Home Buyer Tax Credit Extended…AND E X P A N D E D!

Well, the Washington D.C. faithful finally did it! After months of build up & endless speculation, the House of Representative has passed an extension of the home buyer tax credit by an overwhelming majority (403-12). In an attempt to stave off further job losses and boost an otherwise lackluster economy, the highly successful tax credit has been extended until June 30th and expanded to include 2nd time or “move-up” buyers as well.

Below is a quick run-down of the changes and improvements to the original bill signed back in February of this year:

1. First Time Homebuyers – First time home buyers (defined as those who have not had an ownership interest in a home for 3 years) still qualify for a credit in the amount of 10% of their purchase price, with a maximum of $8,000. However, the original deadline for closing has been pushed back from November 30th, 2009 to June 30th, 2010 as long as the house is under contract by April 30th, 2010. The income limits have also been raised to $125,000 for a single buyer (previously $75,000) and up to $225,000 for a married couple.

2. Current Homeowners – The tax credit has also been expanded to include “move-up” buyers, and provides a $6,500 credit for those who are selling their existing primary residence and moving to a new primary residence. The buyer must have lived in their current residence for at least 5 consecutive years out of the last 8 in order to qualify for the credit, and must be under contract on a new home between November 7th, 2009 and April 30th, 2010 (closing by June 30th). The income requirements are the same as 1st time homebuyers. According to Alec Phillips, an economist with Goldman Sachs, 70% of all current homeowners will be eligible for this new tax credit.

3. Additional Changes – A few other miscellaneous changes were made to the new plan as well. The credit can now only be used on primary residences purchased for less than $800,000 and only individuals above the age of 18 are eligible. In one of the strangest acts of fraud regarding the credit, a 4 year old child claimed the 1st time homebuyer tax credit back in October, prompting the change in age requirements.

There are some lingering questions as to whether the tax credit is worth the expense to tax payers or not. Some economists don’t believe that it will have that big of an effect on the overall housing market, however some estimates show it will cost the federal government up to $43,000 in lost revenue for every extra sale that the credit generates. With a ballooning federal deficit of nearly 1.4 trillion, some are concerned that the cost may be much greater than the benefit.

What’s my opinion? Well, the day that I’m voted in as President of the United States, I’ll start worrying about balancing the federal budget. Right now I’m simply a Realtor in Florida, and my current job is to make sure that all of my clients know about every possible benefit of homeownership. And to that end, the new homebuyer tax credit sure looks like a winner in my book.

For more information, check out this website provided by the Home Builders Association:
http://www.federalhousingtaxcredit.com/home.html

Questions about the credit or real estate in general? Send me an e-mail: matt@mattrobinson.org

Previous Related Posts:
http://mattrobinsonrealtor.blogspot.com/2009/05/big-big-news-for-1st-time-homebuyers.html

http://mattrobinsonrealtor.blogspot.com/2009/03/who-else-wants-8000-for-new-home.html

Pensacola, FL - Top 5 Places to Retire

According to a recent article in the MoneySmart section of the USA Weekend, Pensacola was named as one of the top 5 retirement destinations in the entire United States (#2 to be exact). For those of us who live and work in Northwest Florida, this comes as no surprise, but it's nice to see that the rest of the country is finally taking notice. With our low cost of living, below average crime rate, and infamous white sandy beaches, it's difficult to find a better place to call home, especially in your golden years of retirement.

For those of you who share a zip code of 325, something, something, I would love to hear why you think Pensacola is a great place to live! Just leave a quick note in the comments section below. If you are not the proud owner of a Panhandle Palace, it would be my pleasure to help you locate your slice of Paradise on the Emerald Coast. Give me a call anytime at 850-292-4000 or send me an e-mail: matt@mattrobinson.org.

To check out the entire USA Weekend article, click the link below:
http://budurl.com/kkyr

Big, Big News for 1st Time Homebuyers

HUD recently announced that they would allow 1st time home buyers to use the new $8,000 tax credit as their down payment on FHA mortgages, making the dream of homeownership a reality for many across the United States. Below is an update from a recent news release provided by HUD.

"A U.S. Department of Housing and Urban Development official said Tuesday that HUD would move forward with a plan to let first-time homebuyers use the currently available tax credit of up to $8,000 as collateral for "bridge loans" to cover the down payment on Federal Housing Administration-insured mortgages.

