Enhanced Tax Credit Provides Outstanding Opportunity for Home Buyers

In its efforts to stimulate the economy and revive the housing market, Congress has enacted legislation providing a tax credit of up to $8,000 for first-time home buyers.

But time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after January 1, 2009 and before December 1, 2009 are eligible. Click HERE for more detailed information.

Keller Williams now 3rd LARGEST Real Estate Franchise

Austin-based Keller Williams Realty is now the third-largest real estate franchise in the country, as measured by number of agents.

Keller Williams had 72,794 agents at the end of 2008, according to Real Trends, a trade publication. That pulled it ahead of Re/Max International, which had been third.

The company has 679 offices in the United States, and said it distributed $30 million in profits to agents last year under a profit-sharing program.

Keller Williams focuses on residential real estate but last year launched a commercial division, which now has 220 brokers in the U.S. and Canada.

Austin Joins Top Ranks for Growth

Forbes magazine ranked Austin, Texas, #3 in its Best Cities for Jobs in 2008 and that makes Austin a great target area for real estate. The Texas state capital city came in #1 for income growth in the Forbes list and #2 for job growth. When you consider that houses are where the jobs go at night, then Austin homeowners are sure to rest well, knowing they're in a good spot for equity growth.

While the number of houses sold in December dropped 16 percent compared to a year earlier, the Austin American Statesman reports the average price buyers paid was up 8 percent at $191,000. While sales volume is expected to cool in the city, Austin's job market keeps growing, creating greater demand for homes in great condition and priced right.

Price growth hasn't stopped through the last three years. In 2004, the average single family home sold in Austin was at $154,700. The latest report from the National Association of Realtors shows the same house at $188,200 for the end of the third quarter 2007 -- a gain of more than 21 percent.

While the rest of the country's pricing leveled and dipped last year, homeowners' equity growth continued upward throughout the last 12 months. Meanwhile, while Economy.com forecasts prices to level and dip for the citizens of Austin by about 4 percent in the next several months, job growth will put pressure on the inventory, creating a high level of demand on the dwindling supply.

What's keeping the market insulated from a bubble-like implosion is job growth. The Texas Workforce Commission released job expansion figures indicating the Austin region added 29,500 new jobs during the 12 months ending September 2007 -- a 4 percent gain in employment during the past year.

If I Sell My Home, Will I Have to Pay Capital Gains Tax?

The IRS permits a maximum exclusion on capital gain of $250,000 for individuals and $500,000 for married couples filing a joint return who sell their home, but of course some conditions apply.

For the five-year time-frame prior to the date of the sale of your primary residence, you must meet the Ownership and Use Tests the IRS provides in Publication 523, Selling Your Home. These rules ensure you have owned the home for at least two years, and lived in the home for at least 24 months out of the last five years. Additionally, you may not have excluded a gain on your taxes from the sale of a different home within the last two years. Note that if you sell your property for less than your original purchase price, you cannot claim a capital loss.

A 'reduced maximum exclusion' can apply to those who must sell their home due to a change in their place of employment, health issues, or unforeseen circumstances that affect qualified individuals. In all cases, it is best to consult your tax professional or IRS guidelines if you have any questions about the taxes you may be responsible for if you sell your home.

What Is Title Insurance?

Title insurance is a policy that is usually issued by a title company to protect the lender against something that might have happened in the past, rather than something that might occur in the future. In essence, an extensive search of public records is conducted by the title company to validate who has held title to the property in the past. The lender wants to know if there are any liens, judgments or easements on the property that they should be aware of.

But title insurance also guards against hidden risks or unknown factors that might cause an encumbrance at some point in the future, such as unknown heirs, forged deeds or wills, misinterpreted wills, false impersonation of the true owner of the property, deeds signed over by persons of unsound mind, or defects in the recording of past titles. Title insurance covers the cost of the title search, and any legal fees that may result from any dispute over past property ownership. It is required by the lender and paid for by the buyer.

The smart home buyer will also purchase title insurance to protect their own interests. This is a one-time premium that protects the buyer or their heirs, as long as they retain an interest in the property.

First-Time Home Buyers FAQs

Buying a home is one the biggest financial decisions most people will make in their entire lives, so it's only natural to have questions about the process, especially for first-time home buyers.

What are the benefits of owning versus renting a home?
When you add up the tax benefits of owning a home versus renting a home, it costs no more to be a homeowner than it does to rent, in many cases. With this in mind, why help finance your landlord's financial goals when you can own your own home and, as your equity grows, increase your savings for the future as well?

Does my credit score affect my ability to secure a home loan?
When it comes to qualifying for a mortgage, the answer is never simply a matter of yes or no; it's a matter of when: When will you be ready to qualify? While your credit score does affect this process, with credit repair services, government loans, and other programs and strategies, home-ownership can be a reality for anyone willing to put in the necessary time and effort.

What's the difference between being pre-qualified and being pre-approved?
There's a world of difference. A pre-qualification is a statement based often on unverified financial data. A pre-approval, however, is a decision to loan, and carries a lot of weight with sellers. With a pre-approval, you are essentially a cash buyer, and not only do you know exactly how much you can afford, sellers will take your offer much more seriously knowing you are pre-approved.

New Stimulus Package Proposes Tax Credit For Home Buyers

Last week, the Senate verbally approved the Fix Housing First Act, an important amendment to their version of the Economic Stimulus Bill. The piece of legislation and the Stimulus Bill are still awaiting Senate and House negotiations, but could provide all home buyers of primary residences over the next year with a tax credit of $15,000 or 10 percent of the cost of the home, whichever is less. The credit will not need to be repaid unless the home is sold within two years of purchase. This Senate's version of the tax credit, if implemented, will replace, or “sunset” the current $7,500 credit.

As leaders in the real estate industry, it is important to recognize the relevance of this amendment which could set the housing market on a course toward recovery.

If you are not familiar with this Act, please click here for more information.

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Should the legislation become a law, it will act as a major incentive for home buyers and, coupled with several years of pricing corrections could boost the number of home sales around the country. Until then, get free information on the current $7,500 tax credit for first-time home buyers.