An expansion of the $8,000 first-time home buyer tax credit seems to be on its way after the Obama administration called upon the Congress to give house hunters more time to take advantage of the well-liked tax break. The move comes soon after Senate lawmakers reached an accord to not only push back the measure's threatening deadline but increase it to allow current homeowners and more well off buyers to claim the credit. "We welcome efforts taken by Congress to extend the first-time home buyers tax credit for a limited period," Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan said in a joint statement Last week. "This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide. An Orlando mortgage consultant can help you take advantage of this proposed tax credit.
A tax credit of as much as $8,000 for qualified first-time home buyers was included in the Obama administration's comprehensive economic stimulus package. The measure was designed to stimulate demand for residential real estate and help soak up the outcropping of unsold homes that was putting downhill pressure on home prices. Combined with cheaper home prices and attractive mortgage rates, the perk has helped reduce the glut of unsold properties. Mark Zandi, the chief economist at Moody's Economy.com, expects the tax credit to result in as many as 400,000 additional home sales by the time of its scheduled expiration at the end of November. Trade groups—like the National Association of Home Builders and the National Association of Realtors—have been lobbying Congress to move the deadline back, arguing that failing to do so would endanger recent signs of stability in the housing market. The NAHB, for example, blamed last weeks weaker-than-expected new home sales report on the tax credit's impending expiration.
Although various proposals to extend and expand the credit have been disseminated in Congress for weeks, Senate lawmakers finally reached a deal in recent days. Under the terms of the agreement, the deadline for first-time home buyers to claim the $8,000 credit would be pushed back to April 30, 2010. But the term "deadline" doesn't mean the same thing as it does in the current credit. The Senate agreement requires that buyers must have a sales contract on a house by April 30 to be eligible, but it gives them an additional 60 days to close the purchase. That's much different from the current credit, in which sales must be closed by November 30. The new proposal extends the effective deadline of the credit to the end of June.
Get extra cash for the holidays by refinancing your Orlando mortgage. Cash out refinance is one way a homeowner with equity can easily get a large sum of money, with current low interest rates. This is a popular option around the holidays as homeowners feel the effects of having little or no cash. Many people are able to get cash from their homes equity before Christmas. Find out how: Getting a cash back refinance is just taking out a new home loan, replacing your old loan with it, and pocketing the difference. A lot of homeowners are surprised at the amount of equity they have built up in their home over the years. The larger surprise will be when the home owners realize that cash back refinance provides much lower interest rates than nearly any other loan. That is why so many homeowners look into this option.Around the holidays, cash back refinancing is more popular than the rest of the year. Many people realize around this time of year that they do not have enough money to make ends meet. Between needing to give gifts, provide family dinners, and other holiday expenses, many homeowners get behind on their bills. That is when the realization sets in that unless something drastic happens, bills won’t get paid.While it is not a good idea to spend this money on things that are not considered necessary, many homeowners find it very helpful to have a few extra dollars and be able to pay their bills around the holidays. Contact your Orlando mortgage consultant today and ask about cash out refinancing options. If you act now, you can get help before Christmas. Take action today.
Even couples with secure jobs and ample income are cautious about taking out a mortgage for a new Orlando home. They understand that getting a new mortgage will obligate them to home payments for a significant period of time. Others worry, especially now, about losing their jobs in an unstable economy. The “what if” game begins, and potential homebuyers know that, if they lose their job, there’s a very real possibility they might lose their home.
Unemployment mortgage insurance gives Orlando home buyers some cover should they ever lose that regular income. It’s a definite relief to many who want to take advantage of the deals available in the Orlando home market at this time, but can job-loss mortgage insurance really help homeowners? Or, is it just another way to swindle the innocent out of hard-earned money?
What is it?
Unemployment mortgage insurance is exactly what it sounds like. Some insurance companies offer an insurance plan to help you pay your monthly mortgage payment should you lose your job. Although it’s been around for years, the big companies, such as Bank of America and GE Casualty, have begun offering it up in the past 10 years,.
How does it work?
Unemployment policies pay all or part of your mortgage payment if your job loss is involuntary, and some pay if you become medically unable to work. Policies vary depending on the provider, but most go into action after a month of unemployment. Most also have a wait period which means they won’t pay out during the first six months after you've purchased the policy.
Maximum monthly benefits, what the policy covers and whether you have to be receiving unemployment benefits are just a few things to look over while researching providers. As usual with anything insurance, make sure you read the fine print.
Is it worth it?
A lot of financial advisors say not to bother with the job-loss mortgage insurance. Take the money you’d be spending on insurance and build a savings account to hold six months worth of payments. However, many first-time home buyers have depleted their reserve funds just to get the house, and may not have the money to put aside.
My advice to you…
The troubled economy is having two effects on senior citizens when it comes to reverse mortgages on their Orlando home.
The first: as home values fall, it is dropping the possible proceeds to seniors who are considering getting a reverse mortgage loan.
The second: More seniors are investigating to learn about getting a reverse mortgage loan.
