Good Housing News Predicted

All the leading indicators say housing is definitely on the mend, economists reported in advance of the official release of several pieces of good news expected this week.

Bloomberg News surveyed 53 economists and asked them where they expected the numbers to fall. Here are their predictions:

  • Construction starts in September are expected to hit a 610,000 annual rate, the most since last November.
  • Sales of existing homes likely rose to a two-year high.
  • Because of fear of a relapse, the Federal Reserve is predicted to leave interest rates low for a few more months.
  • Building permits, a sign of future growth, probably rose to a 590,000 annual pace, also the highest level since November, the Commerce Department is likely to announce.
  • The National Association of Home Builders/Wells Fargo index is expected to rise to 20 from 19, the economists say.

Google Inc. plans to resume hiring and acquisitions after its third-quarter sales beat analysts’ estimates. CFO Patrick Pichette says: “We weathered what is an incredible recession. If you have all this behind you, the only outcome you should have as management is: ‘OK, let’s build now.’”

Source: Bloomberg, Courtney Schlisserman (10/18/2009)

Details of the $ 8,000 Purchase Incentive

This is current information comparing the previous Tax Credit and the Current First Time Home Buyer Tax Credit in place now due to the Stimulus Package signed today by the President. 
 
Stimulus Plan First-Time Homebuyer Tax Credit:
The Stimulus Plan was signed into law by President Obama. It contains a new tax credit for first-time homebuyers. Essentially, first-time homebuyers within certain income limits who purchase a home in 2009 before December 1, 2009 will receive a tax credit of up to $8,000. The program is similar to the $7,500 tax credit which applied to home purchases made in 2008 after April 9. A comparison of the two credit programs is outlined below.

While the Stimulus Plan was still being debated, the Senate version originally included a $15,000 tax credit for all homebuyers. To lower the cost of the Stimulus Plan, the final version of the Plan contained this smaller tax credit, and this tax credit is applicable only to first-time homebuyers

To qualify as a first-time home buyer as defined in the programs, the purchaser (and the purchaser’s spouse) may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program. The home must be the primary residence.
 
Both tax credits are subject to the same adjusted gross income limitations (full credit for AGI less than $75,000 single/$150,000 joint, phased out for AGI up to $95,000 single/ $170,000 joint).
 
The amount for either credit is the lesser of 10% of the home purchase price or $7,500 or $8,000, as applicable.
While a purchaser still owns the home, the $7,500 credit must be repaid in equal payments over a period of 15 years, starting with the 2010 tax filing. The $8,000 credit will not need to be repaid. Again, the $7,500 credit needs to be repaid, while the $8,000 credit does not!
 
Upon sale of the home, any portion of the $7,500 credit not yet repaid is due in full.  No portion of the $8,000 credit is due upon sale of the home, if the home is owned for more than three years.  If the home is sold within the first three years, the full amount of the credit is due upon sale.
 
The $7,500 credit was not available to any purchaser utilizing state/local revenue bond money to help finance the home purchase.
There is no such restriction on the $8,000 credit.
 
Under both the $7,500 and the $8,000 programs, the credit will be claimed on the purchaser’s income taxes. Any amount in excess of taxes owed will be refunded to the purchaser.
 
Additional information about the tax credit can be found on the websites of the National Association of Realtors (www.realtor.org) and the National Association of Home Builders
http://www.nahb.org .  You also may want to check out the website recovery.gov

*The above information was received from:

Jay Mitchell, Mortgage Planner FIMC . Phone: 678-413-3222/ Fax:770-929-3461. Be sure to view his website:

Jay@LoansByJay.com
www.LoansByJay.com

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How the New First-Time Buyer Tax Credit Works

Under the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit equal to 10 percent of the property up to a maximum of $7,500. Here’s how it works:

  • The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.

  • This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.

  • The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.

  • High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.

Source: Realtor Magazine