Housing and Urban Development (HUD) Secretary, Shaun Donovan, said on Tuesday that the Federal Housing Administration (FHA) will allow its lenders to facilitate the use of the $8,000 First-Time Homebuyers Credit as down-payment funds through short-term bridge loans. Doing so allows a first-time purchaser to access the tax credit funds at the closing table immediately. I have mixed feelings about this.
On one hand, it is a great way to open up avenues of home-ownership to many first-time purchasers who do not have a ton of liquid cash on hand. Prices are low, inventory is good (but dwindling), and interest rates are unbelievably low. If the only barrier to homeownership for an otherwise
We have seen mortgage rates that were already at near historic lows edge down even further in recent weeks. Depending on personal situations, prospective home buyers are looking at interest rates for 30-year fixed mortgages in the 4% - 5.5% range. Our mortgage partner, Choice Mortgage (an affiliate of Wells Fargo Home Mortgage), has today's rate displayed online at 4.625% with 1 point.
WOW. WOW. WOW.
Even if rates go up a anywhere from half a point to a point and a half, these are still unbelievable deals!
But really, what does a drop or increase in interest rates mean? How does this affect you? How does this affect your payment on your mortgage should you choose to buy a home this year?
There has been a lot of interpretation and paraphrasing on the new Tax Credit. Below, for your information, is the mortgage bankers take.
A couple points of interest:
Iit is NOT a loan, and cannot be used for down payment money.
It DOES have a limit, based on the sales price of the property. Typically (but not always), in this area the maximum will be available.
It DOES have an income limit for full availability. Limits on both single and married buyers. It does phase out the more your earn.
It CAN be accelerated for use in 2008, or 2009 taxes.
There IS a "first time homebuyer" requirement, defined as 72 months (3 full years) of non-home ownership.
There ARE stipulations on the future
Here is my first cut at the Tax Credit the new bill contains. Please consult your tax advisor (or congressman….lol) for additional details.
There is a new $8,000 first-time home buyer tax credit.
It does not replace the $7,500 tax credit issued last year (that one must be paid back). If you purchased your home between 4-8-2008 and 12-31-2008 you do not qualify for the new tax credit.
The $8,000 tax credit is available for “qualifying” home purchases from 1-1-09 until 12-1-09 (that is correct, December 1st)
The tax credit will reduce the tax you owe dollar for dollar. This is great! A tax credit reduces the taxes you owe, a tax deduction reduces your taxable income,