Harleysville-Lansdale Real Estate and More

This is an Update on the First-Time Home Buyer Tax Credit specifically addressing some recent reports that the tax credit has been extended.   While some significant steps have been made towards extending the tax credit and even expanding it beyond first-time home buyers, it seems that these reports are a bit premature in claiming this as a done deal.  Here’s what I found out on the subject.

A bill was originated in the U.S. House of Representatives on September 10, 2009 to extend the availability of certain unemployment compensation benefits (totally unrelated to the tax credit or housing in general).  That bill was passed by the House and made its way to the Senate where numerous amendments were made including those related to the first-time home buyer tax credit.  The Senate unanimously passed their version of this bill yesterday, November 4, 2009.  However, there are still significant hurdles that the legislation must clear before becoming law.  Namely, the bill now moves back to the House and the differences must be resolved.  The bill would then move on to the President for signature into law.

So again, it’s a bit premature to count on any tax credit beyond the current expiration date of December 1, 2009.  It is very encouraging, however, that the amended bill passed through the Senate with a unanimous vote showing strong bipartisan support.

Here are a few provisions (as I understand them) of the bill as amended by the Senate:

Time Extensions
The $8,000 tax credit for first-time home buyers would be extended until May 1, 2010, except that buyers who are under a written contract by May 1, 2010 can even take advantage of the tax credit until July 1, 2010.

Expansion Beyond First-Time Home Buyers
A tax credit of up to $6,500 would be available to “Long-Time Residents” who have owned a home and purchase a new one.   A Long-Time Resident is currently defined as one that has owned a home as their principal residence for any 5-year consecutive period during the 8-year period ending on the date of the purchase of the subsequent principal residence.

Increased Income Limits
The income limits for eligibility of the tax credits would be increased from $150,000 to $225,000 for married persons filing jointly and from $75,000 to $125,000 for other taxpayers.

Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 for help buying or selling a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania. To Search for Homes For Sale in Montgomery County Click Here.

Copyright © 2009, The Scott Loper Team, All rights reserved. Update on The First-Time Home Buyer Tax Credit - Not So Fast, Sparky.

Calling All Home Buyers...

New to the housing market?
Ready to move up?  Downsize?

 Attend our Home Buyer Seminar:

• Learn about opportunities to grab and pitfalls to avoid in today's market!
• This seminar is a MUST for the 1st Time Home Buyer!
• All home buyers are welcome and encouraged to attend!

We’ll cover information on many topics, including:

The Home Buying Process
From the very start of your search for a home through the settlement day, you’ll get a complete understanding of the many steps involved in purchasing a home.  Not only will you gain the knowledge of what to expect in your first home purchase, but we’ll also highlight some pitfalls to avoid and some opportunities that you may be able to capitalize on along the way.

The Home Search
From a Realtor’s MLS search to your own online searches,
learn the best ways to find available homes that meet your
wants and needs.

The Real Costs of Buying a Home
Avoid the sticker shock when you actually sit down to make an offer.  Learn about closing costs, escrows, and the breakdown of your monthly payment.

Tax Credit for 1st Time Buyers
Uncle Sam wants to bring new buyers to the housing market.  There are true tax refunds of up to $8,000 available for qualified 1st time buyers.  Learn about the requirements and whether you would qualify to receive an $8,000 refund.

Agency – Who is Working for Whom?
Every buyer should know about representation before engaging the services of a Realtor.  If you see a home you are interested in and call the number on the yard sign, who does that agent represent?  Learn the options available to you.

New Construction
If you walk into a new construction site and want to purchase one of their homes, do you know that you may have to work with the salesperson who greets you?  Do you know that these salespersons represent the builder and cannot represent you?  Learn about this and other pitfalls of buying new construction and the opportunities/incentives currently being offered.

Mortgage Pre-Approval
It’s very difficult to buy a home without one.  Mortgage preapproval is a key step toward home ownership.  It will let you know how much house you can afford and help assure that your offer will be taken seriously.

The Loan Application and Approval Process
Mortgage companies will scrutinize your financial well-being to make sure you can afford the home you want to buy.  Knowing ahead of time what type of documentation they will ask for helps you be prepared and avoid scrambling to find the right paperwork.