HUD spokesman Brian Sullivan said Phoenix-area lenders misinterpreted the department's withdrawal of an official communication, known as a "Mortgagee Letter," announcing the program last week.

"There was a premature posting of a Mortgagee Letter," Sullivan said to explain the withdrawal, adding that the program's details had not been finalized.

Sullivan would not say when the bridge-loan program would be initiated, or whether it would be substantially different from what originally was announced.

A week earlier, real-estate agents and home builders had issued statements supporting a HUD proposal to let banks, non-profit organizations and local governments offer short-term bridge loans to cover the down payment for first-time buyers eligible for the tax credit.

Jill Hoogendyk, president of HomePoint Mortgage Co.in Phoenix, said Mortgagee Letters are the primary means of communication between HUD and mortgage lenders.

"We get told over and over that nothing is official or should be counted on until we are given a Mortgagee Letter - no matter how much we've heard that HUD is going to do something," Hoogendyk said."

Mortgage Rates Hit Record Low…Again!

Well, you’ve just about run out of excuses for not buying a new home. Prices are lower than they have been in 4-5 years, inventory levels are up with plenty to choose from, the government has chipped in an $8,000 tax credit for 1st time buyers and now…RECORD LOW INTEREST RATES!

According to Freddie Mac’s Primary Mortgage Market Survey, 30-year fixed rate mortgages are down to 4.78% for the week ending April 30th, 2009. That rate matches the lowest rate in the HISTORY of Freddie Mac’s survey, which began in 1970. Need I say more?

If you’re sitting on the fence, don’t sit their much longer or you will miss out on the buying opportunity of a lifetime. All of your friends and relatives may have overpaid for their home with a 6.5% adjustable rate mortgage that is now at 8.5%, but NOT YOU. You are going to buy a great home at a great price with a great mortgage rate!

Give me a call today, and let’s talk about your options.

Who Else Wants $8,000 For A New Home?

As part of last year’s Housing & Economic Recovery Act, Congress created a $7,500 First-Time Homebuyer** Income Tax Credit. It went into effect April 8, 2008 and was set to expire July 1, 2009. (For more, check out my October Real Estate Break video newsletter @ http://www.youtube.com/watch?v=8Y33jlKZW50) It’s primary goal was to remove some of the excess housing inventory in order to stabilize the real estate market. Seeing as 1st time homebuyers make up over 40% of all home purchases, this seemed like a plan that was too good to fail.

However, one of the criticisms of the original “tax credit” was that a homebuyer who received it had to repay the IRS over a period of 15 years, effectively making it nothing more than an interest free loan. The last entity that most people want to owe money to is the Federal Government, and so very few people were taking advantage of the credit. And so, as is the case with most government programs and ideas, they needed a couple of attempts to get it right. Thus the 2nd phase of stimulus was born, affectionately referred to as the “American Recovery & Reinvestment Act.”

The new & improved 1st Time Homebuyer tax credit became effective on January 1st, 2009 and extended the credit to include purchases made prior to December 1st, 2009. The other improvements to the plan include:

• The buyer no longer must repay the credit, as long as the home is not sold within 36 months of purchase.
• The tax credit maximum has been raised from $7,500 to $8,000 (or 10% of the home’s purchase price, whichever is less)
• Purchasers can now use state/local revenue bond financing along with the credit.

For a more complete overview of the 1st time homebuyer tax credit, please feel free to listen to my audio lesson below (to get right to the meat, fast forward through the intro), or visit http://www.irs.gov/.



If you are looking to buy or sell in the Florida Panhandle, give Matt Robinson a call at 850-292-4000 (ERA Beach Ball Realty).

**A “First-Time Homebuyer” is defined as an individual who has not had an ownership interest in any property in the past 3 years.

Credit Fact vs. Fiction

Fiction: Inquiries from multiple mortgage lenders while shopping for a loan will lower my credit score.

Fact: Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you’re only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. If you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score.

Fiction: Paying old collection accounts will improve my credit score.

