Tax credit: you still got 3 more days to claim $8K!

My first-time buyer who is going out of country thursday morning, decided to take advantage of this expiring credit today... My action plan? pulled all the matched criteria listing out of mls, picked up client from home, showed all listings, picked out the winner, researched, wrote the offer, got it accepted, took it to the closing attorney and got it scheduled to close tomorrow evening... Not easy but we made it happen! Are you still thinking? The clock is ticking my friend!

Posted

So the $8000 tax credit expires soon... where is the market headed?

The first-time homebuyer tax credit expires on April 30 – only few days remaining.  If you don't have a contract signed to purchase a property by that date, you will not qualify for the $8000 tax credit. Transaction must close by June 30, 2010 but be under contract by April 30, 2010.

Posted

The Top 5 Tax Perks for Buyers, Sellers and Homeowners

It's tax time, but it doesn't have to be excruciating, especially if you bought, sold or owned a home in 2009.  While so many of us think of tax time as time to write a check, the Obama Administration's stimulus package promised to reverse that tradition, effectively writing a check (in tax credit format) to buyers, sellers and even  short sellers and those who lost a home through foreclosure.

Take this quick list of tax tips to your personal tax guru and cash in your check from Uncle Sam!

    1.  2009-10 First-time Homebuyer
     Tax Credit
  • Who It Helps: Recent (or current!) homebuyers who had not owned a home in the 3 years prior to buying, but bought one in 2009 or this year (must be in contract on or before April 30, 2010).  Depending on when you bought (or buy! there's still some time left!) income and purchase price limits may apply.
  • How It Helps: Depending on your income and purchase price, you can receive up to an $8,000fully refundable tax credit.  (That means if you were already getting a refund, you'll get a bigger one!) You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.
  • IMPORTANT NOTE: Per the IRS website, "because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405."

        2.  2009-10 Move-Up Buyer Tax Credit
    • Who It Helps: Current homeowners who have lived in the home they are selling, or have already sold, as their principal residence for five consecutive years of the last eight years who closed escrow between November 7, 2009 and July 1, 2010, so long as they are in contract on or before April 30, 2010.
    • How It Helps: Eligible homeowners can receive a tax credit of as much as $6,500, depending on income. You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.
          • IMPORTANT NOTE: Can't e-file to collect this one, either - see #1, above.

              3.  Energy Efficient Housing Tax Credits 
          • Who It Helps: Homeowners who invested in making their homes more energy-efficient in 2009 and 2010.
          • How it helps: Offers them a 30 percent tax credit on qualifying purchases of energy-efficient furnaces, windows and insulation.


              4.  Private Mortgage Insurance Deduction
          • Who It Helps: Homeowners who bought a home in 2009, and put less than 20 percent down on their homes. These are the folks whose lenders required them to pay for PMI, or private mortgage insurance.
          • How It Helps: Allows them to deduct the costs - upfront and monthly - of PMI.


              5.  The Mortgage Forgiveness Debt Relief Act  

          • Who It Helps: Short sellers, owners who lost homes through foreclosures or had their mortgage balance reduced through loan modifications.
          • How It Helps: Normally, when a loan is cancelled or forgiven through, for example, a short sale or foreclosure, the cancelled debt is transformed into taxable income - and the IRS comes looking for their cut.  Under this Act, qualifying mortgage debt forgiven through foreclosure, short sale or loan modification is allowed to be excluded from taxable income.  The forgiven mortgage debt must be a loan on your personal residence, and must be related to the purchase of your home (if you pulled a bunch of cash out and did a short sale on that mortgage, you might not qualify).


          On top of these above-and-beyond tax credits, deductions and exemptions, longtime and brand-new homeowners should also look forward to claiming meaty tax deductions for basic closing costs (origination fees, taxes and points - oh my!), property taxes and mortgage interest deductions.

          As always, talk to your tax preparer to see if you qualify for any of these tax perks.  And don't delay - the countdown to April 15th is on.

          by Tara-Nicholle Nelson
          Trulia's In-house Consumer Advocate

          Posted

          Winterizing Your Home

          Preparing Your Home for Winter

          The fall is a good time of year to start thinking about preparing your home for winter, because as temperatures begin to dip, your home will require maintenance to keep it in tip-top shape through the winter.

          Autumn is invariably a prelude to falling winter temperatures, regardless of where you live. It might rain or snow or, as David Letterman says,"Fall is my favorite season in Los Angeles, watching the birds change color and fall from the trees." Did you know there is only one state in the United States where the temperatures have never dipped below zero? Give up? It's Hawaii.

