Housing and Economic Recovery Act of 2008 May Help First Time Homebuyers In The Fort Lauderdale Real Estate Market

First time homebuyers may be aided by one of the provisions of the new Housing and Economic Recovery Act of 2008, signed into law by President Bush on July 30, 2008. The new law which takes effect in October, allows first time homebuyers a tax credit for purchasing a Fort Lauderdale home. The tax credit is available to qualified first time homebuyers. A first time homebuyer is anyone who has not owned any property in the past 3 years.

As defined by the new legislation, the term “first-time homebuyer” means any individual, if such individual (and if married, such individual’s spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the new principal residence.

How does this affect the individual homebuyer looking to buy a home in the Fort Lauderdale real estate market? The law reads, ” In the case of an individual who is a first-time homebuyer of a principal residence in the United States during a taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to 10 percent of the purchase price of the residence.” The property may NOT qualify for the tax credit if it’s purchased from a relative.

The first time homebuyer tax credit is available to buyers of a primary residence purchased from April 09, 2008 through July 01, 2009. The allowable credit amount is 10% of the purchase price up to a maximum $7,500. Single tax payers with modified adjusted gross incomes up to $75,000. are eligible for the credit and married couples with combined modified adjusted gross incomes up to $150,000 are eligible.

The tax credit is temporary and the amounts taken are recaptured (repaid) in future tax years up to 15 years of ownership, or when the home is sold.

The new measure is part of the Housing and Economic Recovery Act of 2008. It should stimulate prospective homebuyers who may already recognize the bottom of the market but need another incentive to buy a home in the near future. The First Time Homebuyer Tax Credit is available through June 30, 2009 to qualified buyers. In all probability it will not be available beyond that date.

Other provisions of the H.R.3221 include FHA Modernization which increases FHA insured loan amount to 115% of an areas median home price up to a maximum of $625,500 which may in effect allow more working families to take advantage of FHA insured loans. The provision will also allow the Federal Housing Authority to guarantee $300 billion to refinance mortgages where homeowners may be facing foreclosure.

While the FHA Modernization is needed and may help some, it may hurt more than help. The FHA has increased its down payment requirements to 3.5% and some down payment assistance programs like the Nehemiah Program are being eliminated.

This Act was meant to be a temporary economic stimulus. What does this mean? If you are looking for a home in the Fort Lauderdale real estate market and you needed a little extra help or incentive, now you have it. However, I would not advise anyone buying any home anywhere if you can’t afford to purchase the home on your own financial merits. Wouldn’t this be just more of the same that got us into this mess anyway?

However if you are qualified to buy a home in Fort Lauderdale, and need just a bit of a hand-up to get the deal closed, then the Housing and Economic Recovery Act of 2008 may indeed help first time homebuyers in the Fort Lauderdale real estate market.

If you’d like to learn more as to how the new law can help you buy a new home, please feel free to call me at 954-709-7461 or email me at robins@robinashley.com. Or you can fill out the contact form below and I will get back to you as soon as possible. If you’d like to search for a home well suited for first time homebuyers here in the Fort Lauderdale real estate market you can search our database of affordable homes in Fort Lauderdale. You can also do a customized search of homes for sale in Fort Lauderdale as well.