The American Recovery and Reinvestment Act of 2009 was signed on February 17, 2009. The Act includes a few revisions for the First-Time Homebuyers Tax Credit.
The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Q What is the amount of the new tax
credit?
A $8,000
Q Who is eligible for the $8,000 tax
credit?
A First time homebuyers who closed (or will close)
on homes between January 1, 2009 and November
30, 2009.
Q What are the details of the new tax
credit?
A Thenewtaxcredit isan $8,000 refundabletax credit
(orupto10%of thepurchaseprice). Thismeans that if your
total tax liability in the given year is less than $8,000 the IRS
will send a refund for the balance.
Q Do I have to pay back the credit?
A If you occupy your home for three years you will
not have to pay back the credit.
Q Who qualifies for the credit?
A •First-time homebuyers (Taxpayers who owned
a main home at any time during the three years prior
to the date of purchase are not eligible).
• Purchasers of a “main home.” i.e. principal
residence. The home must be a home located in the
United States and is generally considered to be the
home where you spend 50% or more of your time. It
can be a condo, single family detached, co-op,
townhouse or something similar. Vacation homes and
rental properties are not eligible. For new
construction, the “purchase date” is the date you
occupy the home.
Q What if I purchased a home between
April 8, 2008 and January 1, 2009?
A Purchasers who bought between 4/8/08 and
1/1/2009 are subject to the terms of the $7,500
repayable credit.
Q What are the income limits?
A The credit is reduced or eliminated for higherincome
taxpayers. Joint filers with a MAGI of $170,000
and above and single filers with a MAGI of $95,000 and
above are ineligible for the credit. Singles making
between $75,000 and $95,000 and joint filerswith aMAGI
of between $150,000 and $170,000 are in the “phase-out”
range, meaning you will only receive a fraction for the
$8,000 tax credit.
Q When/How can I claim the credit?
A It can be claimed on your 2008 tax return (to be
filed by April 15, 2009), an amended 2008 Tax Return,
or your 2009 Tax Return.
Q Who do I contact if I have more
questions about this credit?
A Contact your tax preparer, or
call the IRS toll-free at (800) 829-1040 for more
information on the tax credit. This information is
accurate based on the information available as of
February 19, 2009. As with any tax law change, check
with a tax advisor if there are any question regarding
using this provision.
courtesy, CAR
Saturday
Low Mortgage Rates Will Cost You ...
Mortgage rates are low, but getting a home loan is going to cost you.
New rules by Freddie Mac and Fannie Mae are upping the fees for borrowers with less than perfect credit, those in the mortgage industry say. Other increased costs reflect the uncertainty in the mortgage market as lenders try to reduce their risk and anticipate rates.
"It's an interesting time, in that mortgage rates are historically low," says Amy Bohutinsky, vice president of communications for Zillow.com, a real-estate Web site. "But at the same time, while rates are low, lending standards are still really tight. What that means is that people who qualify for these really good rates … fall under a strict set of guidelines."
Even borrowers with decent credit aren't immune to higher fees and mortgage costs. In general, to get the low rates that make the headlines, borrowers also are often paying more points, or prepaid interest, that bring the mortgage rate down.
Pricing Changes
If you look at where mortgage pricing was a year and a half ago, and where it is now, "there have been a slew of changes, mostly negative from a borrower's perspective," says Rick Allen, vice president of MortgageMarvel.com, a mortgage Web site.
The most recent changes started to show up in lenders' rate sheets this year. New risk-based pricing from Freddie Mac and Fannie Mae adds fees to mortgages based on a borrower's credit score. In order to avoid the extra fees, borrowers need to have a FICO score of 740 or higher, says Dan Green, loan officer with Mobium Mortgage in Cincinnati and author of TheMortgageReports.com.
The new rules take effect in April at Fannie and Freddie, but many lenders have already incorporated them.
The new fees, called loan-level price adjustments, have been an unwelcome surprise for some homeowners interested in taking advantage of low rates. "It has created a different pricing scenario from one consumer to the next," Mr. Allen says. "What you see in the Sunday paper could be perfectly close for one borrower. The guy next door could be 1% higher."
Charges have also gone up for those who extract equity from their home through a cash-out refinance. Condo financing could also cost more.
According to Freddie Mac's weekly rate survey, the average rate on a 30-year fixed-rate conforming mortgage was 5.05% in January, and a payment of an average 0.7 point was required to obtain the rate. A year ago, the average rate was 5.76%, but it took just 0.4 point to get it.
There's an inverse relationship between points and rates; the more points you pay, the lower the rate becomes. A point is 1% of the mortgage amount, charged as prepaid interest.more...
New rules by Freddie Mac and Fannie Mae are upping the fees for borrowers with less than perfect credit, those in the mortgage industry say. Other increased costs reflect the uncertainty in the mortgage market as lenders try to reduce their risk and anticipate rates.
"It's an interesting time, in that mortgage rates are historically low," says Amy Bohutinsky, vice president of communications for Zillow.com, a real-estate Web site. "But at the same time, while rates are low, lending standards are still really tight. What that means is that people who qualify for these really good rates … fall under a strict set of guidelines."
Even borrowers with decent credit aren't immune to higher fees and mortgage costs. In general, to get the low rates that make the headlines, borrowers also are often paying more points, or prepaid interest, that bring the mortgage rate down.
Pricing Changes
If you look at where mortgage pricing was a year and a half ago, and where it is now, "there have been a slew of changes, mostly negative from a borrower's perspective," says Rick Allen, vice president of MortgageMarvel.com, a mortgage Web site.