          Here are ten tips to help you prepare your home for winter:

          1) Furnace Inspection

          • Call an HVAC professional to inspect your furnace and clean ducts.
          • Stock up on furnace filters and change them monthly.
          • Consider switching out your thermostat for a programmable thermostat.
          • If your home is heated by a hot-water radiator, bleed the valves by opening them slightly and when water appears, close them.
          • Remove all flammable material from the area surrounding your furnace.

          2) Get the Fireplace Ready

          • Cap or screen the top of the chimney to keep out rodents and birds.
          • If the chimney hasn't been cleaned for a while, call a chimney sweep to remove soot and creosote.
          • Buy firewood or chop wood. Store it in a dry place away from the exterior of your home.
          • Inspect the fireplace damper for proper opening and closing.
          • Check the mortar between bricks and tuckpoint, if necessary.

          3) Check the Exterior, Doors and Windows

          • Inspect exterior for crevice cracks and exposed entry points around pipes; seal them.
          • Use weatherstripping around doors to prevent cold air from entering the home and caulk windows.
          • Replace cracked glass in windows and, if you end up replacing the entire window, prime and paint exposed wood.
          • If your home has a basement, consider protecting its window wells by covering them with plastic shields.
          • Switch out summer screens with glass replacements from storage. If you have storm windows, install them.

          4) Inspect Roof, Gutters & Downspouts

          • If your weather temperature will fall below 32 degrees in the winter, adding extra insulation to the attic will prevent warm air from creeping to your roof and causing ice dams.
          • Check flashing to ensure water cannot enter the home.
          • Replace worn roof shingles or tiles.
          • Clean out the gutters and use a hose to spray water down the downspouts to clear away debris.
          • Consider installing leaf guards on the gutters or extensions on the downspouts to direct water away from the home.

          5) Service Weather-Specific Equipment

          • Drain gas from lawnmowers.
          • Service or tune-up snow blowers.
          • Replace worn rakes and snow shovels.
          • Clean, dry and store summer gardening equipment.
          • Sharpen ice choppers and buy bags of ice-melt / sand.

          6) Check Foundations

          • Rake away all debris and edible vegetation from the foundation.
          • Seal up entry points to keep small animals from crawling under the house.
          • Tuckpoint or seal foundation cracks. Mice can slip through space as thin as a dime.
          • Inspect sill plates for dry rot or pest infestation.
          • Secure crawlspace entrances.

          7) Install Smoke and Carbon Monoxide Detectors

          • Some cities require a smoke detector in every room.
          • Buy extra smoke detector batteries and change them when daylight savings ends.
          • Install a carbon monoxide detector near your furnace and / or water heater.
          • Test smoke and carbon monoxide detectors to make sure they work.
          • Buy a fire extinguisher or replace an extinguisher older than 10 years.

          8) Prevent Plumbing Freezes

          • Locate your water main in the event you need to shut it off in an emergency.
          • Drain all garden hoses.
          • Insulate exposed plumbing pipes.
          • Drain air conditioner pipes and, if your AC has a water shut-off valve, turn it off.
          • If you go on vacation, leave the heat on, set to at least 55 degrees.

          9) Prepare Landscaping & Outdoor Surfaces

          • Trim trees if branches hang too close to the house or electrical wires.
          • Ask a gardener when your trees should be pruned to prevent winter injury.
          • Plant spring flower bulbs and lift bulbs that cannot winter over such as dahlias in areas where the ground freezes.
          • Seal driveways, brick patios and wood decks.
          • Don't automatically remove dead vegetation from gardens as some provide attractive scenery in an otherwise dreary, snow-drenched yard.
          • Move sensitive potted plants indoors or to a sheltered area.

          10) Prepare an Emergency Kit

          • Buy indoor candles and matches / lighter for use during a power shortage.
          • Find the phone numbers for your utility companies and tape them near your phone or inside the phone book.
          • Buy a battery back-up to protect your computer and sensitive electronic equipment.
          • Store extra bottled water and non-perishable food supplies (including pet food, if you have a pet), blankets and a first-aid kit in a dry and easy-to-access location.
          • Prepare an evacuation plan in the event of an emergency.

          Posted

          Search Entire Memphis MLS!

