Special Finance Alert
The $8,000 First time Homebuyers Credit has been expanded to repeat buyers and extended to April 30, 2010. You must have a contract in place by this date but you have until July 1, 2010 to close. Even after you have found your ideal home, processing the loan and the property appraisal can take more time these days. Call Sandy's Team to today for help in finding the right home for you and getting things moving!
Information about the Tax Credit
The Program: The American Recovery and Reinvestment Act of 2009 now authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence April 30, 2010.
It also offers $6,500 to repeat buyers so long as you have occupied your current home as primary residence for 5 of the last 8 years. The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000 for first timers and $6,500 for other qualifying buyers on homes valued at up to $800,000. You can not receive the credit if you sell your home to a dependent.
Who is a First Time Home buyer? The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For couples, if either spouse has owned within this period, you cannot claim the credit. However, if you have owned a vacation home or rental property and used them as your principle residence, you may qualify.
Do you have to pay it back? This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount.
What types of homes will qualify for the tax credit? Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
Are there any income limits for claiming the tax credit? Yes. The income limit for single taxpayers is $125,000; the limit is $200,000 for married taxpayers filing a joint return. Taxpayers who make up to $20,000 more may qualify for a percentage of the credit.
How can I claim the credit? The credits are issued by the IRS only after you have purchased your home. Even if you participate in a program that enables us to apply the credit toward your down payment or closing costs, you will not receive money in hand any oater way than by receiving a refund from the IRS.
If you antic pate buying a home, you can also reduce your withholding in the tax year you will buy your home. If your plans change, make sure to change your withholding again to prevent IRS penalties.
Is any documentation necessary to claim the credit? Yes, you must attach documentation of your purchase to your tax return.
Can the tax credit be used for a downpayment? Buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for any downpayment above the 3.5 percent downpayment that is required for FHA-insured homes and for closing cost expenses. Sandy can help explain the mechanics of how to use the credit in this way.
Also, non-profits and FHA-approved lenders will be allowed to give home buyers short-term loans of up to $8,000.
The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.
Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement.
In addition, approved FHA lenders will also be able to purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs.
For more information and for answers to other questions you may have, see http://www.federalhousingtaxcredit.com/2009/faq.php#1.
Loan Information
Wonder how much your new mortgage will be? Check our handy MORTGAGE CALCULATOR.
What are Louisiana Mortgage Rates today?
Fixed-Rate Loans
The fixed-rate mortgage is the most popular mortgage program in use today. Fixed-rate loans offer the borrow a fixed interest rate for the life of the loan, typically 15 to 30 years. Borrowers have peace of mind knowing that their monthly payment will not change over time. Conventional fixed-rate mortgages have underwriting requirements established by Freddie Mac and Fannie Mae, and require certain down-payment and debt-to-equity ratios to qualify. Fixed-rate loans are especially attractive to buyers who plan to stay in their home for more than a few years.
Adjustable Rate Loans
With an Adjustable Rate Mortgage (ARM), the interest rate changes periodically, and payments go up or down accordingly. Rates are tied to an index that reflects the cost of money at any given point in time. Generally speaking, lenders charge a lower initial interest rate for the ARM than for the fixed rate mortgage. If you are expecting interest rates to decrease in the future, or if you are trying to maximize your purchase power today knowing your income will rise in the future, then this loan may be right for you. Adjustable rate loans are attractive for buyers who expect to be in the home for a short period of time.
FHA and VA Loans
The Federal Housing Administration (FHA), offers loans for low-to-moderate-income home buyers. FHA loans have lower down payments, and have relatively easier requirements than conventional fixed-rate mortgages. FHA mortgages have no income restrictions and even those with lower credit scores may be considered. Past bankruptcy does not necessarily disqualify borrowers from using this program!
In addition, the Department of Veterans Affairs (VA) offers a zero-down mortgage program. To take advantage of this program, borrowers need to be among those listed as veterans and service personnel in the U.S. military. One of the biggest benefits of this program is that it eliminates the need for private mortgage insurance!
Local Home buying Program
There are often many state and local programs available. These programs offer down-payment assistance and programs for local home ownership. Learn more about these local programs, recommended lenders, and other finance options by contacting us today!