First-time homebuyers rush to get state, federal incentives

PHOTOGRAPHER: Bruce Squiers

Anna Myers is a first time homebuyer who recently hoped to purchase the home behind her in Cohoes, but that venture failed to materialize. She’s still hopeful that federal and state incentives will help her yet.

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Anna Myers grew up in Cohoes but has been priced out of that area during her search for a home in the past six months.

“Cohoes has gotten so expensive with new construction and taxes,” Myers said. “I’ve had to widen my search to different areas I had not previously considered.”

But time is running out for first-time homebuyers like Myers, who want to be able to close on a home by Nov. 30 so they can take advantage of the federal $8,000 tax credit available through the stimulus bill.

“My ideal was a small house with a postage-stamp yard. I’m a single first-time homebuyer,” Myers said.

Myers said the federal tax credit would really make a big difference — coming in handy for repairs and in some ways, providing a financial cushion.

“It would help to even just to have a bit of a nest egg to replace what you set aside to buy the house,” Myers said, referring to the costs of replacing major appliances like a refrigerator, oven, washer or dryer.

Homebuyer help

A few tips for first-time homebuyers:

1. Have an idea of your price range.

2. Don’t spend more than 30 percent of your income on your mortgage payments, taxes and insurance.

3. Prequalify for a loan before you start looking for a house.

4. Do your research and seek out help from local organizations certified by the U.S. Department of Housing and Urban Development to counsel buyers. Some HUD-approved counselors in the Capital Region are Better Neighborhoods in Schenectady, the Affordable Housing Partnership in Albany and Troy Rehabilitation and Improvement Program.

5. Pick a Realtor who has experience with first-time homebuyers who can walk you through the process.

6. For more on the state’s new first time homebuyers’ incentive, visit www.nyhomes.org. For information on the $8,000 credit available through the stimulus bill, click here.

Wednesday marked Myers’ return from vacationing in the Adirondacks — she hadn’t heard of the new tax credit certificate program just announced by the State of New York Mortgage Agency, which will administer the program.

Called the Mortgage Credit Certificate program, the program is a federal tax credit for first-time homebuyers that lets them convert 20 percent of one’s annual mortgage interest into a tax credit that would be deducted from one’s federal income tax liability. The remaining 80 percent of mortgage interest continues to qualify as an itemized tax deduction.

The credit can be taken to reduce one’s tax burden every year for the life of their mortgage loan as long as the person continues to live in the home.

Myers, an administrative assistant for the state Department of Health, called the new credit another help to the working class.

“It’s helpful for somebody like me. Taxes add from $200 to $400 onto your monthly mortgage payment,” Myers said. “I think it’s awesome that the state would do that. Every little bit helps.”

Delay for training

Philip Lentz, director of communication for SONYMA, said he’s received more than a dozen calls from interested buyers and lenders who want to know more about the program.

But applications for the program won’t be available until early September — a lag that has some frustrated.

“The banks have to get ready and be able to handle the requests and train the loan officers to know about the program so that they know how to respond,” Lentz said. “The frustrations are understandable but it has to start at some point.”

The state worked with the Internal Revenue Service to be able to issue $20 million in mortgage credit certificates — which will cover an estimated 700 mortgages this year, Lentz said. But that may not be much in a state of 18 million people.

“We don’t know what the demand will be,” Lentz said. “We’re focused on one part of the real estate community and that’s first-time homebuyers. We know the demand is out there and we know the positive — interest rates are low and home prices are low for people looking to buy for the first time.

“We’re hopeful that if this program is successful, we will renew it and go beyond the 700 mortgages in this first phase,” Lentz added.

The state is working to get information to the 55 lending institutions that offer SONYMA mortgages, as well as the banks and credit unions that are not part of the agency’s participating network.

“There is some due diligence that we need to do,” Lentz said.

Continental Home Loans, Wells Fargo, M&T Bank and Bank of America have already signed up to participate in the program.

Apply, get information

Lentz said those who are looking for a new home and are interested in the state’s certificate program should talk to their bank or financing agency.

“When they apply for the mortgage, they should apply for the MCC,” Lentz said. “This will help them afford the home — a credit that will go on for many years.”

Buyers should check SONYMA’s Web site, www.nyhomes.org, for income and purchase limits to see if they qualify. They should also check the limitations and exceptions to the program.

Critics of the program charge that there are so many restrictions involved that few will qualify and that the credit isn’t retroactive.

That means buyers like East Greenbush resident Ashley Simpkins will miss out on the program because she was expected to close on her house Friday.