          Now you can search entire Memphis MLS on our website and create an account for alerts and new listings of interest.

          http://kaizen-realty.com/index.php/property-search/mls

          Posted

          10 Ways To Increase The Value Of Your Home

          In a dour housing market, wouldn't it be nice to know that your remodeling
          project would pay off when you went to sell the property? Remodeling
          Magazine evaluated the top remodeling projects, how the cost-to-value has
          changed since the housing market implosion, and which projects are still
          worth the investment. Using the magazine's "Cost Vs. Value Report for
          2008-2009," let's look at some of the best projects you can undertake and
          recoup the majority of your cost.

          Upscale Projects
          Siding Replacement (fiber-cement or foam-backed vinyl). With the economic slump, home buyers aren't being dazzled by bells and
          whistles as much as they are improvements that will ensure lower repair and
          utility bills. Although replacing current siding with fiber-cement has lost
          value from 2007, it still nets an astonishing 87% ROI. If you prefer a
          foam-backed vinyl product replacement instead, you can still look to recoup
          80% of your cost.


          Window Replacement (vinyl or wood) Windows are not only an aesthetic feature. For most homeowners, they
          represent one of the easiest ways to lower home heating and cooling bills.
          By replacing your current windows with more efficient vinyl or wood ones,
          you can save on your utility bills, attract future home buyers and net a
          nearly 80% (vinyl) or 77% (wood) return on your investment.

          Bathroom Remodel Depending on the size and amenities of your desired bathroom, you could
          expect to pay over $50,000 to tear out walls, repair joists and wall studs,
          change structural elements and make major layout changes, such as switching
          a toilet and shower. However big the price tag, you can still expect to
          recoup nearly 71% of the cost (which would be $36,400 if you have a $50K
          bill) when you go to sell. This project increased its value since 2007,
          while its sister project - adding a complete bathroom - fell in value.


          Major Kitchen Remodel Kitchens are typically the most frequently used room in a home, so it makes
          sense that investing money here is going to pay off when it comes time to
          sell. While a major kitchen renovation is usually the most time-consuming
          and expensive home improvement job (averaging more than $110,000), it's also
          one of the most profitable. Regardless of the size of your financial layout,
          you can expect to get a nearly 71% ROI.

          Deck Addition (composite product)
          With families cutting their entertainment budgets, they're spending more
          time at home, so it makes sense that adding a deck (composite, not wood) is
          a good investment. You can plan on recouping 63% of your total job cost to
          boost your home's value by nearly $24,000 if you paid the average job cost
          of $37,000. Mid-Range Projects

          While all of the mid-range projects dropped in value versus cost since 2007,
          there are still numerous projects that will net you a significant ROI. Here
          are a few of the best bets for your money:
          Deck Addition (wood) If your bank balance can't swing the higher price tag that comes with
          composite decking, you may still be able to afford a wood addition on to
          your home. While a wood deck would cost you, on average, in the neighborhood
          of $10,000, the resale value it will add to your home is more than $8,600 -
          an 81.8% return on your investment.

          Siding Replacement (vinyl)
          Fiber-cement or foam-banked vinyl are often more preferable siding upgrades,
          but getting vinyl siding replacements instead is still a good choice. You
          can recoup nearly 81% of your cost which, if the job cost you more than
          $10,000, means you could add more than $8,200 to your home's value.

          Minor Kitchen Remodel
          With belt-tightening in style, people are turning to minor kitchen
          improvement projects instead of major overhauls. It turns out that that
          choice is not only frugal, but financially wise. While major kitchen
          remodeling jobs can still, on average, return a nice 70% ROI for homeowners,
          minor kitchen remodeling jobs net an even higher 79.5% return.

          Attic Bedroom Anytime you can add bedrooms, you're going to add to the overall value - and
          listed purchase price - to your home. If your attic's dimensions allow you
          to convert it to a bedroom, you may want to consider investing the money to
          do so. You'll add some sleeping space and net a nice 74% return when a new
          buyer puts your home under contract. Basement Remodel
          If you're fortunate enough to live in an area with a water table high enough
          to permit basements, you should think about squeezing all the value you can
          out of it. By remodeling and finishing a previously-unfinished basement you
          can expect to get nearly 73% of your investment returned with a higher list
          price, come time to sell.

