Ever said “I want to time it just right!” and been so caught up in trying to figure out when the right time is, you miss the boat?  Are you waiting on the perfect time to buy a home, in case the prices might drop just a little more before you purchase that dream home?  At the moment if you keep waiting for prices to fall even lower, you could miss two major bonanzas that can impact the cost of your home: low interest rates and the new Home Buyer’s Credit.

Interest rates are still at record lows all across the country and right here in Key West. While many people are keeping their eyes glued to home prices, they may have forgotten the impact the interest rate has over the life of the mortgage. As recent New York Times article pointed out, “If prices came down another 10%, but interest rates went up by 1 percentage point that would mean the same monthly payment as today versus waiting.”  While waiting on a price drop that may not come, you may miss out on the low rates that are NOT going to last forever. 

Another limited time incentive is the Home Buyer Tax Credit.  The first time homebuyer credit has been extended and expanded as most people already know.  It now includes repeat homebuyers as well and some of the income guidelines have increased. Here is the basic information on the credit:

Eligibility 

• First time homebuyer:  those who have not owned a principal residence in last three years
• Repeat homebuyer:  has lived in their principal residence for five out of the last eight years
• All US citizens who file taxes are eligible
• Whether first time home buyer or repeat home buyer; they must be purchasing a primary residence 

Though the credit cannot be used to buy a vacation home, you can buy a new primary residence and change a current home to vacation or rental property home status. 

Income Guidelines 

• Single or Head of Household filers:  Income maximum for full credit -$125,000; partial credit – up to $145,000
• Married, filing jointly: Income maximum for full credit -$225,000; partial credit up to $245,000 

This broader income range should enable buyers whom might ordinarily buy more expensive home to get in on the action and receive a great deal on a home. 

Amount of Credit

•  First time buyer:  10% of purchase price up to $8000 maximum credit
• Repeat buyer:  10% of purchase price up to $6500 maximum credit

 Expiration Date

• You must have a binding sales contract signed by April 30, 2010 and must close by June 30, 2010.

This allows you to use the credit right up to April deadline and have time to close, including some breathing room.

Real Estate remains a good long term  investment, which is why many savvy buyers are taking advantage of all the incentives to buy now. Depending on how you use the tax credit you can make a significant impact on the bottom line of your mortgage. Almost any type of home qualifies for the credit as long as it is considered a principal residence. Good news for buyers in Key West, even houseboats qualify under this program.

Key West is a great place to live!  If you have questions about the Key West real estate market, Margarita Villoch and her team are the local experts on what Florida island living has to offer. Whether you are seeking a second home that you visit occasionally or a year round permanent residence, contact Margarita and start packing!