Conventional wisdom says that this is an awful time to buy a new home. The housing market is in a funk. Mortgage companies have tightened their guidelines and homes are sitting on the market for months without selling. If you listen to the news it's all doom and gloom with talk of recession and inflation, and questions of how long it will be before we see a recovery. So who would be crazy enough to buy a home now?
There is a famous quote by noted investor Baron Von Rothschild - the time to buy is when there is blood in the streets. Here in Richmond the market isn't as bad as it is in other parts of the country, but if you are a seller sitting in a home that won't sell, the situation is grim. But the bad news for the seller is great news if you are looking to buy a home. Here are some reasons to buy a home here in the Richmond area, now:
Selection - There are homes in the market in all areas and all price ranges. With more houses on the market you can pick and choose and find the home you want. It wasn't so long ago that buyers were jumping on new listings as they came onto the market, even if the home wasn't exactly what they were looking for. You can pick and choose, now.
It's a buyer's market - Again, the best time to buy is when most people want to sell. If you buy now you can get a lot more house for your money, and you have a lot more negotiating power.
Interest rates are low - Mortgage interest rates are at their lowest point in the last several years. This means your mortgage payment takes you a lot farther than it did before. We're not that far off of the all time lows we hit several years back. It is smart to take advantage of the low mortgage rates while they are still available.
Great financing is available - There's a lot of talk about how the problems in the mortgage market have made it harder for borrowers to get financing. Some programs have been cut out, and guidelines are tougher than they were before. But there is still a lot of mortgage money available, including options for low or no money down, and some great programs for first time home buyers. If you are a first time home buyer in Richmond, you may qualify for Virginia Housing authority Program which offers a below market interest rate and down payment and closing costs assistance. There are other programs for home buyers in Virginia with great rates and low fees, ask me how?
Tax savings - Buying a home is one of the best ways to save money on taxes. Your mortgage interests, real estate taxes and in many cases mortgage insurance are all tax deductible. If you are a first time home buyer this means that after-tax, you can pay a lot more for a mortgage payment than you pay for rent.
Appreciation - This might not seem like the best reason to buy, with prices stagnating and falling in some areas, but in the long run, home prices always move up. There is a lot of pessimism in the real estate market today, but even the most pessimistic are bullish in the long run.
Equity build up - As you pay down your mortgage you build up equity in your home. Most people don't even think of this because it is so gradual, but every mortgage payment (as long as it is an amortizing loan) pays a little less interest and a little more principal. In a way owning a home is a form of forced savings.
Tax refunds are coming out - If you wanted to buy but were short of cash, your tax refund could be just what you need for the down payment and closing costs.
Rents are rising - Buying a home means you can fix your mortgage payment, at least the principal and interest portion. Rents are projected to rise this year and over time.
Those are the hard financial reasons for buying a home now, but there are other good reasons to buy now:
You need more room - Has your family has grown, and you are bursting at the seams? You need a new place to put all your stuff? If you have needs that you've been putting off, this could be the right time to buy and take advantage of the buyers market.
Control - If you own your home, you can do what you want to with it. Have a dog? Not a problem. Want to plant a garden? Go for it. Want to paint stripes on the walls? Paint your heart out, it's your home and you are in control.
Pride of ownership - There is a big difference between renting a place and having a home of your own.
It's the American Dream - Not only that, but buying a new home gives you a reason to throw a house warming party.
These are some reasons for buying now, but buying isn't the right course for everyone. Buying a home is a long-term investment. If you can't afford to hold on for the long run, you might be better off renting.
Showing posts with label Home ownership. Show all posts
Showing posts with label Home ownership. Show all posts
Tuesday, November 11, 2008
Monday, October 27, 2008
First-Time Buyer Tax Credit: A Reason to Buy Now!
The home ownership tax credit that the federal government created earlier this year is a hard-won tool at your disposal to encourage your customers to jump off the fence and get into the home buying market.
When you combine the tax credit with today’s continuing low interest rates, large selection of for-sale inventory, and low home prices, many of the pieces are in place for your customers to buy now.
How the Tax Credit Works
The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 and targets any individual or household that hasn’t owned a home for at least three years. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9.
It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your customers wait to buy in the first half of 2009 they can take the credit on their 2009 tax return.
The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500.
Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.
Any house is eligible as long as it’s a primary residence and is in the United States.
Buyers Have 15 Years to Pay Back
To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.
There’s one restriction on the type of financing that your customers can use if they plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if your clients are using below-market interest-rate financing from a public agency or nonprofit that’s funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this won’t be an issue. It’s mainly an issue for low-income buyers using special mortgage financing.
Be a Resource for Clients
NAR Government Affairs has created two helpful documents that you can share with your clients to help them learn more about how the tax credit works. The documents are on downloadable and printable PDFs:
First-time home buyer tax credit chart
First-time homebuyer tax credit FAQ
The IRS Web site also offers tax-credit guidance in an article that provides answers to many frequently asked questions.
For additional local real estate information, information about me and my services, to request home listings by E-Mail, to request a market analysis on your current home, or to tour the MLS Listings please visit my web sites at www.RichmondVAHomes4Sale.com or www.e-RichmondHomes.com.
When you combine the tax credit with today’s continuing low interest rates, large selection of for-sale inventory, and low home prices, many of the pieces are in place for your customers to buy now.
How the Tax Credit Works
The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 and targets any individual or household that hasn’t owned a home for at least three years. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9.
It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your customers wait to buy in the first half of 2009 they can take the credit on their 2009 tax return.
The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500.
Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.
Any house is eligible as long as it’s a primary residence and is in the United States.
Buyers Have 15 Years to Pay Back
To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.
There’s one restriction on the type of financing that your customers can use if they plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if your clients are using below-market interest-rate financing from a public agency or nonprofit that’s funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this won’t be an issue. It’s mainly an issue for low-income buyers using special mortgage financing.
Be a Resource for Clients
NAR Government Affairs has created two helpful documents that you can share with your clients to help them learn more about how the tax credit works. The documents are on downloadable and printable PDFs:
First-time home buyer tax credit chart
First-time homebuyer tax credit FAQ
The IRS Web site also offers tax-credit guidance in an article that provides answers to many frequently asked questions.
For additional local real estate information, information about me and my services, to request home listings by E-Mail, to request a market analysis on your current home, or to tour the MLS Listings please visit my web sites at www.RichmondVAHomes4Sale.com or www.e-RichmondHomes.com.
Thursday, January 31, 2008
The Benefits of Home Ownership
Here are just some of the financial/tax advantages of home ownership:
- Owning versus renting is an investment in your family’s future.
- Seeing the break-even point on an adjustable rate mortgage.
- Deduction of qualified interest & property taxes from the income on a first or second home.
- Avoiding the payment of capital gains tax if selling your home (must have lived 2 out of the last 5 years in your home to qualify).
- Investing in real estate is still one of the best proven growth investments.
For additional local real estate information, information about me and my services, to request home listings by E-Mail, to request a market analysis on your current home, or to tour the MLS Listings please visit my web sites at http://www.RichmondVAHomes4Sale.com or http://www.e-richmondhomes.com/.
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