Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.
Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.
“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..
He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.
Source: IAR Weekly Connection
Wednesday, May 13, 2009
Wednesday, May 6, 2009
2009 FIRST-TIME HOME BUYER TAX CREDIT QUIZ
2009 FIRST-TIME HOME BUYER TAX CREDIT QUIZ
Q. To qualify for the 2009 First-Time Home Buyer Tax Credit, a home must be purchased in what time period?
A: Jan. 1, 2009-Dec. 1, 2009
The home must be purchased on or after Jan. 1, 2009 and before Dec. 1, 2009 to qualify.
--------------------------------------------------------------------------------
Q. In order to qualify for the full $8,000 tax credit, the house must be at least what price?
A: $80,000
Any home that is purchased for $80,000 or more will qualify for the full $8,000 credit. The credit is equal to 10 percent of the home's purchase price, up to $8,000. So if the house costs less than $80,000—say, $75,000—the credit will be 10 percent of the cost (in this case, a $7,500 credit).
--------------------------------------------------------------------------------
Q. A first-time home buyer is defined as a buyer who hasn't owned a principal residence for how long?
A: 3 years prior to the purchase
A first-time home buyer is considered to be a purchaser who has not owned a home in the three years previous to the day of the 2009 purchase. So if the last time you owned a home was in 2005, you would be eligible for the tax credit, even though it's not technically your "first" home. Married joint filers must both meet this "first-time home buyer" requirement in order to claim the credit on a joint return.
--------------------------------------------------------------------------------
Q. What is the income limit for claiming the full tax credit for married taxpayers filing a joint return?
A: $150,000
Married couples filing jointly cannot have an income of more than $150,000 to qualify. If the couple makes more, they don't lose out entirely, though. The credit phases out for married couples (filing jointly) who earn $150,000 to $170,000 in annual income, with a smaller credit being awarded for the higher amounts. Learn more about the formula at REALTOR.org.
--------------------------------------------------------------------------------
Q. What is the income limit for claiming the full tax credit for a single taxpayer?
A: $75,000
Similar to married couples filing jointly, singles making more than $75,000 in annual income don't necessarily lose out entirely on the benefit of the credit. The credit phases out for single filers earning between $75,000 and $95,000. Learn more about the formula at REALTOR.org.
--------------------------------------------------------------------------------
Q. How is a home buyer’s income determined for tax credit eligibility?
A: Adjusted Gross Income (AGI)
For most individuals, “income” will be defined and calculated as Adjusted Gross Income (AGI) on their IRS 1040 income tax return forms. AGI includes wages, salaries, interest and dividends, pensions and retirement earnings, rental income, and several other elements. AGI is the number that appears on the bottom line of the front page of a 1040 form.
--------------------------------------------------------------------------------
Q. What is the most significant difference between this tax credit and the one Congress approved in July 2008?
A: The repayment feature is eliminated.
The 2008 home buyer tax credit that Congress approved was basically an interest-free loan but it had to be repaid over 15 years, whereas the 2009 tax credit does not have to be repaid. The 2008 tax credit also had a limit of $7,500.
--------------------------------------------------------------------------------
Q. What types of homes do not qualify for the tax credit?
Mobile homes
Townhouses
Houseboats
A: They all qualify
Basically any home that is used as a principal residence qualifies for the tax credit, including single-family houses, mobile homes, townhouses, condos, manufactured homes and even houseboats. Generally, you must spend 50 percent or more of your time in the home for it to be considered a principal residence.
--------------------------------------------------------------------------------
Q. To claim the tax credit, you will need to:
A: Claim it on your federal income tax return.
It's that easy: Just claim it on your federal income tax return; no pre-approval is necessary. Home buyers will need to complete IRS Form 5405 to determine their credit amount and then claim that amount on Line 69 of their 1040 income tax return.
--------------------------------------------------------------------------------
Q. Which of the following statements about the tax credit is TRUE?
- The credit can be used as part of a buyer's down payment.
- Vacation homes and rental properties are not eligible.
- Properties outside of the U.S. also are eligible.
- Homes purchased in 2008 can still take advantage of this as well.
A: Vacation homes and rental properties are not eligible.
