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Home Buyer Tax Credit - goodbye

July 1st, 2010 2:15 PM

Yesterday we helped close the last of the first time home buyers who are eligible for the tax credit... or was that the end? Qualifying military personnel have another year and there is the extension to the extension.

Posted by Aaron Walker on July 1st, 2010 2:15 PMPost a Comment (0)

The Market

July 1st, 2010 8:59 AM

Rates fell to their lowest levels since Freddie Mac started tracking them in 1971. Freddie Mac announced that for the week ending June 24, 30-year fixed rates averaged 4.69%, down from 4.75% the previous week. The average for 15-year fixed fell to 4.13%. Adjustables were also down with the average for one-year adjustables falling to 3.77% and five-year adjustables decreasing to 3.84%. A year ago 30-year fixed rates were at 5.42%. “Rates for all but traditional 1-year ARMs hit all-time record lows this week in our survey while activity in the housing market slowed in May following the expiration of the homebuyer tax credit,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Freddie Mac began collecting rates for 30-year fixed loans in April 1971, 15-year fixed loans in September 1991 and 5-year hybrid ARMs in January 2005. The record low for traditional 1-year ARMs of 3.36 percent oc curred during the week of March 25, 2004. Both new and existing home sales showed unexpected declines in May. Existing sales fell 2.2 percent, compared to the market consensus forecast of a 6.0 percent gain, based on figures published by the National Association of Realtors. Sales of new homes fell 32.7 percent to an annualized rate of 300,000 units, which was the largest monthly drop and slowest pace since records began in 1963, according to the Census Bureau." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Posted by Aaron Walker on July 1st, 2010 8:59 AMPost a Comment (0)

Home Buyer Tax Credit to be extended?

June 15th, 2010 8:15 AM

First-time homebuyers looking to land an $8,000 federal income tax credit may have a little more time to close on their purchases if a Senate amendment unveiled Thursday makes it into law. As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years. The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions, especially short-sales, which is a more involved process. "By extending the transaction deadline, we ca n ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said. It remains to be seen, however, whether the amendment will go anywhere. It’s part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest. Source: CNNMoney.com

Posted by Aaron Walker on June 15th, 2010 8:15 AMPost a Comment (0)

Sir, Yes Sir!

June 7th, 2010 8:20 AM

Members of the military or some federal institutions who served overseas between Dec. 31, 2008, and May 1, 2010, have another year to take advantage of the home buyer tax credits. Eligible taxpayers who are in the armed forces or who are members of foreign-service or intelligence organizations can earn home buyer tax credits if they enter into a binding contract to buy a principle residence before April 30, 2011 and close on that contract by June 30, 2011. The tax credit applies to any individual (and, if married, the individual’s spouse) who served on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010. First-time buyers who meet certain income qualifications can earn tax credits of up to $8,000. Previous home owners are eligible for tax credits of up to $6,500 if they are replacing a principal r esidence they have owned for any five-consecutive-year period during the preceding eight years. Source: American Home Shield

Posted by Aaron Walker on June 7th, 2010 8:20 AMPost a Comment (0)

Missing the Tax Credit was a good thing?

June 3rd, 2010 7:30 AM

Missing the tax credit deadline might have seemed like a big mistake to some home buyers, but waiting could have been the smartest thing to do. Rates have fallen so dramatically since April 30th that the typical purchaser of a $350,000 home, financed with a $280,000 loan, would have saved a bundle by waiting until May. At April’s average rate of 5.34 percent, a home buyer would have locked in a 30-year fixed rate with a payment of $1,561.82. The same borrower could have snagged a 30-year fixed rate at a rate of 4.625 percent in May and paid $1,439.59 per month. That’s a $1,467 annual savings. Over 30 years, it’s a $44,003 savings, dwarfing the tax credit. Borrowers eager to lock in a very low-rate fixed should apply quickly, says Bankrate.com analyst Holden Lewis. Rates haven’t been this low since the 1950s, he says, adding that rates are unlikely to fall further. “You can float, but that's not a smart strategy. It's like asking for another ca rd when you have 19 in blackjack. Stand and take your chances,” he advises. Sources: Bankrate.com and Informa Research Services

