Mortgage

Could the Tax Credit Be Extended Again?

The pressure is increasing on Congress to renew the homebuyer tax credits for a third time.

The first $7,500 tax credit was passed in 2008 and required first-time buyers to repay the credit over 15 years. A few months later in 2009, Congress expanded the credit to a maximum of $8,000 that didn’t have to be paid back.

At the end of last year, Congress extended the benefit again until April 30 with an extra two months on top of that to close. A new credit of $6,500 was added for move-up buyers, too.

Now representatives of the housing industry are lobbying for another extension. Some experts, including Mark Zandi, chief economist at Moody’s Economy.com, who supported the earlier credits, think the time has come to let it go.

“It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”

Source: The Wall Street Journal, Nick Timiraos (02/22/2010)

———————————————————
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

IRS Clarifies What’s Needed to Claim Tax Credit

The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.

While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.

The IRS clarification says: “In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”

For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.

Source: Washington Post (02/20/2010)

———————————————————
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

Shadow Inventory Unlikely to Hurt Market

Nearly 5 million houses and condos, of which the mortgages are delinquent, will go through foreclosure over the next few years, a new study by John Burns Real Estate Consulting Inc. concludes.

This represents more than half of the 7.7 million households now behind on their mortgage payments. The situation is worst in Arizona, California, Florida, and Nevada. Burns calculates that there is an inventory equivalent to 27 months of sales in Orlando, 24 months in Miami, and 18 months in Las Vegas.

Consulting firm CEO John Burns says there is strong investor demand for these properties, so as long as employment continues to recover and interest rates remain moderate, these sales won’t have much impact on overall prices.

Source: The Wall Street Journal, James R. Hagerty (02/16/2010)

———————————————————
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

Important Homebuyer Tax Credit Q&As

Important Homebuyer Tax Credit Q&A as provided by http://homebuyertaxcredit.com

First-Time Home Buyer Tax Credit Eligibility
Q. What are the basic eligibility requirements for a first-time home buyer?
To qualify for the first-time home buyer tax credit, you cannot have owned a home as your principal residence in the three years prior to closing.

Q. How much is the first-time home buyer tax credit?
The first-time home buyer tax credit is 10% of your purchase price up to $8,000.

Q. I bought a home once before, but sold it years ago. Do I still qualify as a first-time home buyer?
For the first-time home buyer tax credit, you qualify as a first-time home buyer so long as you have not owned a primary residence in the past three years prior to closing on your new property. So if you owned a home in the past, but sold it more than three years ago, you would qualify as a first-time home buyer.

Q. Can I qualify as a first-time home buyer if I rent my primary residence, but own an investment property or vacation home?
Yes, you could still qualify as a first-time home buyer. Even if you own property, you are still eligible if you have not used that property as your primary residence within the prior three years.

“Step-Up” or Long-Time Homeowner Tax Credit Eligibility
Q. Can I get a credit if I currently own a home?
To qualify as a long-time homeowner, you must have owned a home that you lived in as your personal residence for five consecutive years out of the previous eight years prior to closing.

Q. Can I get the tax credit if I lived in one home for four years, sold it, and then immediately bought and lived in another home for the last two years?
You would not qualify. In order to be eligible for the long-time homeowner tax credit, you must live in the same home for five consecutive years out of the last eight.

Q. Can I get the long-time homeowner credit if I otherwise qualify, even if I don’t sell my previous home?
Yes, the law does not require that you sell the home that you lived in for five consecutive years out of the last eight years. You can keep title to it. However, you have to make the qualifying home your principal residence, so you can’t live in the prior home.

Q. Can I get the credit if I owned one home for ten years, and my current home for three?
No, to get the long-time homeowner home buyer tax credit, you must have lived in your current residence for at least five consecutive years out of the last eight.

Q. Can I sell my current home, and buy a less expensive home, and qualify for the “step-up” tax credit?
Yes. The term “step up” is misleading, because nothing in the law requires that you have to “step up” in value. You do not have to buy a more expensive home. We try to use the term “long-time homeowner tax credit” to make it clear how the credit works.

Income Qualifications
Q. How much can I make and still qualify for the tax credit?
The tax credit is only available at certain income levels: up to $125,000 for single filers and $225,000 for joint filers. The income limits are the same for both first-time home buyers and long-time homeowners. If you make within $20,000 of those limits, you can still qualify for a partial tax credit. But if you make over $145,000 for single filers or $245,000 for joint filers, you are not eligible.