          Conclusion
          If you have savings or access to reasonably-priced credit, it's worth it to
          consider home improvement projects that will produce the best return for
          your time and money. Make sure you work with a reputable, licensed
          contractor (to avoid costly errors or budget overruns), and before you
          undertake any project it's a good idea to check and see if it could
          significantly increase your property tax bill.
          While it may still make sense in the long-run to undertake the project and
          add overall value to your home, you may need to make a few budgetary changes
          so that you don't get caught off-guard when the tax bill comes.  Katie Adams, Investopedia

          Posted

          First-Time Homebuyer Credit Questions and Answers: Basic Information

           Updated Nov. 6, 2009, to note new legislation. The new legislation extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:

          • extends deadlines for purchasing and closing on a home
          • authorizes the credit for long-time homeowners buying a replacement principal residence
          • raises the income limitations for homeowners claiming the credit 

          Q. What is the credit?

          A. The first-time homebuyer credit is a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.

          The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date.

          Q. How much is the credit?

          A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 if purchased after Dec. 31, 2008, and before Dec. 1, 2009).

          Q. Which home purchases qualify for the first-time homebuyer credit?

          A. Any home purchased as the taxpayer’s principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before Dec. 1, 2009, to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.

          Taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return.

          Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?

          A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.

          Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?

          A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.

          Q. Can a taxpayer who purchases a travel trailer qualify for the credit?

          A. A travel trailer that is affixed to land may qualify as a principal residence.   

          Q. Can an individual who has lived in an RV qualify for the credit?

          A.  For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.

          Q. Can I apply for the credit if I bought a vacation home or rental property?

          A. No. Vacation homes and rental property do not qualify for this credit.

          Q. Who is considered to be a first-time homebuyer?

          A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase.

          Q. Can a dependent on someone else’s tax return claim the first time homebuyer credit if they otherwise qualify?

          A. Yes. There is no limitation under section 36 that a first-time homebuyer cannot be a dependent. However, taxpayers who do not otherwise qualify for the credit do not become eligible for the credit simply by using a minor child’s name. In addition, under state law children under the age of 18 generally are not bound by any contract they sign and cannot be required to comply with the terms of the contract. Thus, it is extremely unlikely that a seller of a home, or a lender if financing is required, would enter into a bona fide sale of a home to a child. Merely using the child’s name to purchase a home does not qualify the child for the credit if, in substance, the child is not a bona fide purchaser of a home.

          Q. When do I have to buy a new home to get the credit?

          A. The home must be purchased after April 8, 2008, and before Dec. 1, 2009, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home.

          Q. How do I apply for the credit?

          A. The credit is claimed on new IRS Form 5405, First-Time Homebuyer Credit, and filed with your 2008 or 2009 federal income tax return.

          Q. Are there income limits?

          A. Yes. The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

          Q. Can a taxpayer claim the first-time homebuyer credit after entering into a contract for the purchase of a residence but before closing on the purchase?
           
          A. No. Taxpayers 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. (New 7/2/09)

           

          Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations?

           

          A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)

          Q. I purchased a home that qualifies for the first-time homebuyer credit. I will be renting two of the bedrooms and reporting the rental income on Schedule E. Will I still qualify for the credit if I use the home as my principal residence?

          A. Yes, if you meet all first-time homebuyer eligibility requirements. See Form 5405, First-Time Homebuyer Credit, for more details.

          Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit? 

          A. Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. Your credit is 10% of the portion of the purchase price of the duplex allocated to your dwelling unit that you use as your principal residence, up to a maximum credit of $8,000. You may not use the entire purchase price of the duplex to determine the amount of your credit.

          Q. If two unmarried people buy a house together, how do they determine how much each may take of the credit?

          A. IRS Notice 2009-12 provides guidance for allocating the first-time homebuyer credit between taxpayers who are not married.

          Q. I am a single co-owner of a home. How do I get this credit?

          A. Depending on the year of purchase, you will claim the credit on either your 2008 or 2009 federal income tax return.

          Q. I don’t owe taxes and/or my income is exempt from tax and I do not have a filing requirement. Do I qualify for the credit? 

          A. The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund.

          Q. Does the first-time homebuyer credit apply to homes located in the U.S. Territories?

          A. No. 

          Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years?

          A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.

          Q. If qualified, are homebuyers required to claim the first-time homebuyer credit?

          A. No.

          Q. Who cannot take the credit?

          A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

          • Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
          • You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
          • You do not use the home as your principal residence.
          • You sell your home before the end of the year.
          • You are a nonresident alien.
          • You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
          • Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
          • You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

          Q. Does previously inheriting a home and living in the inherited home automatically disqualify an individual as a first-time homebuyer with respect to a different home that is purchased within the prescribed 2008 and 2009 time frames?  

