Tuesday, December 23, 2008

Jaime Ulmer Real Estate Blog: Great Article about Texas Real Estate, The Federal Tax Credit, & Why to Use a Texas Realtor

First-time buyers can get a no-interest $7,500 loan


Those either/or deals you sometimes see on car commercials have always bugged me. They offer you a discount on the price of the car or an interest-free loan. To me, it’s not an interest-free loan when the car costs $3,000 more if I don’t pay cash.

Thankfully, the U.S. government’s offer of an interest-free $7,500 loan for first-time homebuyers is straightforward. Actually, they call it a tax credit. And it is. If you’re a first-time buyer, you can get an income-tax credit of 10% of the purchase price of the home up to a maximum credit of $7,500.

What does a tax credit do for you? If you have an income-tax bill of $10,000 and qualify for $7,500 tax credit, you would be required to pay only $2,500 in taxes. If you had a $5,000 income-tax liability, you would actually receive a $2,500 tax refund for the year.

I mentioned that the credit is for first-time homebuyers. The government considers you a first-time buyer if you (and your spouse, if married) haven’t owned a principal residence in the last three years. The credit begins to phase out for individuals with gross income higher than $75,000 and joint filers with incomes above $150,000. Once you get to incomes of $95,000 (single filer) and $170,000 (joint filer), the credit is completely phased out.

Although this is called a tax credit, I said it was an interest-free loan. That’s because you must pay the credit amount back over a period of 15 years. If you qualified for the full $7,500 credit, you would pay back $502.50 per year.

If you sell your home before the 15-year repayment period, you must pay back the remaining amount from your home-sale proceeds. If there’s no gain on the sale of the property, the remaining balance does not have to be repaid.

There is a bit of a catch, I suppose. This buyer incentive is only available until June 30, 2009. So if you’re considering making that leap to homeownership, there’s a real incentive to act in the next few months. Even if you purchase a home in 2009 (before June 30), you may be able to take advantage of the credit on your 2008 tax return that you file in 2009. As with any decisions you make that have tax implications, be sure to discuss this with your tax professional. And when you want assistance in making good real estate decisions, you’ll want to rely on the expertise of a Texas REALTOR®.

Article can be found HERE.

Wednesday, December 3, 2008

Reuters News Story: US mortgage applications post largest gain ever

By Julie Haviv

NEW YORK, Dec 3 (Reuters) - U.S. mortgage applications surged by the largest amount on record last week as a new Federal Reserve program pushed interest rates down to their lowest level in more than 3 years, data from an industry group showed on Wednesday.

The U.S. housing market is suffering the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.

But, the latest weekly data from the Mortgage Bankers Association showed potential borrowers were lured by enticing mortgage rates, which dropped dramatically after the Federal Reserve unveiled a plan last week to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises, Fannie Mae (FNM.P: Quote, Profile, Research, Stock Buzz), Freddie Mac (FRE.P: Quote, Profile, Research, Stock Buzz), and Ginnie Mae.

"This clearly was an early holiday gift from the Federal Reserve to mortgage holders and home shoppers," said Mike Larson, a real estate and interest rate analyst at investment firm Weiss Research in Jupiter, Florida.

"But, the MBA's data is only for submitted applications, not closed loans, so a good amount may get rejected because qualifying standards are tighter and many applicants will probably find they do not have the equity to refinance given the decline in home prices," he said.
As long as unemployment is climbing and the economy is weakening, the impact on the home purchase market should be much more muted than the refinance market, he said.