Q. How do I figure out my “modified adjusted gross income” or “MAGI”?
You really should talk to your accountant about it, but generally speaking, your MAGI is what we all colloquially think of as our “income” – wages, salaries, interest income, dividends, and capital gains. Your MAGI also includes certain foreign income, but very few people have that. Note that your MAGI will be reduced by certain deductions such as alimony, but not the ‘below the line” itemized deductions that are on Schedule A of your tax return. Since your MAGI is very close to the “adjusted gross income,” or “AGI,” you can check your last tax return to see what you make: the AGI is the last number on Form 1040or 1040A.

Q. How is the partial credit figured?
The partial tax credit is available for taxpayers whose income is within $20,000 of the income limits: so up to $145,000 for single filers and $245,000 for joint filers. If your income is within that “phase out range,” you get a partial credit based on how much of your income is within that range. For example, if your MAGI is $130,000 as a single filer, that means you’re $5,000 into that $20,000 range. That’s 25% of the range, leaving 75% still in the range. So you would get 75% of the tax credit you’re entitled to: $6,000 if you’re a first-time home buyer (75% of $8,000) or $4,875 if you’re a long-time homeowner (75% of $6,500).

Deadline Issues
Q. When do I have to be in contract?
In order to claim either first-time home buyer tax credit, or the long-time homeowner tax credit, you have to be in contract by April 30, 2010. This is a hard deadline, with no extensions.

Q. When do I have to be in closed?
In order to claim either first-time home buyer tax credit, or the long-time homeowner tax credit, you have to be closed by June 30, 2010. This is a hard deadline, with no extensions.

Q. What if my closing is delayed because of problems with appraisals, attorney delays, etc.?
It doesn’t matter. The IRS has been very exacting with the deadlines. If you don’t close by midnight June 30, 2010, you will not be able to claim the tax credit.

Q. What if I was already in contract at the time the law was passed in November?
It doesn’t matter when you went into contract, so long as you are in contract by April 30, 2010. So long as you otherwise qualify, and close by June 30, 2010, you will get the tax credit. Obviously, a number of people who got into contract without realizing they were going to be eligible for the tax credit are going to get a windfall.

Q. What if I was not eligible for a tax credit on the law prior to November 2009, and closed before the new law? Can I get a tax credit?
No, the law only applies to closings after November 6, 2009, and before June 30, 2010. If you closed on November 6, 2009 or earlier, and did not qualify for the tax credit at the time of your closing, you cannot get the new tax credit.

Buying with Someone Else
Q. If I am buying with someone else, and we both qualify, do we get two tax credits?
No, the tax credit is allocated according to the purchase, not the number of purchasers. So if two people who both qualify purchase a house together, they would split the applicable tax credit.

Q. What if I qualify for the credit, but my spouse does not?
In order to claim either the first-time home buyer tax credit, or the step-up home buyer tax credit, both spouses must be eligible. So if you are eligible, but your spouse is not eligible for whatever reason, neither of you can claim the tax credit.

Q. What if my income is within the limitations, but my spouse’s income is above the limitations?
In that case, unfortunately, neither of you qualify for the tax credit. Both of you must qualify.

Q. What if I previously owned a home in the past three years, but my spouse never owned a home?
In that case, unfortunately, neither of you qualify for either tax credit. You are ineligible for the first-time home buyer tax credit because you owned a home in the past three years, and she is ineligible for the long-time homeowner tax credit because she never owned a home before.

Q. What if my wife and I just got married after living in separate homes, and both qualify for the long-time homeowner tax credit for our prior homes?
Unfortunately, you don’t qualify. In order for a married couple to qualify for the “step-up” home buyer tax credit, both spouses must qualify by owning the SAME principal residence. You each owned separate principal residences, so even though you both might qualify separately, you don’t qualify togethe

For answers to more of your tax credit questions, please visit this excellent website: http://homebuyertaxcredit.com/faq.aspx

———————————————————
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

Homebuyer Tax Credit Deadline Looming

The Homebuyer Tax Credit is set to expire this summer.  The tax credit is available to both First-Time Homebuyers and Step-Up Homebuyers. The provision to make the tax credit eligible for Step-Up Homebuyers was added when the law was extended.

Mortgage

Facts Getting Lost in FHA Safety Debate

“Nobody has asked to come in and look at our balance sheet, to go through our finances, which I’ve offered to everybody.”—FHA Commissioner David Stevens

News reports raising concerns that FHA might be the next major financial institution requiring a government infusion are based on misinformed comparisons with what happened in the subprime market, FHA Commissioner David Stevens said in an exclusive interview with REALTOR® Magazine this week.

At their peak, subprime lenders commanded 40 percent of the residential mortgage market by making low-downpayment, no-document, interest-only, and other types of exotic loans to high-risk borrowers, investors, and speculators, a market that FHA sat out entirely, says Stevens.

Today, it’s FHA that commands 40 percent of the market, but that’s where the comparison ends. The agency makes 30-year, fixed-rate, fully documented loans only for households buying their primary residence. For each loan, the agency maintains capital reserves for the full 30 years of the loan rather than for the 1-2 years required of banks.

