4 Tips for the Homebuyer Tax Credit

The federal homebuyer tax credit is back in action in a new-and-improved format that will benefit both first-time homebuyers and homeowners who want to sell their current home and buy a new one. The credit is reasonably straightforward, but there are some tips for those who want to take advantage of it. Here's what you should know:

1. Deadline: April 30, 2010
The most important tip is to be aware of the deadline. Buyers who want to use the tax credit must have their new home under contract (i.e., in escrow) by April 30, 2010, and must close the transaction within 60 days after that date.
That deadline is much sooner than it may seem: Many buyers take months to locate a house, and closing a transaction typically takes 45 to 60 days.

First-time buyers should get started soon because they may face a lot of competition from other buyers who also want to purchase a moderately priced home, according to Ann Pettijohn, a broker and owner of Oaktree Realtors in Orange, Calif. That price range is "very popular" and those homes tend to sell more quickly than higher-priced homes, she says.

Buyers who wait until 2010 may also find fewer homes on the market from which to choose, according to Allyson Bernard, broker and owner of Real Estate Professionals of Connecticut.

"Smart buyers will be out during the holidays when other people are preoccupied," she says.

The short deadline may create even more of a crunch for homeowners who need to sell their current home and purchase a new one, Pettijohn says. Sellers need to be realistic about the value of their current home and put their home on the market as soon as possible, so they'll feel confident about buying their next home, she says.

“Smart buyers will be out during the holidays.”Buyers who get behind the curveball shouldn't count on another extension to keep them in the game since Sen. Johnny Isakson, R-Ga., a former Realtor and the principal supporter of the legislation that extended and expanded the credit, has said in a statement that the tax credit won't be extended again.

2. Credit up to $8,000 or $6,500
Buyers also need to understand that the tax credit is equal to 10 percent of the sale price of the home, which could be less than the maximum of up to $8,000 for first-time buyers and up to $6,500 for repeat homeowners.
For example, if a first-time buyer purchased a small condominum that cost just $70,000, the tax credit would be $7,000. And by the way, if the home costs more than $800,000, the credit now drops to zero.

3. Get good advice
Homebuyers who want to take advantage of the tax credit should consult the right people for help, including:

A tax preparer, who can help them ensure they meet all the requirements to use the credit.
A mortgage lender, who can help them choose a loan program that will fit their needs.
A local Realtor, who can help them locate a home they can afford and want to purchase. If you'd like a recommendation for a local Realtor, no matter where you live, just let me know. I'll do the research for you and find a top producer in your area.

Buyers should be aware that not all loans allow the borrower to finance closing costs or accept a contribution from the seller toward those costs, Bernard says. Many loan programs do allow those options, but that "certainly is not a blanket opportunity," she says. Buyers whose savings won't stretch to cover all the out-of-pocket costs to buy a home should discuss that constraint with their loan officer or mortgage broker.

4. Beware of tax fraud
According to Patti Ketcham, broker and owner of Ketcham Realty Group in Tallahassee, Fla., homebuyers should educate themselves about the tax credit and learn the lingo.
"It is critical that buyers educate themselves and that they not fall for the slick smoke and mirrors," she says. "Anytime you have found money, it brings out all the rats."

Three Web sites that may be helpful are:

National Association of Realtors
National Association of Home Builders
IRS

Buyers and sellers should be wary of any advice that sounds suspicious or overly complicated, Ketcham says. For instance, buyers who are told to conceal any information from their lender should "get away" from whoever offered that advice, she says.

One final tip: The IRS has found such a high incidence of fraud and creative tax accounting associated with the homebuyer tax credit that taxpayers who take the credit will now be required to attach a copy of the settlement statement to their federal tax return as proof of purchase. Buyers should keep their paperwork handy.

Reposted from www.bankrate.com

Why Use A Realtor When Building?

Ask anyone who has built a home, and chances are they'll tell you it is a difficult process fraught with many choices and challenges. The payoff, however, is having a home where you've hand-picked each paint hue and door handle.

Putting a Realtor on your side when building a home is the smartest move you can make to ensure you dream home doesn't become a nightmare. As a Realtor, Sajata can help you decide if building is right for you, advise you on building the right house for your needs, act as a buffer between you and the builder, and help you avoid costly mistakes in the building and purchasing phases. Best of all, you pay nothing more for having a realtor on your side!

Is Building Right for You?
Put simply, building a home isn't right for everyone. A good Realtor can help you determine if building is right for you, or if perhaps buying an existing home is a smart move. Do you care if your paint is "scone" or "sand?" Do you have passionate opinions on brushed vs. nickel-plated aluminum?

Building the Right House
Once you've decided to build, there are many important decisions to make. Which neighborhood? Which lot? Which floor plan?

As a Fort Worth resident and an experienced Realtor, Sajata knows many of the floor plans of Fort Worth builders. She can find out about new developments that haven't broken ground, and which builders make what concessions.

A Buffer Between Buyer and Builder
Communication between builder and buyer is often the difference between a great experience building a home and a terrible one. Builders want you to have the home you desire, but also have tight construction deadlines to meet. An experienced Realtor stays one step ahead of the game to ensure you get everything you've dreamed of and the home stays on schedule.

If problems ever arise, a Realtor can "go to bat" for you; making certain that your home is nothing less than perfect.

Avoiding Costly Mistakes
The choices you make while building a home have a direct effect on the home's resale value. Sajata has helped many families build homes (in addition to her personal experience). She will help you get the biggest bang for your buck by:

•Selecting the right builder
•Negotiating the best price before construction
•Finding a personally compatible neighborhood
•Choosing lots with permanent premium views
•Avoiding functionally obsolescent floor plans
•Lending an experienced and objective eye to design details
•Resolving all concerns before closing

Sajata doesn't just help clients fix problems, she helps them prevent problems. And an ounce of prevention can be worth tens of thousands of dollars when it comes time to sell your home.

When Building You Pay Nothing for a Realtor
Most builders have a model home you can tour, staffed by a sales representative. While these sales reps are helpful, it's important to remember that they are paid by the home developer.

Why not bring your own Realtor whose sole purpose is to protect your interests? Home developers have a set structure for how they price their homes, and it costs you nothing to bring your own realtor.

IMPORTANT:
Due to home developer rules, you MUST bring your realtor with you IN PERSON the FIRST time you tour a model home. If you come unrepresented, your Realtor will not be allowed to represent you during the build process.

With an upside of an experienced voice on your side of the table getting the best home for the best price without the headaches and costly mistakes, and a downside of nothing, the question isn't, "Why use a Realtor when building." The question is, "Why not?"

Revised posting from www.discoversuncrest.com