Posted by Aaron Walker on June 3rd, 2010 7:30 AMPost a Comment (0)

Home Buyer Tax Credit

November 6th, 2009 9:43 AM

Earlier today the House of Representatives passed legislation to extend and expand the $8,000 first-time homebuyer tax credit, which was approved by the Senate this week. The legislation will be sent to the President, and upon his signature, made law. NAMB strongly advocated for an extension and expansion of the homebuyer tax credit, and considers this a victory for consumers, the housing industry, and NAMB.

Under the legislation, homebuyers will qualify for the tax credit until April 30, 2009 (as long as they have entered a binding contract), and have an additional 2 months (until June 30, 2009) to close the transaction. Borrower income limits have also been increased to $125,000 for individuals and $225,000 for couples (up from $75,000 and $150,000 respectively under the current program). The legislation also includes a tax credit not exceeding $6,500 for move up buyers who have owned their current homes for at least 5 years.

Posted by Aaron Walker on November 6th, 2009 9:43 AMPost a Comment (0)

Effective July 30th 2009 - HERA

August 5th, 2009 1:18 PM

Effective today, July 30th 2009, the following changes will affect all transactions in the mortgage industry both Brokers and Bankers. The changes will affect how to disclose the Truth and Lending and the Regulation Z, the result of the “The Housing and Economic Recovery Act of 2008” (HERA) changes.

Now let me take a moment to say that our numbers are always very accurate so this won't change very much for our team unless a 3rd party charge to APR comes up last minute. These fees would be additional title items from some of the REO sales that we have all seen lately.

However, the people that haven't been disclosing accurately all along (or the bait and switchers) really will need to adjust their behavior. You may know these as originators that always have to cover fees or explain why the good faith estimates don’t match up with the final HUD. The problem is because of the increased time to create and close a loan the “bait and switchers” will all but have your borrower locked into closing at the higher APR.

This re-disclosure rather than punishing the rouge lenders, will just punish the borrowers, sellers and agents because there will be a 3 day delay for the borrower prior to closing! The ugly truth is 3 days to re-disclose is still too short of a time frame to get a new loan done. The cost may be in that sellers may not be too willing or unable to extend if they are going to buy another house and have a simultaneous closing.

The “SOLUTION” to the following new law is to work with a professional you trust and one that has and will continue to disclose all fees truthfully instead of trying to “POLISH” up the good faith to look cheaper initially.

For listing agents it will become CRITICALLY important to get correct title fees if the seller picks the title company. For selling agents that pick the title company, getting correct fees to the buyer’s lender is equally important.

The following is a is a detailed synopsis of the new law that you can review with your clients and partners.

Housing & Economic Recovery Act of 2008 (HERA)

HERA was developed to protect the mortgage consumer. The Act contains provisions that revise the Truth and Lending Act and will apply to all loan applications received on or after July 30, 2009.

What is the HERA Mortgage Disclosure Improvement Act?

Five changes from HERA Disclosures:

o Saturdays count as a business day

o Upfront fees cannot be charged until the borrower receives the initial TIL from the Lender. Only exception is a credit report fee.

o Initial TIL now required on all purchases and refinances of primary residences and second homes. The loan cannot close (i.e. document signing) until seven (7) business days after the initial TIL disclosure has been mailed.

o Initial TIL must be provided at least seven business days before the close/sign date.

o An increase in APR by more than .125% requires re-disclosure of the TIL at least 3 business days before closing. If mailed, the TIL is considered “received” 3 business days after mailing. The loan cannot close until three (3) business days after re-disclosure TIL is received (when applicable).

