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The Basics: Extended Home Buyer Tax Credit 2009/2010

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

• Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
• Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
  
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by tow additional factors:

1. The price of the home.
2. The buyer's income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

Article compliments of Realtor.org / GayRealEstate.com is a Member of the National Association of REALTORS®

Fannie Mae to rent out homes instead of foreclosing

By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer

WASHINGTON – Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.

The government-controlled company, through its new "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.

The program will "eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," Jay Ryan, a Fannie Mae vice president, said in a statement.

But the effort is likely to affect a relatively small number of homeowners. In the first half of the year, Fannie Mae took back about 1,200 properties through this process, known as a deed-in-lieu of foreclosure. That pales in comparison to the 57,000 foreclosed properties the company repossessed in the period.

While neither option is particularly attractive for the homeowner, a deed-in-lieu does less harm to the borrower's credit record.

The rental program is designed to help homeowners who don't qualify for a loan modification under the Obama administration's plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.

Fannie Mae has hired an outside company, which officials declined to identify, to manage the properties.

To qualify, homeowners have to live in the home as their primary residence and prove that they can afford the market rent, which would be determined by the management company. The rent can't be more than 31 percent of their pretax income.

Fannie Mae's sibling company, Freddie Mac, launched a similar effort in March. That policy, however, requires the foreclosure to be complete and only allows month-to-month leases. A Freddie Mac spokesman declined to say how many borrowers have participated.

New $6,500 tax break for homebuyers

By STEPHEN OHLEMACHER, Associated Press Writer Stephen Ohlemacher, Associated Press Write

WASHINGTON – Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

"We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments we will get through this recession and get folks working again."

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place."

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.

The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.

The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.

"It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns," said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

Maine voters have passed a devastating Proposition 8-style measure overturning the state’s marriage equality law.

A deep and bitter disappointment from Maine yesterday: Maine voters have passed a devastating Proposition 8-style measure overturning the state’s marriage equality law.

Our hearts are with everyone in Maine who fought so hard to win recognition for their families. The legislature passed marriage equality earlier this year, but a divisive anti-LGBT campaign to scare voters seems to have worked.

It is infuriating to see that the same fear-mongering ads that were used to pass Prop. 8 a year ago have triumphed again at the expense of so many. This is a terrible loss.

Although we lost our battle in Maine, we will not allow the lies and hate – the foundation on which our opponents built their campaign – to break our spirits. We are on the right side of history and we will continue this fight with even more vigor.

Our friends at No on 1/Protect Maine Equality waged a strong and smart campaign. Thousands of volunteers exposed hundreds of thousands of Mainers to the real lives of same-sex couples and their families – many for the first time.

I am angry. But more importantly, I am determined that with the anger I feel today from this outcome in Maine, we'll rise ever stronger to demand equal treatment under the law and equal respect for our relationships in Maine, California, New Jersey, and every state in the Union.

And in other state elections yesterday...

· In Washington state, voters appear to have cast their ballots to approve Referendum 71, a measure that would expand domestic partnerships to have every state-level right and benefit afforded to married couples. I feel confident that when all of the votes are counted, it will be clear that the voters of Washington chose to provide equal rights and benefits to same-sex couples and their families.

· In New Jersey, Governor Jon Corzine – endorsed by HRC – has lost his re-election bid. He has been a strong ally for LGBT people in New Jersey, and he had pledged repeatedly to sign a marriage equality bill that could still be passed by legislators later this year.

· In Virginia, HRC endorsed Creigh Deeds for governor and placed 20 staffers at work in key delegate races. Deeds unfortunately lost his bid for governor, but there will be new pro-equality voices in the House of Delegates next year.

· In Kalamazoo, Michigan, right-wing groups wanted to make sure it stayed legal to fire or refuse housing to someone just because they’re LGBT. 65% of Kalamazoo voters disagreed and voted to approve Ordinance 1856, expanding the city's existing anti-discrimination law to include sexual orientation and gender identity.

