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Home Buyer Tax Credit Extended; Mortgage Rates At 54-Year Low

By: 7 July 2010 One Comment

ROGERS — First-time home buyers have more time to close the sale of a home to qualify for a federal tax credit, and to get interest rates that have not been so low since Elvis Presley was an unknown singer.

The federal home buyer tax credit has been extended and banks and other lenders have slashed interest rates to further stimulate home buying, said Bruce Castleberry, community outreach coordinator for Credit Counseling of Arkansas’ Fayetteville office.

The average interest rate for 30-year mortgages hit a 54-year low in the third week of June, at 4.69 percent.

“For context, Ike (President Dwight D. Eisenhower) was three years into his first term, gasoline was 23 cents per gallon, the average household income was less than $4,400, and a 21-year-old Mississippian named Elvis Presley was a truck driver who couldn’t get his singing career launched,” Castleberry said.

Credit Counseling of Arkansas offers free courses to help first-time home buyers navigate finding lenders, filling out necessary paperwork and qualifying for tax credits.

Though interest rates are low, they are not much lower than what the rates have been for a 30-year, fixed interest rate mortgage, said Chad Kumpe, a Northwest Arkansas real estate agent who has been in the business since 1971.

Chad Kumpe

“Mostly, these low rates can help on refinancing mortgages, but most of the home owners who wanted to refinance have already done so,” Kumpe said.

Still, plenty of people are refinancing their mortgages, stimulated by low rates, according to the Mortgage Bankers Association.

“As more homeowners locked into these low rates, the level of refinance applications increased to a new 13-month high,” said Michael Fratantoni, the bankers association vice president of research and economics.

The refinance index increased to 9.2 percent for the week ended July 2 and is the highest refinance index since the week ended May 15, 2009, bearing out Kumpe’s assertion that many home owners already refinanced their loans, in 2009 or earlier.

As for the first-time home buyer tax credit, those who had homes under contract by April 30 now have more time to close the sale, until Sept. 30.

“It is taking longer to close a sale than in the past that those buyers who purchased a foreclosure or short sale property usually take a very long time to close,” Kumpe said. “In some of those cases, some buyers will not even make the extended deadline.”

The first-time home buyers attending Credit Counseling of Arkansas’ free courses is at a record-setting level. Castleberry said 148 people had attended home buyer courses from January through June 12, the most recent course offered. That’s compared with 195 people who attended first-time home buyer courses in all of 2009, Castleberry said.

“We can hold their hands through the process and make sure there is nothing in the offer, contract or closing documents they need to worry about,” Castleberry said.

Buyers have some options on how to claim the home buyer tax credit on federal tax returns. The Internal Revenue Service allows tax payers to claim the credit on the 2009 or 2010 returns.

To qualify, a home buyer must:

• Have bought — or have a binding contract to buy — a principal residence on or before April 30, 2010. The tax credit does not apply to second homes, rental properties and vacation homes.

• Complete the sale of the home on or before Sept. 30. The deadline was June 30, 2010, before the tax credit was extended.

Tax payers should be patient in filing for the credit. The IRS requires documentation, which must be filed as hard copies rather than electronically. That can take longer to process returns and get the refunds in hand.

A primary residence, like a condominium in Heritage Bay Condos at Beaver Lake, will qualify for the first-time home buyer tax credit. Chad Kumpe has these condos listed for sale. See www.chadkumpe.com.

For Your Information: Free Home Buying Classes
Credit Counseling of Arkansas in Northwest Arkansas will host a class for first-time home buyers at 9 a.m. Saturday, July 10.
It’s at the Jones Center for Families in Springdale, Ark.
The eight-hour course meets the Arkansas Development Finance Authority requirements for first-time home buyers or those who need down payment assistance.

Participants get a certificate of completion to help them qualify for funds.
For more information, call 479-521-8877 or 1-800-889-4916.

Around the State: Other Credit Counseling of Arkansas Offices
Credit Counseling of Arkansas operates throughout several cities, with certified counselors and free or low-cost assistance.

Credit Counseling of Arkansas has offices in Bentonville, Fayetteville, Fort Smith, Harrison, Siloam Springs, Springdale and Rogers.

To find out more, go to www.ccoacares.com.

About: Lana F. Flowers:
Lana F. Flowers is a gifted Arkansas reporter who can handle news about Walmart and retail, movie and book reviews, human interest stories, features and anything else you'd care to mention. She lives in Rogers, Ark., with her husband Jesse, daughter Layla, cats Lottie Boots and Emmy, and dog Fuzzy. Send an email -- fashionablewords@yahoo.com

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