We all knew the $8000 first time home buyer credit was extended and if you are existing home owners and owned the house for the past 5 years, you are qualified for $6500 as long as you did not make more than $125K and $225 for joint filers.
So, let's find out how this new credit will affect you as a
(1) Trade-up home buyers, (2) Downsized home buyers and (3) Real estate investors.
First, if you are waiting to trade up your existing homes and like to make a home purchase in order to take advantages the $6500 tax credit. You will need to consider how to do with your existing homes.
Do you need to sell it or rent it out?
Do you need the equity from your existing home in order to put at least 20% down so you don't need to pay the PMI (Private Mortgage Insurance).
If so, you may want talk to several mortage brokers how you can draw the equity line from your primary residence so you don't need to sell the house but still able to put down 20% down. However, if you decide to sell and I will suggest you to have an entrusted real estate advisor to help you to do a Comp analysis and order an apprasial and wallk you through from staging and maketing cause the competition that the sellers faced today are way more complicated than 2 years ago.
I already heard a couple stories that even the seller and buyers agreed on the final purchase price but the apprasial came back and short $20K and the seller had to reduce the price in order to close the property. So, right now is defintely a buyer's market and seller if you don't want to handle 2 properties and want to get rid the old house, had a realtor you can trust and sit down and explore all the options.
I recommends some of my trade up home buyers to rent their house instead of selling right the way if the rent can cover the monthly payment. But everyone is different and so talked to your entrusted real estate advisor and see which investment strategies work the best for you and your family.
Secondly,for those planning to downsize their home and you will defintely want to get rid the big house cause you like to save everything from annaul property tax, home insurance, utilities and I will recommend you sell the big one cause if your goal is to simply to save as much as possible.
You want to buy a smaller one and get the $6500 as a bonus from the government!
Of course, if you don't want to sell your big house but you know you are planning to sell it eventually and you may want to retain a property managment company to handle all the tenant showing, screening, eviction...e.t.c in case you want to wait until the market picks up.
I will share with you next time how the (3) Real Estate Investors can take advantage the home buyers credit....
Hannah Chan Broker, GRI - Your Entrusted Real Estate Advisor in Traingle
Cary-Raleigh Realty, Inc.