Sorry Readers: Homebuyer Credit Not Retroactive

Update: Just heard from White House spokeswoman Jen Psaki. The start date for the new $6,500 credit for existing homeowners will take effect as soon as Obama signs the bill into law tomorrow (Nov. 6). Sorry for the confusion. And thanks to “Dean” whose comment alerted me to my error. (In case you’re curious, this is the actual text of the bill. The credit extension was attached to a larger bill to extend unemployment benefits).

My last post was flooded with comments from readers asking whether the expanded credit will apply to them even though they closed on a home purchase earlier this year (or last year or the year before…). The answer: “No.”

It might seem unfair. But the new credit will take effect only after President Obama signs the measure into law tomorrow. Buyers will have until April 30 to sign purchase contracts and must close on the house by the end of June.

Under the new $10.8 billion plan, first-time buyers would continue to get $8,000 for buying a home. But existing homeowners will now be able to claim $6,500 credit for selling their current home and buying a new one, as long as they resided in the home they’re selling for at least five of the past eight years.

Income limits will also expand to $125,000 a year for individuals, and $225,000 a year for married couples. Sounds like a good deal right? Not judging from the flood of comments we’ve gotten from existing buyers who bought during the past several months. They feel gypped.

A commenter identifying himself as “Jim” said he bought a home during the Great Recession and was miffed that he didn’t get a tax credit because he wasn’t a first-time buyer. Now he’s angry.

“If they are handing out free money, give it to those who actually risked their capital,” he wrote a couple hours ago. “I am against this credit altogether … The government deciding who gets money and who doesn’t is TYRANNICAL.”

I sympathize with the comments. My parents only sold their Westchester County, N.Y. home of 30 years only a week ago and bought a much-less-expensive house one 15 miles away. They certainly would have qualified for the $6,500 credit and I’m afraid to break the news to them.

But the point of the credit is to stimulate home sales, not to hand out spending money (Though it will indeed stimulate some consumer spending). As I mentioned in my last post, it could be even less effective and efficient than the previous credit. If that’s the case, it’s best to put some limits on cost. Congressional analysts estimate that the six-month extension and expansion of the credit will cost taxpayers $10.8 billion. Can you imagine the price tag if it was made retroactive to the beginning of 2008?

View the original article here

Travis County Housing Finance Corporation Homebuyer ...

Interested in buying your first home in Travis County, Texas? Travis county offers a program that will allow first time homebuyers and working families to get the help they need to buy a foreclosed home. Some of the requirements for qualifying for a home under the Travis County Neighborhood Stabilization Program have changed since the program's first run, so there is a good chance that a home that didn't originally qualify for the program may end up being perfect for it now. Read on for information on how to qualify for the Travis County homebuyer assistance program and get into a foreclosed home.

First Time Homebuyers

This Travis County program is supposed to be for first time home buyers only. This doesn't mean that you or your family must never have owned a home before. According to the standard for the program, anyone who hasn't owned a home within the last three years can technically qualify as a first time buyer.

Invest In The Home

While this program can assist many buyers in avoiding the large down payments and high interest rates associated with buying a home, you do need to be willing to invest at least $500 into the direct purchase price of the foreclosed home.

Good Credit

Your credit score does not need to be perfect, but you do need to be capable of qualifying for a home loan if your income would allow it. The assistance you get will be based on how much you can afford to pay, so your income will be used to help determine how much help you get in order to make the home you want affordable.

Income Limits

This program is designed to help low and middle income families buy foreclosed homes that need an occupant, so the income limit is set up to encourage people who wouldn't normally be able to afford a home buy one. The limit is currently set at 120% of the median income for Travis County to get half assistance, and 50% of the median income for Travis County to get full assistance.

Where To Buy

This is one area where there has been a major change since the program was originally implemented. In the past, there were specific areas within Travis County where homebuyers needed to find a foreclosed home in order to qualify for assistance. However, the county has changed the rules to allow potential homebuyers to find a foreclosed home anywhere within the Travis County border. Currently, the only limit on which foreclosed home to purchase is the price limit that varies by area.

If you think you may qualify for a home you are interested in under the Travis County homebuyer assistance program remember to act quickly. The original program was set to expire in February of 2010, though it is currently expanded and running through the end of May. Homebuyers who purchase a home through the program will need to attend a counseling session before and after the home's purchase, as well as a HUD home purchase education program.

View the original article here

Who Qualifies for New Homebuyer Tax Credit?

Update: Just spoke with somebody at Sen. Chris Dodd’s office. According to the senator’s banking committee staff, you can qualify for the credit even if you signed a purchase contract before today’s date. The important thing is that you close on the home between today and June 30, 2010 (Your contract must be signed by April 30, 2010). Keep the questions coming, I’ll try to answer as many as I can.

