Register Real Estate Advisors

If you are a first time home buyer you now only have 73 Days until the Tax Credit Ends.  You must close on your first home before December 1st to use the $8,000 tax credit.  If you need help finding a house and want someone to guide you through your first time home buying experience, call me today.  In most cases it’s free to you to use a Realtor because the seller pays all the real estate fees.  So why wouldn’t you want representation?  Call today for a free no obligation consultation.  You could be a first time home buyer by the end of this year and have money in your pocket from Uncle Sam.

HOUSTON (Houston Chronicle) – The window for first-time homebuyers to take advantage of the $8,000 federal tax credit will close at the end of November.

To qualify for the credit, any transaction involving a first-time buyer must close before midnight on Nov. 30, 2009.

Tax credit guidelines are discussed in the Houston Chronicle and in past issues of RECON.

Only 96 days left to purchase a home using the New Home Buyer $8,000 Tax Credit.  There is talk of extending it past December 1st, but that’s not definite yet.  From the time you execute the contract you will need to allow at least 30 days until closing.  Some transactions are taking 45 days.  If you haven’t found a Realtor and started looking, don’t delay any longer.  I believe it’s the best gift Uncle Sam has ever given a home buyer.  Call me today so we can get started - 832.628.SELL.

I have been asked by many first time home buyers, “What is the difference between the $7,500 Tax Credit and the $8,000 Tax Credit?”  

Steve Kaufman is a CPA that published an article titled FREE MONEY in the Houston Realtor Magazine that explained the tax credit in detail.  He included a helpful chart that parallels the differences between the two tax credits, but that magazine is not available to the public.  Using the facts from his article, I would like to explain the difference between the two tax credits to my readers.

Both tax credits can only be used by first time home buyers.  The $8000 tax credit is referred to as the American Recovery and Reinvestment Act of 2009.  This has been defined as someone who has not owned a primary residence during the last three years.  Once you buy the home you must occupy the house as your primary residence for at least three years or the tax credit you receive will be owed back to Uncle Sam.  Both of the tax credits apply to new construction homes, resale homes, manufactured homes, Townhomes, and Mobile homes.

The $7,500 Tax Credit was more of an incentive than a tax credit because it has to be paid back within 15 years, interest free, starting in 2010.  It applies to first time home buyers that purchased their first home between April 9, 2008 and January 1, 2009.  It must be filed with 2009 tax returns for credit to be received. 

The $8,000 tax credit is for first time home buyers that purchase between January 1, 2009 and December 1, 2009 and it never has to be paid back.  It’s just free money from your Uncle Sam.  It can be claimed on your 2008 or 2009 tax return.  So if you are a first time home buyer you will need to close by December 1st which means you should be house hunting now.  It takes atleast 30 days to close on a home unless you are paying cash.

When you file your annual tax return you can claim this credit using IRS Form 5405.  If you claimed the $7,500 and are eligible for the $8,000 tax credit you can ammend your tax return by using IRS Form 1040X.  The maximum credit allowed for the $8,000 tax credit is 10% of the sale price up to the $8,000.  The maximum credit calculation for the $7,500 tax credit is 10% of the sales price up to $7,500.  To receive the maximum credit your income must be below $150K for married couples or $75,000 for individuals. 

Rather than waiting until tax filing for the $8,000, an advance on the credit is available on the credit from the U.S. Dept. of Housing and Urban Development (HUD).  The advance is available for first time home buyers using FHA-Approved lenders.  As an advance, the funds can be applied toward the down payment or closing costs.

Steven offered a great tip in his article.  If you are a first time home buyer and are sure you will purchase by December 1st and qualify for the tax credit, you can go ahead and start taking advantage of the tax credit by adjusting your payroll tax withholding with your employer by filing an updated IRS Form W-4 which will reduce your income tax withholding and will increase your take home pay which can be saved for your down payment.  I consulting with your tax accountant is recommended.

WASHINGTON (Nation’s Building News) – The Texas Department of Housing and Community Affairs has introduced two loan programs designed to help first-time homebuyers apply the new $8,000 tax credit toward down payments and closing costs.

The 90-Day Down Payment Assistance Program and the Mortgage Advantage Program will allow consumers to receive a short-term loan before filing for and receiving the federal tax credit. Consumers can apply these loans toward down payments and closing costs.

Both programs provide assistance of up to 5 percent on the first lien mortgage, but the 90-day program maxes out at $7,000 while the Mortgage Advantage Program’s limit is $6,000.

Repayment times also vary for the two programs, at 90 days and 120 days, respectively.

More information about these programs is available at the Texas Department of Housing and Community Affairs’ website.

Read more about the $8,000 tax credit in next month’s issue of Tierra Grande magazine.

I will be hosting a FREE Home Buyer’s Seminar this Thursday July 16th at 6:30pm.   This quick and informative seminar will answer your questions about the $8,000 Tax Credit and much more.  A representative from Coldwell Banker Mortgage and Access Title will be available to answer your questions.  Other speakers will include an Inspector and Appraisor.  We will have refreshments and door prizes.  Please come out to the Coldwell Banker office at 6905 Cypresswood to learn more about buying your first home while interest rates are low and there’s plenty of inventory on the market so you can get what you want at a great price!

