in commercial buildings.

Homeowners can also benefit from grants to state and local governments for energy audit programs and for retrofitting homes in order to make them more efficient. These grant programs can significantly lower the monthly utility costs of owning a home.

Although the national economy is perilous, the underlying principles of the real estate market remain strong. Congress and the president were right to focus on housing as a key driver for the American economy. A vibrant economy depends upon a vibrant housing market. Assuring that Americans can purchase, own and maintain the homes in which they live and raise their families is fundamental not only to our prosperity but to the essential American value of owning a home.