Congress both extended and expanded the First-Time Home Buyer Tax Credit program Thursday.
The White House says the President will sign it into law today.
The up-to-$8000 tax credit’s expiration date has been pushed forward to spring, requiring homebuyers to be under contract by April 30, 2010, and to be closed by June 30, 2010.
The program’s basic eligibility requirements remain the same:
The new law includes some notable updates, however.
For one, the definition of “first-time home buyer” has been expanded to include most homeowners with at least 5 years in their current home. “Move-up” buyers like these are now eligible for IRS tax credits, but with a cap at $6,500.
This means that you don’t have to be a true first-time home buyer to claim the “first-time home buyer tax credit”.
Other eligibility changes include:
And remember, the First-Time Home Buyer program grants a tax credit as opposed to a deduction. This means that a tax filer would receive a cash payment of $2,000 from the U.S. Treasury if his “normal” tax liability totals $6,000 and he was eligible for all $8,000 available under the new law.
The complete list of qualifying criteria is posted on the IRS website. Be sure to review it with a tax professional to determine your eligibility. Then mark your calendar for April 30, 2010.
It’s 5 months away.
I received a call this morning from a borrower who had recently closed a loan with me, and was asking why First Heritage Mortgage was sending him solicitations for life insurance. He felt it was a breach of confidentiality as he assumed we had provided his loan information to an outside vendor.
I explained that we would never provide his personal information to any third party that was not directly involved with the original transaction, and that lenders are held to very high standards regarding privacy laws - which they take very seriously.
The reality is that after a borrower closes on a mortgage, that information becomes public record when the Deed of Trust is recorded at the courthouse. Thus, the basic information - name of borrower(s), property address, loan amount, originating lender, etc. is available to anyone who takes the time to look for it. More personal information such as social security numbers is not provided.
Unfortunately, many of these companies use very clever strategies to make it appear as though the letter is from your lender. If you look closely enough, there should even be a disclaimer stating the truth - that no lender has endorsed the solicitation, and that your information was derived from public sources.
Best to ignore those letters. If you’re really interested in obtaining life insurance for your mortgage, I recommend clients talk to their own insurance agents or financial advisers about such programs. Lenders sell money; we’re not in the insurance business.
The days of rock-bottom housing prices may be reaching an end.
According to the National Association of REALTORS, the number of Existing Home Sales fell by a modest 140,000 units last month. It’s the fifth straight month in which home sales straddled the 4.5 million mark.
The national housing inventory is down 900,000 from its July 2008 peak.
These are two encouraging signs.
Meanwhile, in a separate report, the Commerce Department said the supply of newly-built homes for sale is at a 7-year low. This, too, is a positive signal for housing.
Home values are based on supply and demand. If the number of homes for sales falls while the number of buyers stays constant, home prices will rise. This is because the same number of buyers are competing for fewer properties. It’s basic economics and that may be what we’re seeing right now in the marketplace.
But the balance could shift further. Remember: the March housing data doesn’t account for first-time home buyers that used the $8,000 First-Time Homebuyer Tax Credit. Because the stimulus package didn’t pass until February, buyers on the program likely hadn’t closed on their respective homes before March data was released.
There’s a big piece of the demand side of the equation unaccounted for, in other words, and if you’re an active home buyer now, you’re probably hearing a lot about multiple-offer situations and seeing this action first-hand.
Data from the housing market hasn’t been outstanding, but it’s definitely not looking worse. Sales levels, inventories and home prices appear to be leveling off nationally and the number of active seems to rising.
Overall, it points to higher home values ahead.
First Heritage Mortgage, LLC
6550 Rock Spring Drive, Suite 260, Bethesda, Maryland 20817-1131
Direct: 240.223.1730 • Toll-free: 866.833.LOAN • Fax: 240.223.1703