The home must be a principal residence that is owned by the occupant, so vacation homes and rentals would not be eligible for the tax credit.
--------------------------------------------------------------------------------
Q. What if buyers are eligible for an $8,000 credit, but their entire income tax liability for the year is only $5,000?
A: They'll get a refund for $3,000.
Any credit amount unused will be refunded as a check to the buyer. So the purchaser would receive the difference between the $8,000 credit amount and the amount of tax liability (so in the above case, a $3,000 refund).
--------------------------------------------------------------------------------
Q. How long do owners have to stay in their homes without having to repay the tax credit?
A: 3 years
The home cannot be sold until three years after the purchase, or owners will be required to repay the tax credit. This is to prevent buyers from flipping properties in order to cash in on the credit.
--------------------------------------------------------------------------------
Source:REALTOR Interactive Magazine
Q. To qualify for the 2009 First-Time Home Buyer Tax Credit, a home must be purchased in what time period?
A: Jan. 1, 2009-Dec. 1, 2009
The home must be purchased on or after Jan. 1, 2009 and before Dec. 1, 2009 to qualify.
--------------------------------------------------------------------------------
Q. In order to qualify for the full $8,000 tax credit, the house must be at least what price?
A: $80,000
Any home that is purchased for $80,000 or more will qualify for the full $8,000 credit. The credit is equal to 10 percent of the home's purchase price, up to $8,000. So if the house costs less than $80,000—say, $75,000—the credit will be 10 percent of the cost (in this case, a $7,500 credit).
--------------------------------------------------------------------------------
Q. A first-time home buyer is defined as a buyer who hasn't owned a principal residence for how long?
A: 3 years prior to the purchase
A first-time home buyer is considered to be a purchaser who has not owned a home in the three years previous to the day of the 2009 purchase. So if the last time you owned a home was in 2005, you would be eligible for the tax credit, even though it's not technically your "first" home. Married joint filers must both meet this "first-time home buyer" requirement in order to claim the credit on a joint return.
--------------------------------------------------------------------------------
Q. What is the income limit for claiming the full tax credit for married taxpayers filing a joint return?
A: $150,000
Married couples filing jointly cannot have an income of more than $150,000 to qualify. If the couple makes more, they don't lose out entirely, though. The credit phases out for married couples (filing jointly) who earn $150,000 to $170,000 in annual income, with a smaller credit being awarded for the higher amounts. Learn more about the formula at REALTOR.org.
--------------------------------------------------------------------------------
Q. What is the income limit for claiming the full tax credit for a single taxpayer?
A: $75,000
Similar to married couples filing jointly, singles making more than $75,000 in annual income don't necessarily lose out entirely on the benefit of the credit. The credit phases out for single filers earning between $75,000 and $95,000. Learn more about the formula at REALTOR.org.
--------------------------------------------------------------------------------
Q. How is a home buyer’s income determined for tax credit eligibility?
A: Adjusted Gross Income (AGI)
For most individuals, “income” will be defined and calculated as Adjusted Gross Income (AGI) on their IRS 1040 income tax return forms. AGI includes wages, salaries, interest and dividends, pensions and retirement earnings, rental income, and several other elements. AGI is the number that appears on the bottom line of the front page of a 1040 form.
--------------------------------------------------------------------------------
Q. What is the most significant difference between this tax credit and the one Congress approved in July 2008?
A: The repayment feature is eliminated.
The 2008 home buyer tax credit that Congress approved was basically an interest-free loan but it had to be repaid over 15 years, whereas the 2009 tax credit does not have to be repaid. The 2008 tax credit also had a limit of $7,500.
--------------------------------------------------------------------------------
Q. What types of homes do not qualify for the tax credit?
Mobile homes
Townhouses
Houseboats
A: They all qualify
Basically any home that is used as a principal residence qualifies for the tax credit, including single-family houses, mobile homes, townhouses, condos, manufactured homes and even houseboats. Generally, you must spend 50 percent or more of your time in the home for it to be considered a principal residence.
--------------------------------------------------------------------------------
Q. To claim the tax credit, you will need to:
A: Claim it on your federal income tax return.
It's that easy: Just claim it on your federal income tax return; no pre-approval is necessary. Home buyers will need to complete IRS Form 5405 to determine their credit amount and then claim that amount on Line 69 of their 1040 income tax return.
