A survey of 1500 real estate agents shows the $6500 move up tax credit is having virtually no effect upon the housing market. One issue facing people wanting to take advantage of the tax credit is the potential sales price of their current home.
Don Grafues
Resource: REALTOR.org
If you are one of the many buyers who have or plan to benefit from the Home Buyer Tax Credit here are a few points to remember.
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Under the original 1st time home buyer tax credit program you could file your claim electronically. This led to numerous cases of fraud. An example is tax preparer James Otto Price who is alleged to have filed false claims on behalf of fifteen clients for the tax credit.
To apply for the credit under the new legislation passed last November you must now send to the IRS paper copies of form 5405 along with proof of residence, signed mortgage document and other forms of justification. This means your refund will be delayed a few months while the information is processed.
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If you read our reports you are aware we recommend that as a buyer you have a loan pre-approval, not simply a loan pre-qualification. Questions arise among our buyers as to what are they. And to confuse folks even more there is loan commitment. It is not unreasonable to get ten different answers from ten different loan officers if you were to ask for the differences. I will try to explain some of the differences as we see them here at Vermilion Realty.
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Within three days after applying for a loan your lender or mortgage broker is required to provide you a form called the “Good Faith Estimate” or “GFE.” The GFE shows you cost details associated with your loan and purchase. Some of the costs on a GFE are fixed; for example; the loan origination fee. Other costs can vary from the good faith estimate, sometimes by a large amount.
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This article from Money closes with a comment about investor activity being rather high. We have not seen much investor activity yet in spite of some of the bargins we have with HUD homes. Our buyers have been families planning to live in their purchased home, many of them first time buyers capitalizing on the tax credit. Regardless, this is good advice if you are thinking of buying for investment.
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