Check HRC's Backstory blog for updates on these and other races throughout the day.

 

I know that the results of today’s elections are frustrating.

But having seen the passion and dedication of volunteers in this election, I know that tomorrow is a new day – and that our movement has the strength and power it needs to keep moving forward.

Joe Solmonese
President

Home sales contracts rise for 8th straight month

NEW YORK (CNNMoney.com) -- The number of signed sales contracts to buy homes rose in September for the eighth straight month, according to a real estate industry report released Monday.

The September Pending Home Sales Index from the National Association of Realtors (NAR) spiked 6.1% to 110.1, consolidating a 6.4% gain in August. It was the index's highest level since December 2006, when it stood at 112.8.

The leap was far better than expected. A panel of analysts surveyed by Briefing.com had forecast a 1.2% rise.

Analysts, including Lawrence Yun, NAR's chief economist, have traced much of the improvement to the government's first-time homebuyer tax credit program, which gives an up to $8,000 tax break to new homebuyers. It's estimated that between 200,000 and 400,000 additional sales will have been made because of the credit.

"What we're witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month," said Yun.

The credit lapses after Nov. 30, and the housing industry is bracing for a major turndown in sales if Congress fails to pass some kind of extension.

"Clearly, buyers were eager to get business done before the credit's November expiration," said Mike Larson, a real estate analyst for Weiss Research. "So I wouldn't be surprised to see some give back in pending sales over the next month or two."

Favorable long-term prospects

Any fall-off should only be temporary, however, according to Yun. Market conditions are just so favorable for buyers right now that sales should rebound quickly should they suffer through a hangover following the tax credit demise.

With home prices well off their highs and mortgage rates still extremely low, the cost of homeownership is well within the range for many Americans who are not homeowners today. There are, Yun estimates, about 3 million renters who are now financially well-qualified to buy a median-priced home.

"As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers," he said.

That will not translate into a new boom, however, according to Larson. "No explosion of pent-up demand will send markets to new heights," he said. "The economy is still not in fantastic shape."

Housing markets certainly do not seem to be out of the woods, but this latest release added to a modest winning streak of positive recent reports. Prices appear to have stabilized, with the S&P/Case-Shiller Home Price index up four months in a row and completed sales of existing homes at their highest level in two years.

Foreclosures, however, continue to plague many markets, adding to supplies on homes for sale, according to Yun.

"An excess of homes remains on the market despite recent improvements," he said. "Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline."

Increased pending sales are a forward-looking indicator since contract signings precede actual closings; they typically take place two to three months later. Although some contract signings fall through, a jump in signings in September usually means NAR statistics on December existing home sales will improve.

Senators agree to extend home-buyer tax credit

WASHINGTON — Senators agreed Wednesday to extend a popular tax credit for first-time home buyers and to offer a reduced credit to some repeat buyers. The tax credit provides up to $8,000 to first-time home buyers but is set to expire at the end of November.

 

The Commerce Department said Wednesday that new home sales fell 3.6% in September, and some industry representatives blamed uncertainty about the tax credit.

 

Senators agreed to extend the existing tax credit for first-time home buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

 

The tax credits would be available to home buyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.

 

By Stephen Ohlemacher, Associated Press Writer

Ready to take advantage of historic low rates? Buyer Basics

The time is right, your down payment is in the bank, interest rates are low, and you are personally and professionally secure and eager to make the transition from renting or leasing to the auspicious realm of home ownership.  In fact you even have your eye on that perfect Tudor over on Hawthorne and the cute little Bungalow on Park, or maybe even the Queen Anne in Stewart Heights.  There is a Realtor® on every corner and all you have to do is decide with which one you prefer to do business.  Oh wait, you nearly forgot the Georgian FSBO (for sale by owner) that you pass on your way to work, you definitely want to check out that one, you might even be able to negotiate a better deal for yourself on that home than on those listed with agents.  You are so smart you surprise yourself sometimes.  So many delightful choices and all yours for the choosing!  You hardly know where to begin, but off you go, checkbook in hand, humming “I’m gonna buy a house”.  