Dozens of you have written in with good questions about the tax credit. I’m working on finding answers, especially to one recurring question. To qualify for the $6,500 credit is it necessary to sign the purchase contract after the measure is signed into law today or can a homeowner who closes on a home after today also meet the requirements? I’ve asked the White House to clarify.

In the meantime, I just received a press release from CMPS Institute, a training, examination, certification and ongoing membership program for financial professionals who provide mortgage and real estate equity advice.

It clarifies a few things. Read on.

More Homebuyers Qualify for Tax Credit

Ann Arbor, MI November 6, 2009 – Congress just passed an expanded version of the $8,000 first time home buyer tax credit that was set to expire on November 30. “The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. “Although the tax credit remains at $8,000 for home buyers that have not owned a primary residence in the last three years, it has been expanded to include a $6,500 tax credit for home buyers that have lived in their current primary residence for at least five consecutive years out of the past eight years. Under the old rules, move-up home buyers did not qualify.” Consider these three examples:

Example 1:
Jane purchased a home in 2002, lived there for 5 years as her primary home, moved out in 2007, and turned that home into a rental property. If Jane decides to buy a new primary residence today, she would qualify for the $6,500 tax credit based on the fact that she lived in the same residence as her primary home for at least five consecutive years out of the past eight.

Example 2:
Harry purchased a home in 2004, and lived there for the past 5 years as his primary home. If Harry decides to buy a new primary residence today, he would qualify for the $6,500 tax credit based on the fact that he lived in the same residence as his primary home for at least five consecutive years out of the past eight.

Example 3:
Nicole purchased a home in 2006, and lived there for the past 3 years as her primary home. If Nicole decides to buy a new primary residence today, she would not qualify for the $6,500 tax credit based on the fact that she did not live in the same residence as her primary home for at least five consecutive years out of the past eight.

The tax credit applies to homes purchased for less than $800,000 before May 1, 2010. “If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010,” Nicholas said. “It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit.”

The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. “This means that more people will qualify for the credit – especially in parts of the country with higher costs of living,” Nicholas said. “This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit.”

There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:
· The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others
· If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit.)
· The credit applies even if you have co-signers on your mortgage loan

View the original article here

Sorry Readers: Homebuyer Credit Not Retroactive

Update: Just heard from White House spokeswoman Jen Psaki. The start date for the new $6,500 credit for existing homeowners will take effect as soon as Obama signs the bill into law tomorrow (Nov. 6). Sorry for the confusion. And thanks to “Dean” whose comment alerted me to my error. (In case you’re curious, this is the actual text of the bill. The credit extension was attached to a larger bill to extend unemployment benefits).

My last post was flooded with comments from readers asking whether the expanded credit will apply to them even though they closed on a home purchase earlier this year (or last year or the year before…). The answer: “No.”

It might seem unfair. But the new credit will take effect only after President Obama signs the measure into law tomorrow. Buyers will have until April 30 to sign purchase contracts and must close on the house by the end of June.

Under the new $10.8 billion plan, first-time buyers would continue to get $8,000 for buying a home. But existing homeowners will now be able to claim $6,500 credit for selling their current home and buying a new one, as long as they resided in the home they’re selling for at least five of the past eight years.

Income limits will also expand to $125,000 a year for individuals, and $225,000 a year for married couples. Sounds like a good deal right? Not judging from the flood of comments we’ve gotten from existing buyers who bought during the past several months. They feel gypped.

A commenter identifying himself as “Jim” said he bought a home during the Great Recession and was miffed that he didn’t get a tax credit because he wasn’t a first-time buyer. Now he’s angry.

“If they are handing out free money, give it to those who actually risked their capital,” he wrote a couple hours ago. “I am against this credit altogether … The government deciding who gets money and who doesn’t is TYRANNICAL.”

I sympathize with the comments. My parents only sold their Westchester County, N.Y. home of 30 years only a week ago and bought a much-less-expensive house one 15 miles away. They certainly would have qualified for the $6,500 credit and I’m afraid to break the news to them.

But the point of the credit is to stimulate home sales, not to hand out spending money (Though it will indeed stimulate some consumer spending). As I mentioned in my last post, it could be even less effective and efficient than the previous credit. If that’s the case, it’s best to put some limits on cost. Congressional analysts estimate that the six-month extension and expansion of the credit will cost taxpayers $10.8 billion. Can you imagine the price tag if it was made retroactive to the beginning of 2008?

View the original article here

Who Qualifies for New Homebuyer Tax Credit?