Free Credit Report
Good credit is an absolute must to get a mortgage.  There are different degrees of “good credit” and your credit score will affect your ability to buy a home and the interest rate that you will be offered.  Learn what factors affect your credit score the most and useful tips to boost your score.  Seminar attendees can receive a free, detailed credit report.

Insurance Issues
What types of insurance should homeowners have?  What levels of coverage are recommended?  Find out more.

Date, Time, & Location
July 21, 2009 at 7pm
Hennings Market
290 Main Street, Harleysville, PA  19438 
Call (215) 513-1333 or email Scott@LoperRealty.com to reserve your spot.

If you are unable to attend this seminar, we would be happy to meet with you at your convenience.  We work as Buyer’s Agents throughout Montgomery County and Bucks County PA and in many surrounding areas.  We welcome your questions.  So, please let us know how we can help you.

Copyright © 2009, The Scott Loper Team, All rights reserved.  Lansdale-Harleysville Home Buyer Seminar.

Q.  How much money do I need to buy a home?  

A.  Typically, home buyers need about 6-7% of the purchase price to buy a home plus whatever down payment they choose to make on the home they are buying.  For example, assume you want to buy a $200K home and put 5% down.  The down payment is $10K plus expect another ~$13K in closing costs which totals $23K.

Closing costs typically include:

• Mortgage Fees ~2.25%
• Tax Escrows ~1.5%
• Transfer Tax ~1.0%
• Miscellaneous* ~0.5-1.0%
• Title Insurance ~0.75%

*Miscellaneous fees include the costs of the home inspections, recording fees, conveyancing fees, and tax reimbursements to the seller. 

In this scenario and assuming a conventional mortgage with a rate of 4.75% over 30 years, your mortgage balance is $195K and the total monthly payment would be $1,244.54.  This includes $991 for principal and interest, $212 for real estate taxes, and $42 for homeowners insurance. 

There is another way to structure this purchase that will require less money at closing.  An FHA (Federal Housing Authority) loan will allow for as little as 3.5% down.  So if you offer $210K and ask the seller to pay $10K in closing costs (seller assist), you will only need ~$7,500 in cash to close. 

Assuming the same mortgage rate (4.75%) over 30 years, your mortgage balance would be $206K and the total monthly payment would be $1,421.89.  This includes $1,076 for principal and interest, $212 for real estate taxes, $42 for homeowners insurance, and $93 for mortgage insurance. 

The key with using a seller assist is that the appraisal done by the lender must support the higher selling price ($210K in this case, not the $200K net selling price). 

Now is a great time for home buyers.  Home prices have come down, interest rates are still at historical lows, and the government is offering the first time home buyer tax credit of $8,000.

Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 to buy or sell a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania.  To Search for Homes For Sale in Montgomery County Click Here.

According to a National Association of Realtors^® survey conducted in March, "first-time buyers accounted for 53% of transactions".  First-time buyers are definitely boosting the real estate market in Montgomery County PA.  For homes in the County priced from $200,000 to $300,000 (largely a first-time buyer market segment in our area), the number of homes pended in April increased by 18% from the Q1 monthly average and 63% from the dismal monthly average for November through January.

While this is welcome improvement, Montgomery County's April pending home sales for this price range are still down by 30% and 24% versus the same month in 2007 and 2008, respectively.  So, we still have a ways to go, but are headed in the right direction.  By comparison, April's pending sales for homes priced above $400,000 (not typically first-time buyers) remain down by 57% and 52% versus the same month in 2007 and 2008, respectively.  Like most areas of the country, our upper prices ranges continue to struggle quite a bit more.

Not burdened with another property that must be sold, first-time buyers enjoy an advantage that makes them very attractive to would-be sellers.  Combined with lower home prices and historically low interest rates, these reasons alone provide plenty of incentive for a buyer to enter the real estate market.  However, first-time buyers overwhelmingly cite the $8,000 tax credit as a significant motivator in their decision to buy.

From personal experience, seven of my last eight transactions all involved a first-time buyer; most specifically mentioned the tax credit as a factor in their decision to buy.  From a Realtor's^® perspective, the above are all reasons to welcome this market segment into one's business plan.  More than any other market segment, they're the ones who are willing and able to buy a home right now.  As an added reason, I also find that they are more eager to listen, learn, and benefit from the experience and knowledge of a good Realtor^®.

- Scott

Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 to buy or sell a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania.