2/18/2009
Welcome, I'm Dan Sweeney, this is HomeBin University...and today we are talking about the first time buyer credit that is floating around out there. Now I don't know if you're aware but prior to Tuesday when Obama signed the new stimulus plan, there was an old stimulus that was in effect from the Bush administration that provided a 7500 dollar tax credit loan for first time buyers. Now that was put in place to jump-start the economy. The problem was people didn't really react to that loan...it was just an interest free loan. So it was good, but it wasn't a big enough incentive for people go out and buy.
So Obama proposed the loan to a tax credit, without needing to be repaid. And increased the amount a little bit from 7,500 to 8,000 dollars. But there are some restrictions:
1. Must be a First Time Buyer (no ownership within last 3 years)
2. Must be purchasing a Primary Residence
3. Must be purchased between January 1, 2009 - November 30, 2009
4.
-Income Restrictions for Single Filers:
Less than 75k FULL credit
75k-95k partial credit,
over 95k ineligible
-Income Restrictions for Joint Filers:
Less than 150k FULL credit
150k-170k partial credit
over 170k ineligible
How do you file for it? On your Income tax return you take the 8000 credit (dollar for dollar credit) for the purchase of a first home. So if you have lots of tax liability, it would decrease your tax liability by 8000 dollars. If you have a little bit of tax liability (less than 8000), it would wipe it out, and then you'd get a refund for the difference. If you have NO liability, you would get an 8000 refund from the IRS.
So that's how it works, and the restrictions, and we talked a little bit about why the country is doing this. The government's plan is that with this tax credit, more buyers will enter the market and jumpstart the buying cycle in real estate and the economy will spring back to life...that’s the plan.
Now, I'm not sure if that's actually going to happen...and here's what I mean. In my opinion there are two potential scenarios that could exist. We have been in a declining real estate market since about the middle of 2005...August of 2005 was really the peak at least in Massachusetts...and it's been declining really ever since. If we have declined to a point where we're really at the bottom, and that's essentially it (all the bad news has come out, all the foreclosures have hit the market, etc etc) and we're really at the bottom of this...then this stimulus could be good. Because it will jumpstart us in to a positive trend and it could be a really good thing.
The other possibility--in my opinion--is that we might not be at the bottom-maybe we're halfway and we'll have this little jumpstart that the government is putting in place. But then after it's done, or maybe some months in to it, the economy/housing market continues to slide downward. I don't know which scenario it's going to be. But if we really need to contract more, then that's what's going to need to occur- this little 8000 dollars isn't going to cut it. To me, it's kind of like taking a caffeine pill. If you're tired and you need to sleep, then the little caffeine pill might work for an hour or two but pretty soon' you're still going to need to sleep..and the housing market might be the same.
I don't know which of the two scenarios it is...but here's what I think you should do if you're a buyer or a seller. Let's start with sellers first. Regardless of whether this is just a little blip that’s going to occur and the markets going to decline, or the market is going to continue to grow from here, I think this Spring is going to be your best time to sell in the near future if you're a seller. Because this tax credit is designed to put a lot of buyers out there. So, this is probably your best time to capitalize on that.
Now, for you buyers...there are a couple of different categories of buyers I want to address. First, if you have to buy, maybe you just moved to the area, or you need to buy a house for whatever reason, then this tax credit is great for you--it's like found money.
However, if you don't NEED to buy, which is most of us-then here's what I would recommend. I think you should go in to education mode: learning and watching what's going on. I think you should continue looking at listings that come to the market, I think you should continue seeing houses here and there that interest you; and I think you should just watch and look and see what happens in the financial and real estate markets to see what you think you should do. Because we talked about those two scenarios...if still have to contract more, then I don't think its best for a lot of people to be getting in to houses right now. Now, when I say you should continue watching if you find a property that really hits all of the bullet points you need to hit. And what I mean by that is: it's the right size, it's the right location, you won't outgrow it in the next 5-7 years, it really needs to be a good solution for at least 5-7 years...AND you need to be getting it below market value then I think you're good.
Now why do I say "below market value"? Let's say this is market value...we have been declining...here's market value. If you get your property below market value, then even if the market continues to decline, you're insulated. And I like that idea because now you're protected a little bit if the market does slide. If you just buy it at market value, and the market goes down, then you'll be underwater so I don't want to see that.
But that's what I think you should do. If you're in the education mode, and you just come across a really good deal, then I think it might be all right to do it. If you don't come across a really good deal, if you don't find a property that’s the right size, and the right location, and is a good 5-7 year solution for you...then don't buy. This credit isn't THAT important...that we make a bad house decision to get this credit.
Hopefully that all makes sense. Our objective here with HomeBin university is to educate you guys on what we would if we were buying, and this is the advice I'd give my family or a friend. I think it's best for most buyers to be in education mode and watch and see what happens. And if the market starts to look solid, then go in to more a buying mode. But right now, just look and see what there is to be seen. And if you come across something that hits on every level: that you can afford, and it's the right fit, and you're getting it below market value to keep you insulated from any further declines, then I think you're good.
Welcome, I'm Dan Sweeney, this is HomeBin University...and today we are talking about the first time buyer credit that is floating around out there. Now I don't know if you're aware but prior to Tuesday when Obama signed the new stimulus plan, there was an old stimulus that was in effect from the Bush administration that provided a 7500 dollar tax credit loan for first time buyers. Now that was put in place to jump-start the economy. The problem was people didn't really react to that loan...it was just an interest free loan. So it was good, but it wasn't a big enough incentive for people go out and buy.