Update: Just spoke with somebody at Sen. Chris Dodd’s office. According to the senator’s banking committee staff, you can qualify for the credit even if you signed a purchase contract before today’s date. The important thing is that you close on the home between today and June 30, 2010 (Your contract must be signed by April 30, 2010). Keep the questions coming, I’ll try to answer as many as I can.

Dozens of you have written in with good questions about the tax credit. I’m working on finding answers, especially to one recurring question. To qualify for the $6,500 credit is it necessary to sign the purchase contract after the measure is signed into law today or can a homeowner who closes on a home after today also meet the requirements? I’ve asked the White House to clarify.

In the meantime, I just received a press release from CMPS Institute, a training, examination, certification and ongoing membership program for financial professionals who provide mortgage and real estate equity advice.

It clarifies a few things. Read on.

More Homebuyers Qualify for Tax Credit

Ann Arbor, MI November 6, 2009 – Congress just passed an expanded version of the $8,000 first time home buyer tax credit that was set to expire on November 30. “The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. “Although the tax credit remains at $8,000 for home buyers that have not owned a primary residence in the last three years, it has been expanded to include a $6,500 tax credit for home buyers that have lived in their current primary residence for at least five consecutive years out of the past eight years. Under the old rules, move-up home buyers did not qualify.” Consider these three examples:

Example 1:
Jane purchased a home in 2002, lived there for 5 years as her primary home, moved out in 2007, and turned that home into a rental property. If Jane decides to buy a new primary residence today, she would qualify for the $6,500 tax credit based on the fact that she lived in the same residence as her primary home for at least five consecutive years out of the past eight.

Example 2:
Harry purchased a home in 2004, and lived there for the past 5 years as his primary home. If Harry decides to buy a new primary residence today, he would qualify for the $6,500 tax credit based on the fact that he lived in the same residence as his primary home for at least five consecutive years out of the past eight.

Example 3:
Nicole purchased a home in 2006, and lived there for the past 3 years as her primary home. If Nicole decides to buy a new primary residence today, she would not qualify for the $6,500 tax credit based on the fact that she did not live in the same residence as her primary home for at least five consecutive years out of the past eight.

The tax credit applies to homes purchased for less than $800,000 before May 1, 2010. “If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010,” Nicholas said. “It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit.”

The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. “This means that more people will qualify for the credit – especially in parts of the country with higher costs of living,” Nicholas said. “This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit.”

There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:
· The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others
· If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit.)
· The credit applies even if you have co-signers on your mortgage loan

View the original article here

Latest Homebuyer Tax Credit: Pay More, Get Less

President Obama could sign the $10.8 billion homebuyer tax credit extension and expansion plan into law as soon as next week. The Senate this evening voted 98-0 in favor of the extension. The House is expected to approve it within days.

But a new report from Goldman Sachs suggests that the six-month extension might do little for the fragile housing market and could be even less effective than the soon-to-expire credit for first-time buyers that cost taxpayers about $8.5 billion and lasted nearly a year.

The Congressional proposal would give buyers until April 30, 2010 to sign purchase contracts and another 60 days to close. And it will no longer be just for first-time buyers. Homeowners who have lived in their current home for five of the last eight years can claim $6,500, under the new law, which would only apply to houses purchased after the current tax credit expires Nov. 30. Income limits will be more generous: $125,000 a year for individuals, $225,000 a year for married couples.

But Goldman Sachs economist Alec Phillips says, in a report released to clients Nov. 3, that the expanded program won’t raise home prices and sales much and likely won’t significantly trim the supply of unsold homes.

“The extension of the current credit will probably result in some incremental first-time buying but not as much as the last one,” Phillips said in a phone interview today. “The expansion to the other population of buyers [existing homeowners] will provide a small boost to prices, but no more than 1%.”

According to Phillips’ calculations, all but about 200,000 of the 1.4 million first-time buyers who claimed the credit this year would have purchased a home even without the incentive. And the credit resulted in boosting home prices only by about 1%(Phillips assumed in his calculation that home prices rose in part because sellers built a large portion of the credit into their asking prices).

The pool of first-time buyers who still need an incentive to get off the fence is likely small because many of them have already taken advantage of the now-expiring credit. Existing homeowners who qualify for the new $6,500 credit could spur additional sales. But the supply of unsold homes will remain unchanged because most homeowners will have to sell their existing home in order to buy a new one (The credit only applies to principal residences).

This doesn’t mean that the credit is useless, only that it is inefficient. For one thing, it could stimulate the economy by giving consumers more money to spend. (Economist Simon Johnson argued in the Washington Post last week that the tax credit is both inefficent as a homebuyer incentive and as a economic stimulus).

“We were not arguing that [the expanded credit] would have no effect,” Phillips said. “Just will the effect be as great as last one?”

View the original article here