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Ten Facts about the First-Time Homebuyer Credit
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Many taxpayers who purchase a home this year will qualify for an $8,000 federal tax credit. The refundable first-time homebuyer credit is a major tax provision in the American Recovery and Reinvestment Act of 2009. But time is running out to qualify for this credit.
Here are ten things the IRS wants you to know about the first-time homebuyer credit:
- To be considered a first-time homebuyer, you – and your spouse if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
- You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase.
- To qualify for the credit, the completed purchase must occur before December 1, 2009.
- The home must be located in the United States .
- The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.
- The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers.
- The credit is fully refundable. A homebuyer with no taxable income, who qualifies for the credit, may file for the sole purpose of claiming the credit and receive a refund. The credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
- The credit is claimed on IRS Form 5405, First-Time Homebuyers Credit.
- Taxpayers can claim the credit for a qualified 2009 purchase on either their 2008 or 2009 tax return. For those who have filed a 2008 return, a Form 1040X, Amended U.S. Individual Income Tax Return can be filed in order to get a refund in 2009.
- The credit for qualified 2009 purchases does not have to be repaid, as long as the home remains your main home for 36 months after the purchase date.
Qualified taxpayers who have been considering a main home purchase may find extra incentive from this tax credit to buy now so they can complete the purchase before the December 1 deadline.
For more information on this and other key tax provisions of the Recovery Act visit the official IRS Website at IRS.gov/Recovery.
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Category 1
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9/17/2009
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Getting a Mortgage Tougher for Buyers
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Difficulty in landing a mortgage is keeping many buyers out of the market.
At the peak of the housing boom, about 20 percent of the mortgage market was subprime, and nearly 20 percent was "Alt-A loans” or "A-minus" loans, typically offered those with good credit but with high debt-to-loan ratios or little or no proof of income.
Both categories are now nearly extinct. That means about 40 percent of the residential mortgage market has all but disappeared, according to David Olson of Wholesale Access Mortgage Research and Consulting.
"The underwriting has really tightened up," Olson says, "Before, if you could fog a mirror, you got a loan. Now, that's not the case."
Nationwide, practitioners say they are encountering more potential buyers who can’t get financing.
"Buyers come in with confidence, and once they have talked with a lending practitioner, it's like they've been hit over the head with a ton of bricks," says Dean Moss, an agent at Keller Williams Fox and Associates Realty in Chicago.
A study conducted using data from a Reno, Nev., multiple listing service, found that about 30 percent of sales haven’t closed after 90 days. Practitioner Guy Johnson, who analyzed the data, suggests that buyers stay on top of their loans, checking in with their lender frequently to make sure the loan for which they’ve been approved is still the same.
"A loan commitment letter," he adds, "isn't really as solid as it once was."
Source: USA Today, Anna Bahney (08/05/2008)
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Category 2
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5/10/2009
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Role of Mortgage Broker in Refinance
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Description: Mortgage brokers play an important role when it comes to refinancing. They can offer you a cheaper rate than what the banks or credit unions can offer.
Role of Mortgage Broker in Refinancing
When you are thinking about refinancing your existing mortgage for any particular purpose, there are a number of factors that you must understand for the intention of preventing overpayment for your next home mortgage loan.
Mortgage broker markup of your mortgage interest rate and useless fees charged by the lender can rapidly turn a beneficial deal into an expensive new home mortgage loan.
Refinancing your mortgage through a credit union or bank would not protect you from mortgage broker markup as you might believe. Following are some valuable tips that would assist you in getting some idea about the role of mortgage brokers in refinancing. These tips would help you stay away from paying an excessive amount and becoming ruined by your next mortgage loan.
Mortgage Brokers vs Banks
Mortgage brokers function as mediators between the borrowers and countrywide lenders. These lenders which also include banks pay them for dealing with the applications on their behalf. For being competitive, they work with a lower profit margin than other lenders or banks.
A large number of people believe that they can steer clear of payment of mortgage broker fees by refinancing their existing mortgage loan through a bank. In spite of everything, your bank works as a direct lender. Unluckily, the banks are similarly guilty as mortgage brokers, perhaps more than the mortgage brokers in making the most of their customers by charging too much from them. In reality, the banking lobby of the United States has paid out millions of dollars for successfully amending the disclosure regulations to banks. This is true; the Real Estate Settlement Procedures Act is not applicable for your bank and your bank is not bound to reveal their markup or margin of profit on your home loan.
In contrast, mortgage brokers have the accessibility to wholesale rates and if you can locate a good broker who is ready to function for a flat activation fee, this would help you save a lot of money every year. Similar to your bank, the mortgage broker can markup your mortgage rate for getting a commission from the lender. This name of this commission is Yield Spread Premium and if you wish to get the best deal while refinancing your existing loan, it is necessary that you keep away from this needless markup.
Written by Betty Parker
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Category 1
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5/10/2009
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