“That’s awfully disappointing,” Simpkins said. “But I’m not going to move my close back just for that, because my loan commitment changes and I may not get as low an interest rate.

“I know there has to be an arbitrary line somewhere, I just wish I was on the other side of the line.”

Simpkins, who works in pharmaceutical sales, is currently renting a townhouse only four doors down from her new home. She spent nearly two months searching for a home, looking at about 20 properties.

“I really like my neighborhood and I saw the opportunity to stay in it and I jumped at it,” Simpkins said. “I did look at a whole bunch of other places — many of them were on the market for a short amount of time or were already under contract, mostly in East Greenbush.”

Simpkins said she has been under contract for a couple of months.

“It’s been a long closing process,” Simpkins said. “It’s going to be a relief. I’m just looking forward to it all being behind me.”

Lentz says the purpose of the program is to encourage people who are financially able to buy a home to do so.

“It’s not aimed at people who have already closed,” Lentz said.

Time constraints

Greater Capital Region Association of Realtors President Sandra Nardoci is grateful for the program’s intent but said she needs to look into the specifics of the program before she can endorse it formally because of the restrictions involved.

Other Realtors in the area are sending out mass e-mails and telling everyone they know about MCC, especially because of the timing involved.

“Everyone is getting very uptight because they need to close by Nov. 30,” said Miguel Berger, president of TechValley Homes Real Estate in Loudonville, who sent out a mass e-mail to 200 people and posted a note on the company’s blog about the program.

“Only certain banks are approved to issue the certificates. We don’t know who those banks are yet. People also don’t know where they can pick up the applications,” Berger said. “I wish they would have done things in a better fashion. It’s a great program. I am sure once they get all the pieces in place it will be good for homebuyers.”

Eric Dahl, managing broker for Community Realty in Albany, said the MCC gives first-time homebuyers another incentive to make a move.

“I don’t expect to see more of a surge because of the state credit. The state credit is just one more reason for buyers whose attention has already been captured by the federal tax credit,” said Dahl.

First-time homebuyers continue to push home sales in the Capital Region, according Realtor Kevin Clancy, owner of Altamont-based Clancy Real Estate, who said any program that helps homebuyers offset the state tax burden is good.

“Anything that helps people save money when they buy a house I’m a huge fan of it,” Clancy said. “The average person owns a home for seven years around here, so I love it. I’m optimistic.”

Clancy said there is a lot of competition for homes priced around $150,000. He said he listed a home at $159,000 last week and quickly had five offers on it.

Clancy said he now needs two full-time real estate agents to mainly service his first-time homebuyer demand.

“I really have that many people calling,” Clancy said.

And first-time homebuyers can be time-consuming for Realtors because they generally require more time. “Sometimes they don’t know what they want,” Clancy said.

And many buyers are seeking to get more help with the home purchasing process, according to Ellie Pepper, assistant director of Better Neighborhoods Inc. in Schenectady, an affordable housing homeownership center that offers counseling to first-time homebuyers.

The organization serves clients in Schenectady, Fulton and Montgomery counties.

“One of the things that we’re seeing here as far as homeownership — it’s harder to get a mortgage,” Pepper said, as stricter lending standards present a challenge to getting financing even as home prices have become more attractive to buyers. “You’ve got to have your ducks in a row to get a mortgage.”

BNI is seeing more people signing up for the homebuyer education workshops and one-on-one counseling, Pepper said.

New client intake for the April-June period increased 45 percent compared to last year during the same time, though workshop attendance remained unchanged for that quarter, Pepper said.

Pepper attributes the increase to three reasons — the $8,000 federal tax credit for first-time homebuyers, lender requests for buyers to take counseling classes and consumers being proactive.

“Some lenders won’t give a mortgage unless there is some counseling,” Pepper said. “People are being more proactive. They don’t want to get into a situation where they may lose the house.”

Couple optimistic

For first-time homebuyers Shannon Kelly and her husband, the long-term state incentive to buy a house now is good news — the couple plans to close on a home in Albany by late September or early October.

They looked all over in Troy, Schenectady and Albany for a total of 10 months as they rented a small, one-bedroom attic apartment, Kelly said.

The couple became familiar with all the troubles in the housing industry because of their search, but Kelly said she looks forward to taking advantage of both tax credits.

“I approached my loan officer immediately and it was new to her as well,” Kelly said of the new state-administered housing tax credit. “Between the Realtor and loan officers, hopefully we will know.”