 

Does this description effectively capture your current feelings about purchasing a home?  Do you know the tingling anticipation of actually having the keys placed in your hand and requesting a change of address for your mail?  If you are already obsessing about what fabrics to use in the living room, then you might be well-served by the taking of a moment to in fact “get real” about the process of purchasing a home, especially if you are a first-time buyer.  While you may not be searching for a home to live in for the rest of your life, you are certainly making an investment that will have a tremendous impact on the quality of your life, regardless of how long you intend to live there.  Whether you realize it now, your home-buying experiences will forever influence your feelings about the house you purchase.  If purchasing a home is a “nightmare from hell”, then those ghosts will haunt you throughout your ownership of it.  Some demons are far better avoided than exorcised afterwards.

 

We have all heard horrific tales from friends about the dreadful experiences encountered in buying a home.  “The agent did not want to show me anything that I liked”.  “The neighborhood had nothing to offer”.  “The property had liens against it.”  The truth is that many of our unfortunate experiences can be thwarted if we approach the experience from an enlightened and informed position.   There are some very basic things we can do to ensure that our journey towards home ownership is a pleasant one by assuming the authority of a creditable and savvy buyer.  In claiming that authority as our own, we must also take ownership of the responsibilities that come with the territory.  As buyers we sometimes lose our perspectives and perceive responsibilities to belong to sellers and real estate agents.  When we do that, we hand over our fates willingly.   Consider these options to maximize your home buying experience.

 

    1. Know your budget.  

Ouch, this one stings – remember we said “basic” things, not necessary easy things.  While we may dream of domains in excess of our range of affordability, we owe it to ourselves to be realistic about how much money we can invest in a home.  If we have X amount of dollars to comfortably invest in a monthly mortgage yet insist upon considering homes that will cost far above X amount of dollars per month, we only set ourselves up to be disappointed.  A seller whose home lists for $500,000.00 will never accept your offer of $350,000.00.  It is not your real estate agent’s job to encourage the seller to incur such a disastrous loss on a property.  Would you want a person like that to be showing your property? 

 

    2. Know your credit history.

Most of us have at least a general idea of what is reflected in our credit histories.  If there are any unresolved issues regarding the legitimacy of a debt, you should take care of those as soon as possible.  Upon establishing with the appropriate agency the validity of a debt, you need to have the record removed or make arrangements for paying the debt.  Seek assistance from a consumer organization or an attorney if you are unable to resolve credit issues on your own.  Clearing up any negative credit issues prior to attempting to finance a mortgage will expedite the process when you are ready to purchase your home.

 

3. Know your taste.

Most of us have at least one particular architectural design that is appealing to us.  If you know that you would positively never live in a Ranch style home, do not waste your time or your agent’s time in looking at it.  Never feel obligated to view or consider a home that has no appealing qualities to you regarding its style.  Even if it is within your budget, you will never be happy with it.  You are not required to complete the process of purchasing a home today.  If we rush too quickly, simply for the sake of being able to say that we have bought a house, we are apt to miss an opportunity that might become available sooner than we expect.  While there are those once-in-a-lifetime exceptions, the truth of the matter is that properties enter the market everyday.  There are treasures worth their waiting.

