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A couple weeks ago, the government turned the First Time Home Buyer Tax Credit into a new and improved credit for first timers and repeat buyers alike. The way the new law was crafted is especially helpful to buyers in the DC area.

Now first time buyers can qualify for up to $8,000 off the price of a home, while repeat  buyer who own and resided in a home for at least five of the last eight years can qualify for $6,500. What is especially applicable to the DC area where salaries are higher is that the income levels have been raised to $125,000 for single taxpayers and $225,000 for married couples, with a phase out of the credit if your income is up to $20,000 higher. (The higher income limits provision takes effect November 6, 2009.)

The credit, previously on life support till November 30, 2009, now runs through April 30, 2010. You need a signed contract by this date, but you have until June 30 to close. This is particularly beneficial if you are buying a newly built home or even if you want to time your move to when your kids get out of school. For the first time credit, the new dates apply to anyone, even if you had aimed for the November date with a home purchase that is underway but will miss it due to a hold up with the  lender or the appraisal.  However, if you are applying for the repeat buyer credit, the deal only applies to homes closed on November 6 or later; this credit is not retroactive. 

Since homes in the District average nearly $500,000, the credit assures that both groups of homebuyers should have an ample supply of homes.   The effect of the previous credit was to decrease the inventory of lower priced homes homes that appeal to first time buyers to just over five month worth.  Now, sellers can put their homes on the market with more confidence that they will sell quickly so the seller can buy another home, often at a higher price point.  The expected effect is that first time buyers will have more homes to choose from while stimulating  the housing market at most levels.  The credit does cut off at $800,000: previously, there was no price limit. (The thinking here is that people who buy homes in this price range probably exceed the income limits.)

Members of the military serving on extended official duty away from home for more than 90 days have an extra year to qualify for the credit and are not subject to the repayment clause if they have to move in less than three years.  These terms apply to all members of the uniformed services of the U.S military, members of the Foreign Service of the U.S., or employees of the intelligence community, so are big boost to DC's military community.

While the new credit does offer new opportunities to DC home buyers to get the home they want with some help from the government, homes at lower price points are expected to continue to move swiftly.  Lenders expect to be busy, so mortgage processing times may be lengthy.  The time to get the home buying process started is now! Don't put it off till after the holidays.  Call Rachel Valentino today to discuss current residential options. Rachel Valentino is a top specialist in the D.C. area no matter what your needs are. You can go to Atlantic Coast Connection website to look for that perfect older home in one of DC's many charming historic areas, a beautiful condo convenient to work, or a more suburban place in northern Virginia or Maryland.