--------------------------------------------------------------------------------
Q. Which of the following statements about the tax credit is TRUE?
- The credit can be used as part of a buyer's down payment.
- Vacation homes and rental properties are not eligible.
- Properties outside of the U.S. also are eligible.
- Homes purchased in 2008 can still take advantage of this as well.
A: Vacation homes and rental properties are not eligible.
The home must be a principal residence that is owned by the occupant, so vacation homes and rentals would not be eligible for the tax credit.
--------------------------------------------------------------------------------
Q. What if buyers are eligible for an $8,000 credit, but their entire income tax liability for the year is only $5,000?
A: They'll get a refund for $3,000.
Any credit amount unused will be refunded as a check to the buyer. So the purchaser would receive the difference between the $8,000 credit amount and the amount of tax liability (so in the above case, a $3,000 refund).
--------------------------------------------------------------------------------
Q. How long do owners have to stay in their homes without having to repay the tax credit?
A: 3 years
The home cannot be sold until three years after the purchase, or owners will be required to repay the tax credit. This is to prevent buyers from flipping properties in order to cash in on the credit.
--------------------------------------------------------------------------------
Source:REALTOR Interactive Magazine
Saturday, January 31, 2009
Fed Announces Plan to Reduce Foreclosures
The Federal Reserve will take aggressive action to renegotiate mortgages that are likely to enter foreclosure, Fed Chair Ben Bernanke said in a letter to Congress Tuesday.
Under the program, which only affects mortgages owned by the Fed, the central bank will be able to reduce what a home owner owes on a mortgage, lower the interest rate, lengthen the term on the loan, or take other steps that might persuade home owners to keep paying. Borrowers will deal directly with their mortgage servicer.
The Fed says that the mortgages most likely to be affected are those with loan balances that are more than 125 percent of estimated value of the property.
"It's a step beyond what FDIC is doing with its own portfolio," said mortgage expert Alan White, an assistant professor at Valparaiso University School of Law. "Principal write-downs are still the critical issue" in keeping borrowers in their homes.
Source: Washington Post, Neil Irwin and Renae Merle (01/28/2009)
Under the program, which only affects mortgages owned by the Fed, the central bank will be able to reduce what a home owner owes on a mortgage, lower the interest rate, lengthen the term on the loan, or take other steps that might persuade home owners to keep paying. Borrowers will deal directly with their mortgage servicer.
The Fed says that the mortgages most likely to be affected are those with loan balances that are more than 125 percent of estimated value of the property.
"It's a step beyond what FDIC is doing with its own portfolio," said mortgage expert Alan White, an assistant professor at Valparaiso University School of Law. "Principal write-downs are still the critical issue" in keeping borrowers in their homes.
Source: Washington Post, Neil Irwin and Renae Merle (01/28/2009)
Thursday, January 22, 2009
Foreclosure bill among final action of General Assembly
In the last days of the 95th General Assembly there were a few items of interest approved by both chambers including Senate Bill 2513 with provisions to address foreclosure actions, which requires that no foreclosure action can begin before the mortgagee mails a notice advising the homeowner about HUD-approved housing counseling. According to IAR Weekly Connection
Thursday, November 27, 2008
What You Should Know About Buying REO's
Buying Real Estate Owned (REO) property, rehabbing it and renting it out can be a great investment strategy. But it is a different transaction altogether than buying your principal residence. Here are some things that are important to know.
1. Most REO property won’t leave you feeling all warm and fuzzy.
First time home-buyers are often gleeful when they get their first look at the home they will eventually buy. "It’s just so CUTE!" they declare. They oooh and aaah over the carefully groomed, staged and scented home visualizing Thanksgiving Dinners and Christmas trees.
REO property often takes a little more imagination. You have to try to pretend that the yard is not dead, the house isn’t lime green, the walls don’t have holes in them, the kitchen appliances and fixtures are actually there, and the flooring isn’t all torn up. That is, if you can get past the unbelievable stench and filth of lives gone horribly wrong.
To be fair, there are nice, clean REO properties to be had. But oftentimes, an REO house is one that shows evidence of terrible neglect and outright abuse on the part of an angry or desperate previous owner.