So Obama proposed the loan to a tax credit, without needing to be repaid. And increased the amount a little bit from 7,500 to 8,000 dollars. But there are some restrictions:
1. Must be a First Time Buyer (no ownership within last 3 years)
2. Must be purchasing a Primary Residence
3. Must be purchased between January 1, 2009 - November 30, 2009
4.
-Income Restrictions for Single Filers:
Less than 75k FULL credit
75k-95k partial credit,
over 95k ineligible
-Income Restrictions for Joint Filers:
Less than 150k FULL credit
150k-170k partial credit
over 170k ineligible
How do you file for it? On your Income tax return you take the 8000 credit (dollar for dollar credit) for the purchase of a first home. So if you have lots of tax liability, it would decrease your tax liability by 8000 dollars. If you have a little bit of tax liability (less than 8000), it would wipe it out, and then you'd get a refund for the difference. If you have NO liability, you would get an 8000 refund from the IRS.
So that's how it works, and the restrictions, and we talked a little bit about why the country is doing this. The government's plan is that with this tax credit, more buyers will enter the market and jumpstart the buying cycle in real estate and the economy will spring back to life...that’s the plan.
Now, I'm not sure if that's actually going to happen...and here's what I mean. In my opinion there are two potential scenarios that could exist. We have been in a declining real estate market since about the middle of 2005...August of 2005 was really the peak at least in Massachusetts...and it's been declining really ever since. If we have declined to a point where we're really at the bottom, and that's essentially it (all the bad news has come out, all the foreclosures have hit the market, etc etc) and we're really at the bottom of this...then this stimulus could be good. Because it will jumpstart us in to a positive trend and it could be a really good thing.
The other possibility--in my opinion--is that we might not be at the bottom-maybe we're halfway and we'll have this little jumpstart that the government is putting in place. But then after it's done, or maybe some months in to it, the economy/housing market continues to slide downward. I don't know which scenario it's going to be. But if we really need to contract more, then that's what's going to need to occur- this little 8000 dollars isn't going to cut it. To me, it's kind of like taking a caffeine pill. If you're tired and you need to sleep, then the little caffeine pill might work for an hour or two but pretty soon' you're still going to need to sleep..and the housing market might be the same.
I don't know which of the two scenarios it is...but here's what I think you should do if you're a buyer or a seller. Let's start with sellers first. Regardless of whether this is just a little blip that’s going to occur and the markets going to decline, or the market is going to continue to grow from here, I think this Spring is going to be your best time to sell in the near future if you're a seller. Because this tax credit is designed to put a lot of buyers out there. So, this is probably your best time to capitalize on that.
Now, for you buyers...there are a couple of different categories of buyers I want to address. First, if you have to buy, maybe you just moved to the area, or you need to buy a house for whatever reason, then this tax credit is great for you--it's like found money.
However, if you don't NEED to buy, which is most of us-then here's what I would recommend. I think you should go in to education mode: learning and watching what's going on. I think you should continue looking at listings that come to the market, I think you should continue seeing houses here and there that interest you; and I think you should just watch and look and see what happens in the financial and real estate markets to see what you think you should do. Because we talked about those two scenarios...if still have to contract more, then I don't think its best for a lot of people to be getting in to houses right now. Now, when I say you should continue watching if you find a property that really hits all of the bullet points you need to hit. And what I mean by that is: it's the right size, it's the right location, you won't outgrow it in the next 5-7 years, it really needs to be a good solution for at least 5-7 years...AND you need to be getting it below market value then I think you're good.
Now why do I say "below market value"? Let's say this is market value...we have been declining...here's market value. If you get your property below market value, then even if the market continues to decline, you're insulated. And I like that idea because now you're protected a little bit if the market does slide. If you just buy it at market value, and the market goes down, then you'll be underwater so I don't want to see that.
But that's what I think you should do. If you're in the education mode, and you just come across a really good deal, then I think it might be all right to do it. If you don't come across a really good deal, if you don't find a property that’s the right size, and the right location, and is a good 5-7 year solution for you...then don't buy. This credit isn't THAT important...that we make a bad house decision to get this credit.
Hopefully that all makes sense. Our objective here with HomeBin university is to educate you guys on what we would if we were buying, and this is the advice I'd give my family or a friend. I think it's best for most buyers to be in education mode and watch and see what happens. And if the market starts to look solid, then go in to more a buying mode. But right now, just look and see what there is to be seen. And if you come across something that hits on every level: that you can afford, and it's the right fit, and you're getting it below market value to keep you insulated from any further declines, then I think you're good.
Customer
Testimonial
As first time home buyers, we were unfamiliar with the complexities of the home buying process. Joe Sweeney and the entire HomeBin staff not only educated us but made our experience an enjoyable one. Joe's knowledge, experience, attitude and diligence combined with his dedication proved to be a winning formula! We are delighted with our new home and will use HomeBin for future real estate transactions. Without hesitation we highly recommend the HomeBin team and know given the opportunity, they will prove to be a valuable asset during your real estate transaction.
Millis, MA
Trent & Kendra Guthrie
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