First-Time Home Buyer Tax Credit Fact Sheet
Who is Eligible
The $7,500 tax credit is available for first-time home buyers only.
The law defines a first-time home buyer as a buyer who has not owned a home during the past three years.
All U.S. citizens who file taxes are eligible to participate in the program.
Income Limits
Home buyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000.
For married couples filing a joint return, the income limit doubles to $150,000.
Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples with an AGI that exceeds $170,000.
Effective Dates for the Tax Credit
First-time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Tax Credit is Refundable
A refundable credit means that if you pay less than $7,500 in federal income taxes, then the government will write you a check for the difference.
For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $2,500 payment from the government.
If you are due to receive a $1,000 tax refund from the government, your refund would grow to $8,750 ($1,000 plus $7,500 from the home buyer tax credit).
Buyers can take the tax credit in their 2008 or 2009 tax return.
If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.
Types of Homes that Qualify for the Tax Credit
All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a home in the prior three years. This also includes newly-constructed homes.
Payback Provisions
The tax credit essentially serves as an interest-free loan to be repaid over 15 years.
For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. However, the buyer doesn’t have to start repaying the credit until two years after the tax year in which the credit is claimed.
If the home owner sold the home, then the remaining credit would be due from the profit of the home sale.
If there was insufficient profit, then the remaining credit payback would be forgiven.
For more details on the tax credit, go to www.federalhousingtaxcredit.com
Thursday, July 31, 2008
Wednesday, July 30, 2008
Housing Recovery Act Information
I will discuss details later, but wanted to get the information out as soon as I could. This is great news! Here are the main points of the Act as passed:
H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:
GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.
H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:
GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.
Friday, July 25, 2008
Interest Rates Moving Up
This just in from the Wall Street journal --
30-Year Mortgage Rates Rise Again Freddie Mac reports a more than 0.25-percentage point gain in the 30-year fixed mortgage rate to 6.63 percent during the week ended July 24 from the prior week, marking the highest level since it reached 6.68 percent last August. The 15-year fixed mortgage rate also increased, climbing to 6.18 percent from 5.78 percent. Meanwhile, the five-year hybrid adjustable mortgage rate rose to 6.16 percent from 5.80 percent; and the one-year ARM surged to 5.49 percent from 5.10 percent. Freddie Mac chief economist Frank Nothaft attributes the jump to "market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year." Source: Wall Street Journal (07/25/08)
We may not see any more increases like this, but the trend is in place. If you are considering buying a home, now is the time! As interest rates increase, the less house you can afford comfortably.
30-Year Mortgage Rates Rise Again Freddie Mac reports a more than 0.25-percentage point gain in the 30-year fixed mortgage rate to 6.63 percent during the week ended July 24 from the prior week, marking the highest level since it reached 6.68 percent last August. The 15-year fixed mortgage rate also increased, climbing to 6.18 percent from 5.78 percent. Meanwhile, the five-year hybrid adjustable mortgage rate rose to 6.16 percent from 5.80 percent; and the one-year ARM surged to 5.49 percent from 5.10 percent. Freddie Mac chief economist Frank Nothaft attributes the jump to "market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year." Source: Wall Street Journal (07/25/08)
We may not see any more increases like this, but the trend is in place. If you are considering buying a home, now is the time! As interest rates increase, the less house you can afford comfortably.
Tuesday, July 22, 2008
Things going on!
Wow! The economy is sinking and we are running out of options!
Sorry, that is another place, not here! In fact the home sales business is picking up and we continue to see growth in the area. Even though AT&T announced the move of 700 executive postions to Dallas later this year, the word is that only about 300 or so will actually move because they don't want to leave San Antonio. Impact on the housing market will be an incease of some higher end homes in the $400,000+ range. Since our average house sale is more like $150,000, this won't affect many of us.
What we do see as an impact is the ever slightly increasing interest rates. See our previous posts on this subject (MArch 3, 2008) and you can see where we are headed...higher interest rates and rising home prices. This week's rates are closer to 6.75% than we have seen in months. In March we were thinking 6% all summer, but with energy prices up and bonds taking a bruising, it has been anything but stable.
Take stock of your housing situation. If you don't need to sell, sit tight for a while as prices continue to rise with the reduction of inventory available. If you are looking to buy, get the house you want now as the inventory is reducing and interest rates are rising.
