First Time Home Buyer

Sure, as a new home buyer you are going to get your $8000 tax credit for buying a home  (provided you close before the deadlines) and you will begin to “itemize” your tax deductions (real estate property taxes, mortgage interest, and points) going forward each year.  All of these can potentially save you allot of money on your federal taxes which one of the many reasons people chose to buy rather than rent.  But did you chose the right loan program to enhance your tax savings or allow to you qualify for that extra $20,000 in purchase price?  The Mortgage Credit Certificate (MCC) program can potentially accomplish this.

The MCC program is an enhancement to your loan that allows you to claim 20% of the mortgage interest you pay as an actual dollar for dollar tax credit (not a tax deduction) and this is for the life of the loan (not just one year).  The remaining 80% of the mortgage interest continues to qualify as a itemized tax deduction.   This is a significant tool to super charge your federal tax savings or increase your purchasing power when out there house hunting.

Talk to a “qualified MCC” lender for more details.

“It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of light, it was the season of darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way.”

Charles Dickens.

This is easily my favorite quote of all time and it accurately describes how many of us felt during the course of 2009. Some of you may even be thinking, “were there any high points in real estate this year?”

Yes there were, and while I only have limited space I’ll try to recap the top five in each category.

The Lowlights:

• Clearly, we started the year worse off than anyone imagined. People not only contracted their buying, but they also went into hibernation mode and some agents wondered if they would ever sell a home again.
• Some price points like the Luxury market saw drops in value in excess of 30 percent in less than a year.
• Lending has hit a new low. Never has it been so hard to borrow money for the average person. The regulations, guidelines, and qualifications are getting harder every day. At this juncture, I am not convinced that banks are remotely interested in helping Americans get back on their feet.
• The mortgage industry is now being controlled by a few large banking institutions that have too much power and too much control. This is bad for consumers, bad for competition, and bad for capitalism.
• The appraisal system has run amuck. It’s in complete disarray and if you wait a week, it will change again. We need stability here soon.

The Highlights:

• More people were able to buy their first home. The first-time home buyer tax credit worked and stimulated the industry.
• The fourth quarter looks to have a much stronger close in real estate sales than originally predicted. Improvements in the economy, buyer confidence, low home prices, low interest rates and incentives have brought buyers off the sideline.
• Today we have a much more qualified buyer than in many years past. People who own homes now or recently bought homes are the ones that can truly afford them.
• We made great headway in beginning to weed out fraud, deception, cheating, and people looking to take advantage of others.
• We came out of an election year, banks failing, and unprecedented amount of foreclosures and still the real estate market continued to operate. We got deals done and actually improved the forecast for everyone.

Later this week is the start of 2010. Happy New Year Everyone and let’s pray that we have more to write about in the highlights column.

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost

I am sure by now that you saw the news from two weeks ago about the first-time home buyers’ tax credit being extended through April 30, 2010 and Congress creating a new credit for people other than first-time home buyers.

This was one of the best scenarios we could hope for. The only way that this could have been better is if it was a $15,000 tax credit for first-time buyers and everyone else, but we’ll take what they passed. More importantly, there are several reasons why this will continue to help the housing market and the economy overall.

First, you have seen me write this before the first $8,000 tax credit really did work. It got people off their couch, in the market, sold homes, put people to work, and stimulated the economy. Second, as I have said before, this crisis started with housing and housing will lead the way in turning the economy around. That’s why this critical legislation needs to be extended. It had a proven track record of success and will continue to benefit the country.

The $6500 tax credit for everyone else is also a strong move to get more people to buy homes. There are some preconditions here like you must have lived in your current home for at least five years before you can upgrade and cash in on the $6500. There are also some income limitations to be eligible for the tax credit, but overall, the incentive will bring more buyers into the market. (To find out all the fine details about the tax credit go to www.firsttimehomebuyerdenverco.com.)

Finally, there are a lot of reasons to buy a home right now: historically low housing prices, low interest rates, plenty of selection, motivated sellers, and cash incentives from the government. It’s almost the perfect storm for buyers. I say “almost” because the one piece of the puzzle that still needs to come around is the loosening of credit for buyers. We need to put pressure on Washington to get the banks to lend out more money with more favorable conditions.

Dan Polimino is a Realtor with Fuller Sotheby’s International Realty. He can be reached at DPolimino@fullerproperties.com and www.coloradodreamhouse.com/denverpost