2. Don’t expect the bank to pretty it all up for you!
The banks usually prefer to sell "as is." Minimally, they will do an initial "trash out" to remove the belongings left in or on the property. In addition, they will re-key, board up windows, and winterize. It is unlikely that measures will be taken to add appeal- if the sinks, lights, appliances and windows are missing, they are likely to stay that way. Exception: if the buyer’s lender requires a repair to fund the loan, the bank may negotiate the cost of the repairs. In a competitive REO market, however, they won’t need to do any repairs- a cash buyer will snatch it right up in it’s current condition.
3. The bank won’t tell you what’s wrong with the house, because they don’t know.
A traditional seller is required to provide you with a laundry list of everything they know to be wrong with the property. In the case of an REO property, the seller has never even seen the property, let alone lived in it. The bank has no idea if the handrail is loose, if there are barking dogs next door, or if meth was manufactured in the second bedroom. Make sure that you do any inspections necessary to ensure that you have a good grasp on the condition of the property- very little information will be provided to you by the seller.
4. Buying at a low enough discount will take patience.
When the banks first put their properties on the market they frequently price them too high. Many times a successful purchase involves a process of making a number of low ball offers and being rejected several times and waiting while the asking price comes down to the level where your price will be accepted.
1. Most REO property won’t leave you feeling all warm and fuzzy.
First time home-buyers are often gleeful when they get their first look at the home they will eventually buy. "It’s just so CUTE!" they declare. They oooh and aaah over the carefully groomed, staged and scented home visualizing Thanksgiving Dinners and Christmas trees.
REO property often takes a little more imagination. You have to try to pretend that the yard is not dead, the house isn’t lime green, the walls don’t have holes in them, the kitchen appliances and fixtures are actually there, and the flooring isn’t all torn up. That is, if you can get past the unbelievable stench and filth of lives gone horribly wrong.
To be fair, there are nice, clean REO properties to be had. But oftentimes, an REO house is one that shows evidence of terrible neglect and outright abuse on the part of an angry or desperate previous owner.
2. Don’t expect the bank to pretty it all up for you!
The banks usually prefer to sell "as is." Minimally, they will do an initial "trash out" to remove the belongings left in or on the property. In addition, they will re-key, board up windows, and winterize. It is unlikely that measures will be taken to add appeal- if the sinks, lights, appliances and windows are missing, they are likely to stay that way. Exception: if the buyer’s lender requires a repair to fund the loan, the bank may negotiate the cost of the repairs. In a competitive REO market, however, they won’t need to do any repairs- a cash buyer will snatch it right up in it’s current condition.
3. The bank won’t tell you what’s wrong with the house, because they don’t know.
A traditional seller is required to provide you with a laundry list of everything they know to be wrong with the property. In the case of an REO property, the seller has never even seen the property, let alone lived in it. The bank has no idea if the handrail is loose, if there are barking dogs next door, or if meth was manufactured in the second bedroom. Make sure that you do any inspections necessary to ensure that you have a good grasp on the condition of the property- very little information will be provided to you by the seller.
4. Buying at a low enough discount will take patience.
When the banks first put their properties on the market they frequently price them too high. Many times a successful purchase involves a process of making a number of low ball offers and being rejected several times and waiting while the asking price comes down to the level where your price will be accepted.
Some of this material from Chico Ca Real Estate Blog
NEW HELP COMING FOR MORTGAGES BACKED BY FANNIE, FREDDIE
The Bush administration announced another plan to modify hundreds of thousands of distressed mortgages held or backed by mortgage finance giants Fannie Mae and Freddie Mac. To qualify for the new program, homeowners whose loans are owned or packaged by Fannie and Freddie must be 90 days or more past due on their payments for single-family dwellings in which they live. (Kevin G. Hall, November 12, 2008, RISMedia)
NAR HOME BUYER AND SELLER SURVEY SHOWS RISE IN FIRST-TIME BUYERS, LONG-TERM PLANS
The latest consumer survey of home buyers and sellers shows first-time buyers have risen in market share and plan to own their homes longer than buyers in the past. Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it’s a trend he expects to grow. (Walter Molony, November 8, 2008, NAR)
Subscribe to:
Posts (Atom)
