Homebuyers in luck

In case you haven’t heard, first-time homebuyers have been getting tax credits of up to $8,000 since January of 2009. The program has been credited for stimulating the housing market.

In fact, about 1.4 million first-time homebuyers have qualified for the credit through August of 2009. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

The tax credit was scheduled to end Dec. 1, but there is some great news. The Senate and the House of Representatives have passed a bill to extend the tax credit and President Barack Obama made it official by signing the bill on Nov. 6.

But there’s more!

The only thing that was lacking on the previous bill was it did nothing to help current home owners. This new bill adds a new wrinkle to help current home owners, too. Buyers who have owned their current homes at least five years will be eligible for tax credits of up to $6,500.

An important deadline

According to the new legislation, first time and repeat buyers have to sign a purchase agreement by April 30, 2010 and close the deal by June 30.

“This is probably the last extension,” said Georgia Sen. Johnny Isakson, a former real estate executive who championed the credits. “With the right mix of tax breaks and investments, we will get through this recession and get folks working again.”

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The tax credit has some restrictions, including an income limit of $125,000 for individuals and $225,000 for couples filing jointly.

“We are still in a world of economic hurt, and Congress must continue to act boldly and creatively,” said Montana Sen. Max Baucus, chairman of the Senate Finance Committee.

Did you think you missed out? It was widely expected that the $8,000 tax credit would be extended, but things widely expected have not come true before. This time you are in luck. If you were one of the people who were trying to find the perfect home, get in contract and close before the last deadline of Nov. 30, you know how difficult that can be.

Don’t wait until the last minute. The average escrow takes more than 60 days to complete and sometimes takes more than four months. The window has been opened for you again and now you can take advantage of this amazing cash credit/refund for buying a home.

There is a wonderful old saying, “A rising tide raises all boats.” I can tell you that most of the transactions we are seeing out there are for more than the asking price. That means that the tide is rising. Homes are being bid up to higher levels because of demand. While this is far from a seller’s market, in some price ranges, it has some strange abnormalities that give it some of the characteristics of a seller’s market. The opportunity to build equity because of this demand or rising tide, if you will, is excellent.

All of this is a sign that this might be the perfect and best time for you to buy that home out there. You have the three Cs working for you: cost, capacity and competence. With prices this low for homes and rates at historic lows, the cost of buying a home is at all-time lows.

Homes are affordable today and people have the capacity to buy a home with the confidence they can make the payment. And last, you will find the professionals at your local real estate office who have the competence to walk you through the whole process. Lucky you!

(Dave Raffi is a regional manager for Mission Hills Mortgage of Petaluma. He can be reached at 775-4500.)