Maine Real Estate News & Notes

Like most of the country, the Maine real estate market has benefited significantly from the first-time homebuyers federal tax credit, which is scheduled to expire Nov. 30, 2009. First time homebuyers are being defined as anyone who hasn't owned a home in the past three years.

Currently in order to qualify for the tax credit, a buyer must close on their property by Nov. 30. Those hoping to take advantage of the tax credit will need to have their finances in good shape, as nervous lenders are closely scrutinizing a potential borrower’s credit and income history.

In Maine, new homebuyers also can get up to an additional $5,000 in the form of a grant from the Maine State Housing Authority's Gift of Green program. The money, which can be used for closing costs, requires a 1% down payment and enrollment in a special first-time homebuyer class.

Rather than simply increase sales, the Federal incentive is helping to slow the decline in home sales.  As Congress considers extending the program, it is easy to be concerned that sales will slump again if the incentive is not extended. The National Association of Realtors has estimated that 2 million first-time buyers will take advantage of the $8,000 tax credit and that it will be responsible for 350,000 sales nationally. 

According to some local lenders, it is estimated that 60% of current mortgage applications are from first-time homebuyers – an extremely high level.

There is considerable pressure being applied to the government to extend or perhaps enhance the program.  There’s still a chance that Congress could extend the tax credit in its current form or amend it. Some lawmakers have voiced conern about the program’s cost, which may hit an estimated $15 billion.  According to the AP, this is more than double the amount initially forecast in the stimulus bill. Critics contend that the program is artificially inflating demand at the expense of the taxpayer and that sales would have occurred anyway due to declining prices, low interest rates and other government sponsored programs.

In any case, there is about five more weeks for buyers to take advantage of the program.