Listings of Bank Owned Homes: Good News for First-Time Buyers

First-time buyers will be happy to note that the listings of bank owned homes is ripe for picking good property deals. Industry experts agree that the foreclosure crisis benefits only one group, first-time buyers.

The Obama Administration has given an $8,000 federal tax credit to first-time buyers as part of its effort to trim down listings of bank owned homes. And if the tax credit fails to motivate first-time buyers, the low home prices and down payment mortgages will surely entice them to invest in foreclosure properties.

Already, first-time homebuyers are starting to catch on the trend. Some real estate professionals reported working with an increase number of first-time buyers.

Results of the May survey of the National Association of Realtors showed that first-time homebuyers accounted for about 2 percent of sales transactions. The survey also indicated that the number of potential homebuyers was up by 10 percent compared with the previous year.

In February, President Barack Obama signed the economic stimulus package which included the $8,000 federal tax credit. The tax credit, which expires November 30, does not apply to homeowners who earn higher than $75,000 or couples who have incomes higher than $150,000.

First-time homebuyers who are eligible for the program are those who have not owned a property for the past three years. Potential buyers who qualified for the program aimed at streamlining listings of bank owned homes, can claim the tax credit by filing the 2008 tax return which was amended, or they can wait for the 2009 tax return.

Industry professionals advise first-time homebuyers to close on property deals before the November 30 deadline, adding that no hesitation should be taken by buyers if they really want to take advantage of the tax credit.

Meanwhile, data showed that one out of three properties sold in June was a distressed home or foreclosure, pressuring the median price to fall to $173,000 or 16.8 percent less than a year ago.

Another factor that may motivate first-time buyers is the abundance of mortgage loans that require little or no deposit. The most widely popular mortgage loan among first-time buyers is the 203b of the Federal Housing Agency (FHA). This mortgage loan requires only a 3.5 percent deposit but buyers of listings of bank owned homes are required to pay the mortgage insurance monthly.

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