Keep a positive outlook, we are still in Texas!
Sorry, that is another place, not here! In fact the home sales business is picking up and we continue to see growth in the area. Even though AT&T announced the move of 700 executive postions to Dallas later this year, the word is that only about 300 or so will actually move because they don't want to leave San Antonio. Impact on the housing market will be an incease of some higher end homes in the $400,000+ range. Since our average house sale is more like $150,000, this won't affect many of us.
What we do see as an impact is the ever slightly increasing interest rates. See our previous posts on this subject (MArch 3, 2008) and you can see where we are headed...higher interest rates and rising home prices. This week's rates are closer to 6.75% than we have seen in months. In March we were thinking 6% all summer, but with energy prices up and bonds taking a bruising, it has been anything but stable.
Take stock of your housing situation. If you don't need to sell, sit tight for a while as prices continue to rise with the reduction of inventory available. If you are looking to buy, get the house you want now as the inventory is reducing and interest rates are rising.
Keep a positive outlook, we are still in Texas!
Tuesday, July 1, 2008
Junk Fees
You may have seen my addition to the web site that states we do not believe in junk fees. Let me explain a bit more.
Seems that with the ever increasing competition in this, and other business', many agents and brokers have advertised lower fees and commissions to entice clients to use their services. However, the cost of doing business, any business today, has not gone down. So these "discount" brokers start to add a menu of fees instead of straight up commissions. In fact, in many cases the menu pricing can far exceed a normal commission and cost the savings minded consumer much more in the long run.
Don't "discount" the fact that discounted commissions will come with discounted service. You may find the rare start up that has the time to provide good service at a discount. But at some point you are not getting experience or full service.
In today's very competitive market, you can not afford to risk your home's sale or your largest personal investment to a discount service provider. You do not save money when your house sits on the market for weeks, or months, longer due to a discount program that fails to advertise and market (both of which do cost money). The same with a home purchase - do you think you will really save money when you are about to make your largest single investment and not get full service, experience, and support? Will your agent really negotiate in your best interest when they are not getting a full payment?
Think about professionals in other regulated areas such as lawyers, or insurance agents - how many discounts and rebates do they offer for full service? You expect them to have the resources and experience to serve you without asking for a rebate.
So, back to the original premise - No Junk Fees! Don't be fooled by so called "savings" when you may be paying more in added fees than if you had contracted with a full service, full time Realtor. If an agent tells you that they have an "Admin fee" of "only $195" and are getting a commission, ask them why.
If they are offering a discount or a rebate program and start adding service fees, then you know there is no real discount.
It is competitive out here, so watch what is going on. Ad if you are in the area, call to set up a time to discuss this, or any real estate idea, in depth. Look forward to hearing from you!
Seems that with the ever increasing competition in this, and other business', many agents and brokers have advertised lower fees and commissions to entice clients to use their services. However, the cost of doing business, any business today, has not gone down. So these "discount" brokers start to add a menu of fees instead of straight up commissions. In fact, in many cases the menu pricing can far exceed a normal commission and cost the savings minded consumer much more in the long run.
Don't "discount" the fact that discounted commissions will come with discounted service. You may find the rare start up that has the time to provide good service at a discount. But at some point you are not getting experience or full service.
In today's very competitive market, you can not afford to risk your home's sale or your largest personal investment to a discount service provider. You do not save money when your house sits on the market for weeks, or months, longer due to a discount program that fails to advertise and market (both of which do cost money). The same with a home purchase - do you think you will really save money when you are about to make your largest single investment and not get full service, experience, and support? Will your agent really negotiate in your best interest when they are not getting a full payment?
Think about professionals in other regulated areas such as lawyers, or insurance agents - how many discounts and rebates do they offer for full service? You expect them to have the resources and experience to serve you without asking for a rebate.
So, back to the original premise - No Junk Fees! Don't be fooled by so called "savings" when you may be paying more in added fees than if you had contracted with a full service, full time Realtor. If an agent tells you that they have an "Admin fee" of "only $195" and are getting a commission, ask them why.
If they are offering a discount or a rebate program and start adding service fees, then you know there is no real discount.
It is competitive out here, so watch what is going on. Ad if you are in the area, call to set up a time to discuss this, or any real estate idea, in depth. Look forward to hearing from you!
Subscribe to:
Posts (Atom)