Definition of Disclosure Delivery

If the disclosure are delivered via regular mail, the disclosures are considered received by the borrower three (3) business days after they are mailed. When disclosures are delivered electronically, consistent with the E-Sign Act, the creditor may rely on evidence of actual delivery to determine when the three-business (3) day period begins. Accordingly, lenders are adapting disclosure processing to support electronic communication of the Truth in Lending. Electronic delivery of the disclosures allow for a more streamline process and provides an opportunity for better customer service.

Reason for HERA Disclosures

A more transparent, level and fair regulation of the real estate industry

Additional controls to prevent deceptive lending practices

Protection against abusive lending practices for borrowers

Consistent lending practices among all lenders

Borrowers are more informed and more confident about the mortgage process

HERA Revision #1

Saturday is now counted as a business day for disclosure timing

HERA Revision #2

No upfront fees can be charged prior to the consumer’s receipt of the initial Truth in Lending disclosure (TIL) from the Lender. Lenders will no longer be able to charge large commitment fees that intimidated the borrowers into staying with that lender.

Credit report fee is the only exception to the regulation

If disclosures are mailed, the consumer is considered to have received the TIL 3 business days after mailing.

Appraisal cannot be requested until the consumer receives the initial TIL from the Lender (applicable to all loans, conventional AND government). This will stall all appraisal orders for a minimum 4 days from initial consultation.

RESULT

No fees collected or charged (other than the credit report fee) prior to consumer’s receipt of initial disclosures

You cannot request the appraisal or collect the appraisal fee until 4 business days after the initial disclosure packet. (Table fund and Enhanced loans wait period will be based off the broker’s issue date of the initial TIL.)

Add almost one full week in time to your purchase because of delayed appraisal order

HERA Changes - #3

Initial Truth In Lending (TIL) Disclosure

The initial TIL disclosure has been amended to require specific language to notify the consumer that they are not required to complete the loan agreement merely because they have received the disclosure or signed a loan.

Required for all primary and second home transactions

RESULTS

TIL disclosure will be included in all initial disclosure packages except investment properties

Enhanced Warehouse, Enhanced Table fund and Traditional Table fund brokers will be required to deliver the initial TIL to Investors with the initial file to meet minimum submission standards

HERA Changes - #4

Early disclosures need to be provided no later than 3 business days after receipt of application as well as be provided at least 7 business days before close/sign

RESULTS

Cannot schedule the close/sign date prior to the 7 day wait expiration

HERA Changes - #5

An increase of more than .125% in the APR from the initial TIL disclosure requires the TIL disclosure to be revised and reissued to the borrower

Borrowers must have a 3 business day review period prior to close/sign

It is presumed that borrowers will receive the disclosures 3 business days after mailing

HERA Changes - #5

RESULTS

New re-disclosure packet to be mailed any time APR tolerance is exceeded by .125% either up or down

Lock the loan (strongly recommended, but not mandatory)

If the APR increases by more than an .125% after re-disclosure, it will require another re-disclosure and a new 6 day wait

Settlement agents in escrow states will now be required to submit a HUD prior to receiving the closing package

HERA HVCC Guidelines

Per HVCC, the borrower must be provided a copy of the appraisal*

Borrowers must have a 3 business day review period prior to close/sign

It is presumed that borrowers will receive a copy of the appraisal 3 business days after mailing

Borrowers have the option of waiving their right to review the appraisal, thereby eliminating this wait period

*The Home Valuation Code of Conduct technically only applies to conforming loans, but many investors will apply it to all conventional loans, and in the future may apply it to other types of loans as well.

Posted by Aaron Walker on August 5th, 2009 1:18 PMPost a Comment (0)

Upgrades That Will Slash Your Tax Bill

July 30th, 2009 9:09 AM

Looking for that extra push to go ahead with an upgrade in your home? If it's an energy-efficient upgrade you may qualify for a tax credit in April 2010. A provision in the American Recovery and Reinvestment Act of 2009 allows homeowners to claim tax credits for up to 30% (up to $1500) on energy-efficient upgrade projects such as windows, roofs, insulation and doors.

