Consumers received a big boost in buying power last week when President Obama signed the $8,000 first-time homebuyer tax credit into law and raised conforming loan limits back to the 2008 levels. This was all a part of the American Recovery and Reinvestment Act and what NAR has been asking for since November.
I want consumers to know that they just got handed a great deal! I also really want to encourage Realtors® to understand these two measures and bring them up with potential buyers.
Not only are mortgage interest rates the lowest in nearly 50 years, but home shoppers can now have an $8,000 boost as well as the opportunity to get a lower mortgage interest rate due to the higher set loan limits available from Fannie, Freddie, and the FHA. This helps out buyers in high-cost areas where securing a lower interest rate on a large loan has been difficult.
The FHA just posted the new conforming loan limits today. The legislation says that a buyer receives the higher of the limits between what was in effect for 2008, or what the new limit is for2009. Check https://entp.hud.gov/idapp/html/hicostlook.cfm to see where your area falls.
Unlike the $7,500 first-time homebuyer tax credit of 2008, you do not have to repay the new $8,000 tax credit of 2009. It’s a true tax credit and is a huge victory for first-time buyers.
Another reason this credit is so valuable—pun intended—is because the credit is refundable, meaning you get the entire credit even if you don’t owe that much in taxes. Most American workers do not owe the government $8,000 in taxes. That means if a homebuyer uses the tax credit and has a $5,000 tax liability, that person will receive a $3,000 check back from the government. I love that! Affordability is getting better and better.
The credit has also been extended from a June 2009 deadline to a November deadline. It applies to all purchases between January 1 – November 30, 2009.
Also, even though it’s labeled as a “first-time” homebuyer tax credit, if you haven’t owned a home since 2005, you’re considered a “first-time” buyer and eligible for the credit.
There are income limits on using the tax credit, though. Go to http://www.realtor.org/government_affairs/gapublic/american_recovery_reinvestment_act_home?lid=ronav0019 for complete information on it and on the stimulus legislation.
NAR has been lobbying since our Annual Conference in November to get the conforming loan limits raised back to 2008 levels and to do away with the repayment feature on the tax credit. We succeeded on both fronts. It just goes to show that with continued hard work, persistence, and patience, we can succeed in tough times.
Realtors®, we now need to flex the power of these two provisions in our businesses. Make it a point to tell every client about how this legislation could help them. Even consider recreating your advertising to mention the tax credit.
I’d love to hear your stories on how this is going. Reply to this blog on what your clients’ reactions are and how you’re pitching it. Let’s learn from each other.
Good luck, and I look forward to reading your stories! Gary Thomas, 2009 VP & Liaison to Government Affairs