 

    4. Know your neighborhood requisites.

If you adore the arts and crave fine dining experiences, you will probably have to be willing to commute if you purchase a suburban or rural home.  If the “Book-Mobile” stops at the house closest to the one you are considering, it is reasonable bet that you will not find the amenities you are seeking in that particular area.  More than one proud homeowner has been dismayed to learn that there is simply “nothing here” after transitioning from the city to suburbia or rural areas.  On the other hand passionate gardeners and outdoor enthusiasts can be just as easily disheartened by the discovery that their perfect house is right in the middle of mainstream mania.  Take the time to explore any area you think you like before purchasing a home there.  How close is the nearest shopping mall?  Does it have a quality school district?  Does your favorite pizza store deliver in that area?  Does it have cable television and high-speed Internet Service Providers available? Is there a required membership in a homeowners’ association?  Does the municipality restrict me from running a business from my home?  We all have certain individual elements that we consider “must have’s” for the areas in which we live.  Do not take for granted that your essentials are available, but rather invest a bit of time and energy to determine exactly what is available.  Your future happiness depends upon it.

   

5. Know your risks.

While working with a Realtor® does add another schedule into the mix into the home-buying process, it is certainly an addition worthy of much consideration.  No matter what an individual seller tells you about the decision to market a home personally instead of listing it with a professional, the true reason for that choice is money.  When a person lists a home for sale with a real estate agent, an agreement is entered which provides for the agent’s fee in an agreed upon amount (usually a percentage of the sale price) to be paid from the seller’s proceeds at the time of sale.  A seller may convey that he/she is better able to show a home to and to negotiate the sale price absent the expertise of a real estate agent.  However, professional services offered by real estate agents and brokers go far beyond arranging times to show homes to potential buyers and negotiating sale prices.  To begin with, real estate agents must be licensed.  Does the individual trying to sell you his/her house have a license?  Are there any liens on the property you are considering?  Liens and encumbrances on property that are unpaid by a seller are transferred to the buyer unless the seller pays them at the time of the sale.  A real estate agent would be able to provide you information concerning any attachments to the title of the property.  What was the actual selling price for the last three comparable properties?  While an individual seller probably cannot or will not tell you much about recent property sales in the area, a real estate agent has specific and accurate information readily available.  Is there any damage to the property that the seller is responsible for prior to selling?  Real estate agents know precisely what costs are the responsibility of the seller as well as those of the buyer.  Do you really want to pay for repairs after your purchase that should have been made by the seller before the sale?  You can begin protecting any potential investment as a home owner by working directly with a licensed real estate professional.  Placing your trust in a qualified real estate professional is an option well worth your consideration. 

  

    6. Know your rights.

In a perfect world, none of us would ever have to know or experience discrimination in any form, but as we are all keenly aware, it happens every single day.  Most of us have experienced some comments that fall in the “you would have to be deaf, dumb, and blind not to have known what was meant” category.  At other times we have perhaps felt a nagging sense inside, but were not quite certain if the discrimination was real or misinterpreted.  All individuals have the right to expect fair and equal housing opportunities, and in fact, the law requires such.  Possible discriminatory actions in housing by AGENTS or OWNERS may include:

 

a.    Asking questions or recording information regarding an applicant’s race, national origin, marital status, religion, sexual orientation, disability, or number of occupants who will be children

b.   Publishing housing ads which indicate a preference such as “Adults Only”

c.    Steering or limiting your choices to certain neighborhoods or parts of a complex by characteristics grouping     

d.   Refusing to sell a property to a potential buyer based upon any grouping characteristic

 

For specific information regarding the law in equal housing, contact your local HUD office or your attorney.  If you are concerned that you may encounter discrimination as a direct result of your sexual orientation, consider contacting a Gay / Gay Friendly real estate professional at www.GayRealEstate.com, or Toll Free at 1-888-420-MOVE (6683).  These dedicated home specialist’s offer the experience and sensitivity the LGBT community seeks in meeting their real estate needs.  They are committed to ensuring your fair and equal access to the perfect home for you!

Whether you are in the market for your first home or have been a homeowner for years, these simple ideas can help make your home-buying experience one that gives you more control as a buyer.  Beginning your path towards home ownership with a sense of direction ensures that your journey will be far less complicated.  Just as you already knew, there are indeed many choices, yours for the making.  Happy Hunting, and may the best home for you have your signature on its mortgage.