While the tax credit for smaller projects will max out at $1500 (total, not per project), there is no cap for larger projects. Those homeowners planning on installing solar panels, solar water heaters and wind systems will see a credit of $1500 or more. The installation costs for these types of upgrades count toward the credit until 2016.

When planning a project you'll need to do a little research to make sure the upgrade qualifies for the tax credit. Not all Energy Star-certified doors and windows will qualify and such items as energy-efficient garage door openers won't qualify at all.

For your project to qualify, it must be "placed in service" during the tax year -- the purchase of the materials doesn't count, the job must be complete. It is also suggested that you keep the Manufacturer's Certification Statement saying the item qualifies for the tax credit.

To help you determine if a planned upgrade may qualify for the credit, take a look at the list below.

These projects qualify for a tax credit up to $1,500 (30% of cost through 2010):

Window, door replacement: Must have a U-factor and solar heat gain coefficient (SHGC) of 0.30 or less, which is a more stringent requirement than for some Energy Star-certified products. (U-factor and SHGC express heat flow through an object, hence its insulating value.) See http://www.garagewownow.com for more information on which garage doors qualify for credit.
Roofing replacement: All Energy Star metal and asphalt roofs qualify. Download "Find a Product" from Energy Star's "Roof Products" page for more information. Synthetic roofs are not covered.
Installing insulation: Insulation installations must last five years or have a two-year warranty. Insulated siding and cladding won't help you with a tax break, but vapor retarders will. It's not clear yet if spray foam and air sealing are covered, according to the Environmental Protection Agency.
Heating and cooling systems: Not all Energy Star products will qualify for the tax credit. See the Consortium for Energy Efficiency product directory for qualified types of central A/C and air source heat pumps. Consult the Air-Conditioning, Heating and Refrigeration Institute for natural gas and oil-using heating products. Check pelletheat.org for information on biomass stoves.
Water-heater replacement: Not all Energy Star gas-storage and gas-condensing water heaters will qualify for the tax credit. See "Residential Water Heaters Key Product Criteria" under Energy Star's "Products" tab.

These projects qualify for a tax credit of $1,500 or more (30% of cost installation through 2016):

Geothermal heat pump: All Energy Star geothermal heat pumps qualify for the tax credit.
Solar water heater: All Energy Star solar water heaters qualify for the tax credit, but it's unclear whether using them for radiant floor heating is allowed. No dice for swimming pools or hot tubs â€” the water must be used in the dwelling.
Solar/photovoltaic panels: No federal restrictions on qualifying products available. Contact the Solar Energy Industries Association for further information.
Small wind energy systems: No federal restrictions on qualifying products available. Contact the American Wind Energy Association for further information.

You can also go to the Database of State Incentives for Renewables and Efficiency for information on state and local tax credits.

Source: msn.com and Popular Mechanics

Posted by Aaron Walker on July 30th, 2009 9:09 AMPost a Comment (0)

Tax Tip for First Time Home Buyer Credit

June 29th, 2009 9:15 AM

If you’re filing an amended ’08 return for the first time home buyer credit...

Be sure to enclose a copy of the settlement statement with your 1040-X.

The Service has noticed that many of the refund claims for the credit are fraudulent, so it is giving all such claims extra scrutiny. To avoid having your refund delayed, attach a copy of the HUD-1 form with your amended return. First time home buyers can claim the tax credit...10% of the purchase price, up to a maximum of $8,000... on amended 2008 returns if they buy a primary home this year before Dec. 1, 2009.

Posted by Aaron Walker on June 29th, 2009 9:15 AMPost a Comment (0)

First-Time Homebuyer Credit

June 23rd, 2009 1:08 PM

Overview

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:

Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
Applies only to homes used as a taxpayer's principal residence.
Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The credit is claimed using Form 5405.

For 2008 Home Purchases

The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.

Posted by Aaron Walker on June 23rd, 2009 1:08 PMPost a Comment (0)