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What Turns Renters Into Home Owners?

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It’s not what you know about home ownership that makes you want to own a home, but rather how you value it. Or so says a new study from Fannie Mae that concludes having a personal experience like being unable to pay a mortgage, thinking home values will fall in the future, or being underwater on a home loan don’t play a big part in renters wanting to be home owners.

The key drivers pushing renters toward home ownership are attitudes and beliefs. Those who believe “owning makes more sense financially over the long term” do indeed go on to buy homes.

Things that are much less important factors for renters:

· The perceived ease of getting a mortgage

· Knowing someone who defaulted on a mortgage

· The belief that home values will rise or fall

· The desire to have a good place to raise and educate children

· Safety

· More space and control over your living environment

The study suggests Americans’ desire to own homes is strong, even when the housing market undergoes dramatic challenges.

“Our study shows that the negative housing events of the past few years have not discouraged
people from wanting to own a home,” the study authors wrote. “Exposure to mortgage default, perceived home value appreciation/depreciation, and self-reported underwater status are not significant factors in the models predicting individuals’ intentions to own a home for their next move.”

Source: Fannie Mae

Congress extends homebuyer tax credit and flood insurance

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The U.S. Senate passed two bills last evening previously passed by the House. Both bills still need President Obama’s signature to become law, but that’s expected to happen quickly.

Homebuyer tax credit
The Senate passed HR 5623, which extends the mandatory closing date to qualify for the homebuyer tax credit. The contract deadline does not change – homebuyers must have a contract signed by April 30, 2010 (an exception for active duty military) – but the previous closing deadline of June 30, 2010, has been extended to Sept. 30, 2010. The National Association of Realtors estimates that the approved bill will benefit more than 14,000 deals in Florida.

National Flood Insurance Program
Congress once again reauthorized a short-term extension for the National Flood Insurance Program to Sept. 30, 2010. The bill, HR 5569, makes the program retroactive to May 31, 2010, the date the program went on hiatus.

This is great news for many of my clients in the Tampa Bay area, we are going to have some very happy people today.

Homebuyer Tax Credit

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Real estate Tax credit chart $8,000 & $6,500


Thanks to the newly extended and expanded homebuyer tax credit, first-time homebuyers may still qualify for an $8,000 tax credit and existing homeowners may qualify for a $6,500 tax credit when they buy a new home. That’s a guaranteed federal tax credit that directly reduces the amount of taxes you owe for the entire year. Even if you have little or no federal income tax liability to offset, you may be able to claim the full $8,000 or $6,500 as a refund.
You may qualify for the newly extended $8,000 federal tax credit if*:
You are a first-time buyer or have not owned a home for the past 3 years
You make $225,000 or less if filing as a couple ($125,000 or less if filing single)
You enter into a written contract for sale before May 1, 2010 and close on the new home before July 1, 2010
You don’t sell the home within 3 years of closing
You use the new home as a principal residence, which can be a single-family home, condominium or townhome
The purchase price of the home is $800,000 or less and you did not buy it from a lineal ancestor or descendent
You are not claimed as a dependent on someone else’s tax return
You may qualify for the newly expanded $6,500 federal tax credit if*:
You are an existing homeowner who has owned and lived in your home for any 5 consecutive years out of the last 8 years
You make $225,000 or less if filing as a couple ($125,000 or less if filing single)
You enter into a written contract for sale before May 1, 2010 and close on the new home before July 1, 2010
You don’t sell the home within 3 years of closing
You use the new home as a principal residence, which can be a single-family home, condominium or townhome
The purchase price of the home is $800,000 or less and you did not buy it from a lineal ancestor or descendent
You are not claimed as a dependent on someone else’s tax return

TWO POINTS

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The $8,000 first-time homebuyer tax credit has received a lot of attention lately, but it has also overshadowed another big reason to buy a home now: record-low interest rates. In May, 30-year mortgage rates of 5 percent were widely available. That’s down from January’s already-low 5.8 percent, and two percentage points less than in August 2008. How important is two points? On a $200,000 home, a buyer could save $257 per month ($3,084 per year) by buying now rather than last August. On a $200,000, 30-year fixed rate mortgage, the monthly payment difference is:
• 7 percent: $1,330 monthly (rates in August 2008)
• 6 percent: $1,199 monthly (rates in December 2008)
• 5 percent: $1,073 monthly (rates in May 2009)

New law gives first-time buyers $7,500 tax credit

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WASHINGTON – Aug. 1, 2008 – Tell first-time homebuyers it’s time to commit: A provision of the recently-passed federal housing recovery bill gives first-time buyers an interest-free loan of up to $7,500 in the form of an income tax credit.

The credit equals 10 percent of a home’s cost up to $7,500, and applies to any single-family residence (including condos and co-ops) to be used as a buyer’s principal residence.

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