Property Developers Offer "Tax Credits" to Buyers

[Jun 17, 2010.]

 

The government's tax credit for home buyers expired in April, but that doesn't mean some people aren't finding incentives to buy new homes. Some property developers are offering special "tax credit" plans directly to buyers, according to the Wall Street Journal.

Getting Cash Back

The article mentions several New York property developers offering up to $8,000 toward new home purchases. The "tax credits" are mostly offered as cash rebates that are paid out in the final phase of purchase. The rebates are intended to get buyers to make a decision faster.

"The functional purpose of a tax rebate is that there is a deadline," Christopher Thornberg, founding principal of Beacon Economics in Los Angeles, told the Wall Street Journal. "Consumers think 'if I don't buy today, I will miss the credit.' "

Mortgage Loan Closing Costs

When hunting for a new home ask property developers about special incentives like cash rebates. Getting cash back could help with mortgage closing costs. Among the mortgage closing costs you can expect to pay when buying a home are fees for an appraisal, title search, attorney, and homeowners insurance premiums.

Lowest Mortgage Rates

In addition to cash back, some property developments may offer other incentives to close deals. According to the Wall Street Journal, home builder Lennar Corp. has been offering mortgage loans with a rate of 3.25% for five years. After the five-year period, the mortgage rate rises up to 1% a year and is capped at 8.25%.

High Inventory

Even if a home builder isn't running a promotion, see if you can negotiate one. There is an excess inventory of new homes that builders are hoping to unload. The National Association of Home Builders also said this week that builder confidence has declined as fewer consumers are looking to buy homes in the wake of the expiration of the government's tax credit.

Competitive Mortgage Rates

Even if you don't qualify for a special mortgage rate from a home builder you are still likely to get a competitive rate. Today's mortgage rates are at historical lows, making it an ideal time to buy a home if you need financing.

You can begin comparing mortgage rates here to find a deal. Remember, the better your credit and more of a down payment you have saved up, the better off you'll be in the long run. Although some home builders may have a deadline for getting special incentives, make sure you take enough time to research your options for getting a mortgage loan to buy a home.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.