Today, the agency has more than $30 billion in reserves, including a fully funded loan-loss reserve. All the talk in the media about reserves dipping below a 2-percent required threshold is about a secondary account that’s above and beyond the agency’s primary reserve. Those two accounts together represent more than 4 percent of assets, he says.

An actuarial audit of FHA finances due out in a few weeks from a non-governmental auditor is expected to find that FHA has sufficient capital to cover all forecasted losses, even assuming further declines in home prices, says Stevens.

“What concerns me, and I think should concern all REALTORS®, is . . . non-fact-based [criticism] from people who jump to conclusions without looking at data [and] create an environment where we’ll be forced to make corrections where they are not required and can hurt this housing recovery.”

Stevens sat down with the magazine for a 30-minute interview that covered the agency’s new appraisal policy and an upcoming mortgagee letter that’s expected to make condo financing more attractive as well as the agency’s credit health. He also talked about the improvements to the agency’s processing that makes it comparable to conventional lenders in terms of processing speed and paperwork requirements.

Remainder of Article and Aduio from Interview

Robert Freedman ·- Senior Editor, REALTOR® Magazine (October 22, 2009)

——————–
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

Refinancing Fuels Loan Activity

Loan applications rose 8.2 percent last week on a seasonally adjusted basis compared to the previous week, according to the Mortgage Bankers Association weekly survey.

Most of the increase was in refinances, which rose 14.5 percent, while purchases decreased 1.8 percent. On an unadjusted basis, the purchase index decreased 3 percent compared with the previous week and was down 3.4 percent compared to the same week a year ago.

Mortgage rates declined overall:

* 30-year fixed-rate mortgages decreased to 4.97 percent from 5.04 percent.
* 15-year fixed-rate mortgages decreased to 4.33 percent from 4.53 percent.
* 1-year ARMs increased to 6.83 percent from 6.79 percent.

Source: Mortgage Bankers Association (11/04/2009)

——————–
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

How to Tell Mortgage Rates Are Rising

What are the signs that mortgage rates, now at historic lows, are about to go up?

One way to catch a clue is to read the minutes of the Federal Reserve. For instance, the Federal Open Market Committee said in its September minutes that when it came to interest rates, there is “no policy change.” And the minutes said that while the Fed believes “an economic recovery is underway,” it regards a weak economy as a greater risk than inflation. Upcoming meeting minutes are likely to be just as forthcoming if an uptick is in the cards.

Other signs include:

* Declining unemployment: The unemployment rate is sitting at 9.7 percent. If lots of Americans go back to work, an increase in interest rates is likely.
* Rising discount rate: The rate the Fed charges banks that borrow from it directly stands at 0.5 percent. If it rises or the spread between it and the Federal Funds rate widens, then mortgage rate increases won’t be far behind.

Source: BusinesWeek.com, Marc Roth (10/28/2009)

——————–
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

Mortgage Applications Fall Again

Mortgage applications declined again last week, falling 12.3 percent on a seasonally adjusted basis compared with the previous week.

Most of the decline was in refinances, which fell 16.2 percent. The seasonally adjusted purchase index decreased 5.2 percent.

On an unadjusted basis, the purchase index declined 4.8 percent and was down 15.4 percent compared with the same week a year ago.

Except for 15-year rates, mortgage rates were down slightly:

* 30-year fixed-rate mortgages decreased to 5.04 percent from 5.07 percent.
* 15-year fixed-rate mortgages increased to 4.53 percent from 4.51 percent.
* 1-year ARMs decreased to 6.79 percent from 6.86 percent.

Source: Mortgage Bankers Association (10/28/2009)

——————–
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage

House Committee Weighs Scrapping HVCC

The appraisal system imposed by Fannie Mae and Freddie Mac last May is under attack by the House Financial Services Committee and could be on its way out.

The “Home Valuation Code of Conduct” could be terminated by the proposed Consumer Financial Protection Agency under a bipartisan amendment approved by the House committee.

The amendment would require the new agency’s director to replace the code with a set of rules developed through regular administrative procedures and public comment periods used by all federal agencies. The valuation code was the product of a settlement among New York Attorney General Andrew Cuomo, Fannie Mae and Freddie Mac, and the Federal Housing Finance Agency.

Critics say the code created more problems than it solved and has encouraged lenders to use inexperienced appraisers who don’t know the areas where they are doing the work, which is resulting in lowball valuations as well as higher fees.

The legislation under which this code would be scrapped is likely to pass the full House, but may have a tough road in the Senate.

Source: The Washington Post Writers Group, Kenneth Harney (10/30/2009)

——————–
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Next Page »