Orlando mortgage brokers have come to this conclusion based on the many inquires from seniors via the internet and telephone.
During the third quarter 2009, the number of seniors using the on-line mortgage calculators has increased nearly 90% from the preceding quarter. This important increase in older homeowners researching a reverse mortgage reflects the growth in reverse mortgages overall. Brokers also believes that conditions in the marketplace reducing the amount of money seniors can gain through a reverse mortgage is in part behind the increase interest as many are looking for relief now to take full advantage of their equity.
Besides waning home values, new Department of Housing and Urban Development regulations have slashed reverse mortgage proceeds by 10% and federal legislation set to expire at the end of this year will significantly reduce reverse mortgage limits even further.
Older Americans continue to feel the lingering effects of the recession more than other segments of the population, and a growing number of them are actively looking for ways to generate additional cash in retirement. Unfortunately, these individuals stand to lose even more leverage and equity in their own homes when the temporary increase on mortgage limits expires at the end of this year. Seniors need this higher limit renewed as another tool that can help them find their financial footing.
The average age of a person researching a reverse mortgage is 69.4 years old. The average home value was $174000, down 10% from the second quarter 2009, while the median home value was $125000. Slightly more than half, 51% have an existing mortgage.
The housing market received what should prove to be a real advance when, earlier this month, Congress and the President extended the first-time home buyer tax credit that was set to end on Nov. 30 into the spring and lengthened it to include qualified move-up or repeat home buyers.
First time home buyers will now be eligible for the tax credit if they sign a contract by April 30, 2010, and settle on their home no later than June 30. Likewise, move-up/repeat home buyers (existing home owners) who have lived in their primary residence for five of the last eight years will now be eligible for a tax credit of up to $6,500.
The tax credits are expected to boost new and existing home sales by 180,000, including sales of about 40,000 new homes and 26,000 in sales of vacant homes. These sales are also expected to generate more than 200,000 new jobs, primarily in residential construction and related fields but also through the jobs created by the ripple effect of the new construction jobs and the additional spending power of the tax credit recipients. While the boost will be temporary, this is just the medicine that housing needs at present.
In addition, other segments of the economy are beginning to show signs of improvement.
The Commerce Department’s Bureau of Economic Analysis reported in its advanced estimate that real gross domestic product (GDP) for the third quarter rose by 3.5% at a seasonally adjusted annual rate after four consecutive quarters of decline. In addition, industrial production advanced for three months, from July through September, pushing up capacity utilization.
While the recent recovery is gaining some grip, the economy is still losing jobs — 190,000 in October as the national unemployment rose to 10.2% for the month — up from 9.8% in September.
The construction unemployment rate, which includes residential and commercial construction, increased to 18.7% in October, up from 17.1% the month before. This included a drop in residential construction employment of 15,000.
However, the drop in residential construction employment may not fully reflect residential construction activity spurred by the first-time home buyer tax credit. In our view, when residential construction slowed markedly in 2006, many building firms shifted from residential projects to nonresidential projects without properly reporting the change in classification to the Bureau of Labor Statistics (BLS). Consequently, because those firms were building, the loss in residential construction employment did not appear to totally reflect that slowdown.
Conversely, now that residential construction is showing some improvement with nonresidential construction still in decline, many of the steep job losses from nonresidential construction that are occurring may still be classified and reported to the BLS as residential construction losses, inflating those figures.
There is a little positive news that can be eked out of the overall employment report. Total job losses in October were the smallest recorded since August 2008. In addition, September job figures indicated an increase in the hiring of temporary employees.
Temporary workers are often hired during the early stages of a recovery because, even though business is improving and employers have to hire more people to meet increased demand, they are reluctant to hire permanent, full-time employees until the demand and recovery grow stronger.
The home buyer tax credit will help the housing industry bridge the gap of uncertainty about the recovery path — which promises to be a very long road. It may help calm some of the fear that is keeping many consumers on the sidelines and will help stabilize house prices, which, together with a recovering economy, will help stem the tide of foreclosures.
By orlandomortgagecentral
Who Gets What? Some Tips from an Orlando Mortgage Consultant.
First Time Homebuyers (FTHBs): First time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000
Married couples filing a joint return and single tax payers may qualify for the full tax credit amount.
Current Owners: The home tax credit extension program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Married couples filing a joint return and single taxpayers may qualify for the full tax credit amount.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in force no later than April 30, 2010 and close no later than June 30, 2010.
What are the Income Caps?
The amount of income someone can earn and qualify for the full amount of the credit has risen.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.What is a Tax Credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.
How Much are First Time Homebuyers (FTHB) Eligible to Receive?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.
Who is Eligible fort FTHB Tax Credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.
This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.
As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.
How Much are Current Home Owners Eligible to Receive?
The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.
Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.
According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession,2. Right to obtain legal title upon full payment of the purchase price,3. Right to construct improvements,4. Obligation to pay property taxes,5. Risk of loss,6. Responsibility to insure the property, and7. Duty to maintain the property.
Are There Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:
Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.
If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes, provided that the child meets the other requirements for the tax credit.«
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