          A. Yes, an ownership interest in a prior principal residence would preclude the taxpayer from being considered a first-time homebuyer. As long as the taxpayer owned and used the prior home as his principal residence, then he is not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (05/06/09) 

          Q. Is a step-relative considered a related party? 

          A. Step-relatives are neither ancestors nor lineal descendents and are therefore not related persons for purposes of the first-time homebuyer credit. (05/06/09)

          Q. If I claim the first-time homebuyer credit in 2009 and stop using the property as my main home before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?

          A. If, within 36 months of the date of purchase, the property is no longer used as the taxpayer's principal residence, the taxpayer is required to repay the credit.  Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be the taxpayer's principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit. (05/06/09)

          Q. If a person does not actually make the payments on a home that’s their primary residence, but the deed and mortgage documents are in their name, can they be considered a first-time home buyer?  

          A. Yes. If a taxpayer purchases a home to be used as a primary residence from an unrelated person and has not owned a home within the previous 36 months, the taxpayer is eligible for the first-time homebuyer credit regardless of who makes the mortgage payment. (05/06/09)

          Q. Do taxpayers affected by Hurricane Katrina or other disasters qualify as first-time homebuyers if their principal residence (i.e. main home) became uninhabitable more than three years ago and they have not formally disposed of the uninhabitable home or purchased or built a new home in the interim?  

          A. A first-time homebuyer is an individual (and the individual's spouse, if married) who has not had an ownership interest in a principal residence (within the meaning of Section 121 of the Internal Revenue Code) during the three years before the date a new principal residence is purchased. Applying Section 121, a taxpayer can be a first-time homebuyer if the taxpayer has not owned and used a property as a principal residence at any time during the three years before the date of purchase of the new residence. Taxpayers affected by Hurricane Katrina who have owned but not used their property as a principal residence within the last three years may be eligible for the first-time homebuyer credit when they purchase a new principal residence. (05/07/09)

          Related Items:

          Posted

          Tax credit HAS BEEN EXTENDED AND EXPANDED...

          Tax credit HAS BEEN EXTENDED AND EXPANDED... 8,000.00 Credit for FTHB and a new 6,500 credit for move up buyers that have owned for at least 5 years.

          Posted

          Refinancing Your Mortgage - Is It The Right Choice For You?

          Mortgage refinancing is an option for many homebuyers who are paying interest rates 2-3% or higher than what they can find today, or who need additional cash. Were you a first time homebuyer or you had poor credit the last time you obtained a loan? Now you are on your feet and make a salary that could help you receive the best interest rates. Possibly you are looking to refinance your mortgage so you can free some funds for a new car or for educational purposes. There are many options available when you refinance.

          Before you decide if refinancing is right for you, look at your current financial situation. Do you have an adjustable rate loan or a fixed rate loan? How long do you plan to be in your home after you obtain your new mortgage? What is your ultimate goal? Most people want to refinance so they can access more money now. Refinancing is a great solution, but is a refinance of your loan the right solution for you?

          The first step is making contact with your lender, and be aware how much your monthly payment is now. It is also helpful to find out how much you have paid of your mortgage towards principal. Since you will refinance the amount left on the mortgage principal, and not refinance the original mortgage amount, it is really important to know how much principal is left. If you plan to stay in your home for a length of time and still have a sizeable principal left on your loan, then a mortgage refinance may be a good option for you if interest rates are lower than when you obtained your last loan.

          Just as with most conventional loans, refinancing offers similar options of adjustable and fixed rate mortgages and anywhere from 10-40 year loans. Be sure to review with your mortgage lender the reasons you are interested in refinancing; do you need to refinance to obtain cash for home improvements or for a new car purchase? These are important factors to make your lender aware of as you are deciding how to refinance your mortgage.

          Another factor that determines whether borrowers refinance is interest rates. Current mortgage interest rates can rise and this often scares refinance borrowers who have ARMs because they are afraid the adjustable rates will rise after they refinance. It is difficult to assess what will happen to the adjustable refinance mortgage interest rates over the next few years. If you refinance into a fixed rate mortgage during a high interest rate period, then when interest rates go back down, you are stuck with a high fixed rate mortgage and another decision about whether or not to refinance again. Of course the only sure-fire way of knowing if you should apply for a refinancing is to assess your reasons for the refinance and how it will affect you in the future.

          Posted

          Homebuyer Tax Credit Gets New Life

          Key lawmakers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years. 

          Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program. 

          Source: Wall Street Journal, Corey Boles and John D. McKinnon (10/29/09)

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