The most recent changes started to show up in lenders' rate sheets this year. New risk-based pricing from Freddie Mac and Fannie Mae adds fees to mortgages based on a borrower's credit score. In order to avoid the extra fees, borrowers need to have a FICO score of 740 or higher, says Dan Green, loan officer with Mobium Mortgage in Cincinnati and author of TheMortgageReports.com.
The new rules take effect in April at Fannie and Freddie, but many lenders have already incorporated them.
The new fees, called loan-level price adjustments, have been an unwelcome surprise for some homeowners interested in taking advantage of low rates. "It has created a different pricing scenario from one consumer to the next," Mr. Allen says. "What you see in the Sunday paper could be perfectly close for one borrower. The guy next door could be 1% higher."
Charges have also gone up for those who extract equity from their home through a cash-out refinance. Condo financing could also cost more.
According to Freddie Mac's weekly rate survey, the average rate on a 30-year fixed-rate conforming mortgage was 5.05% in January, and a payment of an average 0.7 point was required to obtain the rate. A year ago, the average rate was 5.76%, but it took just 0.4 point to get it.
There's an inverse relationship between points and rates; the more points you pay, the lower the rate becomes. A point is 1% of the mortgage amount, charged as prepaid interest.more...
Wednesday
Prices to fall here less than other cities: forecast..
Prices of single-family homes in the Chicago-area will hit bottom in early 2010 after a three-year, 17.1% drop, according to a new forecast. That may not sound like good news, but it is considering how much more prices are projected to plunge in other big metropolitan areas. And prices here had already declined by 13.3% through the third quarter of 2008, meaning they don’t have much further to fall, according to the forecast by Moody’s Economy.com.
Still, it could be a while before prices here and nationwide rebound as the economy struggles to get back on its feet after the worst recession in a generation.
“We’re not really going to see a recovery before 2011 or 2012,” says Sophia Koropeckyj, managing director of industry economics at Moody’s Economy.com.
The West Chester, Pa.-based research firm developed its price forecast by using projections for key economic indicators, like unemployment and foreclosures, to estimate the future direction of the S&P/Case-Shiller index, a widely cited home-price survey based on repeat sales of the same properties. The study looked at 369 U.S. metro areas, focusing only on single-family homes. more...
Still, it could be a while before prices here and nationwide rebound as the economy struggles to get back on its feet after the worst recession in a generation.
“We’re not really going to see a recovery before 2011 or 2012,” says Sophia Koropeckyj, managing director of industry economics at Moody’s Economy.com.
The West Chester, Pa.-based research firm developed its price forecast by using projections for key economic indicators, like unemployment and foreclosures, to estimate the future direction of the S&P/Case-Shiller index, a widely cited home-price survey based on repeat sales of the same properties. The study looked at 369 U.S. metro areas, focusing only on single-family homes. more...
Sunday
Report: Some Home Prices to Bottom Out in 2009 ...
House prices in much of the U.S. will bottom out in this year's fourth quarter, Moody's Economy.com says in a new report.
In some of the hardest hit markets, however, prices won't reach a bottom until 2010 or 2011, the research firm says in a report written by its chief economist, Mark Zandi.
"Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view," the report says.
It cites signs that home sales are stabilizing as people snap up bargains on foreclosures, a decline in the supply of unsold homes in many areas and expectations of moves by the Obama administration "that will help place a floor under the housing downturn." Those measures could include lowering mortgage rates further, preventing more foreclosures and generating jobs through higher federal spending.
On average, house prices nationwide will hit bottom in this year's fourth quarter at a level 36% below the peak reached in the first quarter of 2006, the report says. The price measure is based on the Fiserv Case-Shiller index.
But some areas will be hit much harder. For instance, the Naples-Marco Island, Fla., area is expected to bottom out in the fourth quarter of 2010 with prices 70% below the peak. The report projects that peak-to-trough declines for metro areas will be 66% in Miami, Fla., 63% in Riverside-San Bernardino, Calif., 58% in Phoenix, 56% in Las Vegas, 53% in Los Angeles, 38% in Washington and 33% in New York. Within those metro areas, different neighborhoods are likely to show very divergent performances; the most desirable areas near good schools and jobs are faring much better than other places.more...
In some of the hardest hit markets, however, prices won't reach a bottom until 2010 or 2011, the research firm says in a report written by its chief economist, Mark Zandi.
"Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view," the report says.
It cites signs that home sales are stabilizing as people snap up bargains on foreclosures, a decline in the supply of unsold homes in many areas and expectations of moves by the Obama administration "that will help place a floor under the housing downturn." Those measures could include lowering mortgage rates further, preventing more foreclosures and generating jobs through higher federal spending.
On average, house prices nationwide will hit bottom in this year's fourth quarter at a level 36% below the peak reached in the first quarter of 2006, the report says. The price measure is based on the Fiserv Case-Shiller index.
But some areas will be hit much harder. For instance, the Naples-Marco Island, Fla., area is expected to bottom out in the fourth quarter of 2010 with prices 70% below the peak. The report projects that peak-to-trough declines for metro areas will be 66% in Miami, Fla., 63% in Riverside-San Bernardino, Calif., 58% in Phoenix, 56% in Las Vegas, 53% in Los Angeles, 38% in Washington and 33% in New York. Within those metro areas, different neighborhoods are likely to show very divergent performances; the most desirable areas near good schools and jobs are faring much better than other places.more...
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