NEW YORK (CNNMoney.com) – The U.S. Department of Housing and Urban Development (HUD) announced Friday that its $8,000 incentive for first-time homebuyers has been tweaked from a refund at tax time to cash made available for assistance on down payments or closing costs.

The mechanics of the new program, according to National Association of Home Builders economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS.

Homebuyers must still come up with the Federal Housing Administration’s mandatory down payment of 3.5 percent on their own, but they can use the tax credit to lower their principal balance and save on monthly payments.

“Families will now be able to apply their anticipated tax credit toward their home purchase right away,” said HUD secretary Shaun Donovan. “What we’re doing will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.”

What it means to homebuyers

The Housing and Economic Recovery Act of 2008 will introduce changes in the mortgage industry which will also affect the housing market.  Here is a brief summary of the new legislation and what it means to homebuyers.

Purpose of the legislation:

• Make it easier to buy or sell a home
• Slow down the rate of foreclosures
• Ensure the financial stability of Fannie Mae and Freddie Mac

Highlights:

• Higher permanent loan limits for conventional, FHA and VA Loans (effective January 1, 2009)
• Tax credit for first-time homebuyers – up to $7,500 in the purchase year, for homes purchased between April 9, 2008 and July 1, 2009.
• Modernization of FHA loan programs – including a 3.5% minimum down payment (effective January 1, 2009)
• Fannie Mae and Freddie Mac get a financial boost from the U.S. Treasury, and they will have a new regulator with broader authority
• FHA “HOPE” Rescue Plan – refinancing for homeowners at risk of foreclosure

What this means to homebuyers:

The higher loan limits could help buyers obtain more affordable financing; however, the effects will vary by geographical location – so ask your Mortgage Adviser for details.  Since the new permanent limits are less aggressive than the “conforming plus” limits that expire on December 31, 2008, buyers must act soon to take advantage of current higher limits.

The initial cash savings from the tax credit may be very attractive to many first-time homebuyers; however, buyers must act soon to take advantage of the tax credit by closing on a new home before July 1, 2009.

Help for Fannie Mae and Freddie Mac makes it easier to buy or sell a home by boosting investor and consumer confidence in the housing market.  The FHA “HOPE” Rescue Program may help some homeowners avoid foreclosure, potentially reducing the inventory of homes entering the market.  This is good news for everyone.

I hope everyone got out to vote today. We all know how important this election year is. I was in line to vote early this morning before I went into the office. The lady behind me in line kept complaining about how long it was taking the elderly poll worker to get people signed in to vote, but I just kept thinking to myself how thankful I am to live in America where I can vote and not get shot at while I’m standing in line waiting. It made me think of those first elections held in Iraq while our troops were establishing the new Iraqi government.

I hope you all took advantage of the Starbucks free coffee. I didn’t because I don’t like coffee myself, but I hope all of you enjoyed it just the same.

As I am home tonight mapping the changing colors of red and blue while the polls are closing around the country I am on the edge of my seat. I am not going to get my political intentions involved on my blog, but I do want to use this opportunity to remind you of some of the differences between Obama and McCain on some housing issues.

Looking back on some of the articles written about Obama over the last year he points to the special interests in Washington and corporate greed as the causes of the sub prime credit crisis. He criticized the deal reached in the Senate to freeze some foreclosures, saying a 30-day period wasn’t long enough. His plan against predatory lending included penalizing the lenders, but gave no explanation for how he would actually do that. He said he would provide a tax credit to homeowners to cover 10 percent of the interest on their mortgage every year and make an additional $10 billion in bonds available to help the middle class buy their first home or avoid foreclosure. He also wants to mandate accurate loan disclosure to ensure consumers understand their loan agreements. Now that last one is interesting because I can explain a mortgage or loan document to you over and over again and so can your lender, but no one can understand it for you.

Now on the other hand, there’s McCain who believes it is not the duty of government to bail anyone out, not the big banks nor the individual borrowers who acted irresponsibly, whether knowingly doing so or not. He said any government assistance to alleviate the housing crisis must be temporary and should be accompanied by reforms that aim to make the system more transparent and accountable to prevent a repeat of the crisis. He said no assistance should be given to people who bought houses to rent or as second homes. He does not support federal bailouts unless it has catastrophic effects on the entire financial marketplace nor does he support people buying homes with no money down like lenders have done over the past few years. This simply means people should have skin in the game when they are buying homes which will make them less likely to walk away from them when troubling times come knocking at the door.

Thinking about each of their views, I still come back to the saying that we got into this mess one house at a time and we will get out of it one house at a time. That is why I support the “Save the Dream” campaign. If you’re not familiar with that campaign please check out my earlier blog posts.

I hope we are able to get some rest, even though this close political run for the White House is stirring our minds tonight. As we look towards the new year, it is my belief that no matter which candidate wins, our housing market will improve. Our economy will rebound. Our country’s most sacred investment, our homes, will again accrue in value. It is my sincere hope and belief. It is my prayer.  God Bless America!

• The tax credit is available for first-time home buyers only.
• The maximum credit amount is $8,000.
• The credit is available for homes purchased on or after April 9, 2008 and before
  November 31, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
• The tax credit does not have to be repaid.

Purchase a home now and take advantage of a tax credit of up to $8,000.00!  This is a new benefit that makes it easier for you to buy your first home.
Learn more details from your Realtor or visit
FederalHousingTaxCredit.com.