Fact: In most cases, paying an old collection account will not increase your credit score. It is more likely to decrease a customer’s credit score because a collection is viewed the same, whether it is paid or unpaid. The difference is the last activity date. The older the date, the less impact it has on the current credit score. If old the collection is paid, the last activity date is updated and now the account is viewed as recent and will have a negative impact on the overall credit rating. More weight is given to the recent accounts on the report. You should never advise customers to not pay their collection account, just do not advise them that their credit score will improve if they pay them.

Fiction: Credit scores can change only once per month or every 30 days.

Fact: Just the opposite is true. Each creditor reports information to each credit bureau at different times of the month. This will cause the information and potentially the credit scores to change on a daily basis. For example, American Express may report to Experian on the 1st of the month, Equifax on the 15th and Transunion on the 25th. Thorough review of the credit report is needed to determine what caused the score to change from report to report. (It usually is not the inquiries)

Fiction: There are 6 inquiries from “Mortgage Services” on the credit report all on the same day. Did we really pull their credit 6 times on 1 day?

Fact: No. We typically will order a tri-merged credit report for each borrower on the loan. The bureau is required to display a “footprint” of each bureau from which credit was requested for each borrower on the loan. So, if you have 2 borrowers on the loan, and you order a joint or individual credit report for each, you will see 6 footprints, 3 bureaus for 2 customers. Although you will see 6 footprints, it will only register as 1 inquiry for each customer.

Fiction: The credit score on my consumer credit report should be the same as the one the mortgage company returns.

Fact: When mortgage companies order a credit report the credit bureau will include a “mortgage adjustment” that is factored into the customer’s credit score. These adjustments are not controlled by the mortgage lender, but buy the credit bureaus themselves. This adjustment takes a customer’s past mortgage history into account and will reflect accordingly in the credit scores returned to the lender. For example, a customer with an extensive clean history of mortgage payments will have a different adjustment than a customer who has never had a mortgage in the past.

Fiction: There is nothing a customer can do to fix errors on their credit report.

Fact: Customers who have errors on their credit report have the ability to file a dispute with the credit bureau to correct the erroneous information. Your customer can go to www.annualcreditreport.com and obtain a free copy of their credit report. They will need to submit documentation supporting their claim that the information reported is erroneous, and the credit bureau has 30 days to confirm the information and update the repositories.

Fiction: My score will drop if I apply for new credit.

Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called “inquiries”) will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score as stated above.

Fiction: A poor score will haunt me forever.

Fact: Just the opposite is true. A score is a “snapshot” of your risk at a particular point in time. It changes as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve their score, will put your customer is better position to get approved for a loan.

*Sources of information – myfico.com & Equifax credit service, & my good friend Amanda Shepherd @ ERA Mortgage (phone-850-420-5170)

'Tis the Season...To Pay Taxes?

For most people, their birthday is an exciting event, a day of celebration filled with family, friends, presents, and of course the beloved cake & ice cream. That is unless you are as fortunate as I am, and your birthday falls on April 15th, the infamously dreaded “Tax Day” in America. Some in my family say that it’s fitting since Matthew in the Bible was a tax collector. I, however, think that it’s just cruel.

When I was young, it was no big deal. I didn’t pay taxes, and getting older was a good thing. One year closer to your permit, then your driver’s license, then being an official adult…every year was a new adventure. Now, it’s a double whammy. As a self-employed person, every April I get the joy of writing a large check to the government, and I get one year closer to being officially “old”.

Oh well, such is life. But what about YOU! You are most likely getting to this blog post because you are one of my past or present customers, and April is racing towards us! ARE YOU READY? As you scrounge around your shoe boxes and filing cabinets, wading through piles of receipts and bank statements, take a few minutes and check out the article, “Tax Credits Worth Pursuing This Year” in this month’s newsletter. You can find it at the following link: www.mattrobinson.org/jan09

Happy Tax Season!

Matt Robinson, REALTOR
ERA Beach Ball Realty
Cell or Text: 850-292-4000
www.mattrobinson.biz

Check out my "Real Estate Break" Video Newsletters at the link below:http://www.youtube.com/view_play_list?p=F8A4B54D3D4B9EE2

OR Follow Me @ http://twitter.com/realtormatt

P.S. The new stimulus plan has raised the 1st time homebuyer tax credit to $8,000 and you don’t have to pay it back! What a deal! With interest rates at an all time low, what are you waiting for? Get off the fence and get that home of your dreams today!