Ellicott City Realtor Catonsville Realtor

First Time Homebuyers - FTHB - $8,000 tax credit extension for Military homebuyers:

As part of the First Time Homebuyer extension that went into effect on November 6, 2009, the law included provisions for military and federal employees serving outside the U.S. to enter into a contract in order to qualify for the tax credit:

• Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual's spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

• In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer's principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual's spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer's principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

If you have any questions about the extension, or about buying a home in Maryland, feel free to contact me.

This week a met with a First Time Buyer.  He's got a good job with security and steady pay - he's a firefighter.  He's also realized that he's tired of throwing good money after bad into rent, and he'd like to take advantage of the $8,000 First Time Homebuyer Tax Credit, which expires on April 30^th of this year.  He's heard about some of the 100% financing options that are available, because he brought them up at our consultation.  In addition to his steady income, he's got little debt, some assets and good credit.

So he's doing everything right, right?

He was correct about the 100% financing options - there were two programs that he could have qualified for.  Unfortunately, both of these programs were cancelled just as of last week.  So now what options does he have?  He can't pay cash for a house, he's not a veteran, and private financing is cost prohibitive.  FHA would be the next program to look at.  Unfortunately, he needs a 3.5% down payment and he doesn't have quite enough.

Here's what you need to know - if you're a first time buyer, you really need to have time to prepare.  Things like this are going to happen.  Programs are going to get cancelled, and you need to know what your alternatives are and give yourself time to prepare for them.

So if you are a first Time Buyer and you are thinking of buying a home, even if it's not for another year, or even two years, it would be helpful for you to sit down with a Lender to see what you can do to prepare financially, and with a Realtor to see what you will be able to afford.

I called my client this morning to confirm our appointment tonight.  My young client and his wife are bringing his parents to see the home they have chosen to write an offer on, and we are finalizing the paperwork tonight.  We've looked at a lot of homes together, and he and his wife have carefully evaluated where they want to live.  Last week, we found a home that, although it needs some work, truly suits all of their needs, and it's priced accordingly.

My client surprised me with the news that things have been really stressful for him over the past few days.  He told me that although he and his wife are very pleased with their decision, his parents are pressuring him to keep looking.  My client told his parents that this is a decision he and his wife want to make together, and has asked his parents to let them do things their way, and for their own reasons.

My client expressed concern over the showing tonight.  He's pretty sure his parents will find something wrong with this house, because it's not the house they would choose.  And when his parents second guess his decisions, he second guesses himself as well.  Maybe he hasn't looked around enough, maybe there's a better deal out there, this place sure does need a lot of work....

As it relates to Real Estate, I think a lot of his concerns are "normal" first time Buyer jitters.  I discussed with my client that our offer is a fair price, and that we've looked at a lot of homes - and I reminded him that this was the house that he and his wife really loved, in the location best suited for them.  He agreed.

As for his parents, my guess is that this started with a financial contribution.  That can be a big hook for young couples buying their first house.  Most parents are going to want to be involved in their young adult's decision to purchase a house - some more than others, and a financial contribution from the parents really seems to compound the situation.

If you are a first time buyer, and you think your parents may want to get involved, and if you are concerned that their involvement be to the extent that you are precluded from doing what is best for you in order to satisfy your parents, you should try to address this early.  Sit down with both of your parents and have a very frank, pointed discussion regarding their involvement, and their feedback / concerns / opinion.  Make sure that you are clear about the boundaries that you are comfortable with.

I'm not Dr. Phil, although if I grew a mustache I might look like him, but this seems to make sense to me.