$8,000 First-time Home Buyer Tax Credit at a Glance

• The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
• For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance

• To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.

Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

ABOUT NAHB: The National Association of Home Builders is a Washington, D.C.-based trade association representing more than 200,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as “the voice of the housing industry,” NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB’s builder members will construct about 80 percent of the new housing units projected for 2009.

NAHB is providing the information on this web site for general guidance only. The information on this site does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question. None of the tax information on this web site is intended to be used nor can it be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

Copyright © 2009 National Association of Home Builders. All hts reserved.

Happy April Fools from SW Florida!

If you are really interested in that Waterfront home or living the Florida lifestyle, call Kristin 239-464-8441 or email Kristin@BeachesAndBoating.com, www.BeachesAndBoating.com.

Amazing deals on Waterfont Homes….call 239-464-8441 or email Kristin@BeachesAndBoating.com to talk to your Waterfront Specialist.

Chuck Lombardo 239-628-4708 or email Chuck@BeachesAndBoating.com

Getting a mortgage without perfect credit

WASHINGTON – March 17, 2010 – The government keeps promoting programs designed to help existing homeowners refinance their mortgages at a lower rate, as well as get perspective buyers into homes. In other words, Uncle Sam says he’s here to help.

“Phooey,” say homeowners and prospective homeowners, who keep complaining that it is ridiculously hard to get a mortgage or refinance one.

Can both sides be right?

Unfortunately, yes. But if you are willing to do a bit more work than in the past, it is possible to lower your mortgage rate to 5 percent or arrange to buy your first home. It is clear that there is pent-up demand to do both.

Seemingly qualified buyers keep telling me they can’t get a mortgage. According to Credit Suisse (CS) and others, more than one-third of homeowners hold a 30-year conventional mortgage at 6 percent or higher. I will tell you what you need to do, but first we must understand what is going on in the marketplace.

A demanding lending landscape

Today it is unquestionably more complicated and difficult to get a home loan than it used to be. Burned by the recent housing meltdown they helped to create, lenders currently go over every requirement with a fine-tooth comb. They are looking for higher credit scores and more money down.

Still, the situation is far from hopeless: Loans at attractive rates are still available for those with less-than-perfect credit and minimal-to-no equity.

How should one negotiate the landscape? I checked with industry experts and here’s what I learned: Banks and mortgage brokers can still get you a mortgage of $417,000 or less at the best rates through Fannie Mae (FNM) and Freddie Mac (FRE) programs if you have a credit score as low as 660 and can put 20 percent down. Jumbo loans, those greater than $417,000, remain more expensive.

What about more complicated scenarios? I checked on a number of specific situations – for example, people who can put 20 percent down but have a credit score of only 630, or people who have a score of 630 and only 10 percent to put down. I found these deals can get done but, not surprisingly, you will pay an additional quarter- or half-point. This means that instead of getting a 30-year mortgage at 5 percent, you would have to pay from 5.25 percent to 5.5 percent. Not too bad.

What about tougher scenarios, such as trying to buy or refinance with average credit, but zero to negative equity? According to expert Brian Fishman of Illinois-based DB Diamond Mortgage Group, the zero-down days are over, apart from incentives such as the soon-to-expire homebuyer credits.

Refinancing is possible, however. Freddie Mac has refinance opportunities for those with mortgages of up to 105 percent of their appraised value. Fannie has them for up to 95 percent. The lower credit and low-or-zero-equity deals will cost at least a point or more above published rates. But it might get done.

Don’t assume your hands are tied

Believe it or not, even if your first and second mortgages total 125 percent of the appraised value, Fannie or Freddie may yet have programs that will refinance the first mortgage at a reasonable rate, as long as the second-mortgage holder doesn’t object. Since every scenario is different, I’m not suggesting that you refinance this type. I’m simply suggesting you weigh all reasonable options vs. assume that you have no choices.

How can you determine which opportunities are available to you and which best suit your particular circumstances? I’m still a big fan of doing homework. I recommend that you consider seeking input from multiple sources, such as your current servicer, your local bank and your mortgage broker, and your local real estate professional.

To start, I’d suggest a reputable mortgage broker. While they are being paid a commission by lenders to help place you with them, they will often get you an equal or possibly better rate by shopping for you. You are also more likely to know where you stand among the various options before you get bogged down with paperwork.

In a nutshell, if you have credit scores in the low 600s or higher, 10 percent or greater equity in your home, and you’re paying above 6 percent, you should be shopping to refinance. If you’re in the market to buy a home, set these levels as your minimum standards, understanding that the better your credit and the more you can put down, the better your chances of getting the lowest mortgage rate available.

No matter what you do, remember that you have options and should do your homework. If you find that you’re so far under water that nothing seems to make sense, maybe it’s time to seek an alternative strategy, such as a short sale.

Copyright © 2010 The McGraw-Hill Cos., Marc Roth. All rights reserved.

 This is my brand new Real Estate blog. Check back soon for market updates, new houses on the market, etc.