Thursday, March 12, 2009

First-time Buyer's Guide to Understanding the Federal Income Tax Credit

Are you afraid to buy a home now worrying that you might not be able to afford it because of the crash in our economy? No need to worry! The IRS new stimulus plan might help. This policy, effective for purchases on or after January 1, 2009 and before December 1, 2009 has become a hot topic.

Let us make it simple for you...It is a great time to buy a home now! Not only are interest rates lower than 5%, there is also an offer of tax credits. $8,000 is the maximum amount a homeowner can get for credit, no matter how much the purchased home may be. We know that last summer, the refundable credit required a repayment. But the new stimulus plan promises nothing but a refund. There is no repayment by the homebuyer whatsoever. It is just pure heavenly income tax credit.

And who may be qualified for this income tax credit?

  • Anyone who purchases a single-family residence, as long as it is the homebuyer's principal residence. This includes condominiums, townhouses, or a co-op.
  • First-time homebuyers. Meaning, those who have not owned a home in the 3 years before purchasing an eligible property.
  • A homebuyer who utilizes revenue bond financing.
  • For a full refund in tax credits, the homebuyer may have a total annual taxable income of no more than $75,000 ($150,000 on a joint return).
  • For a reduced tax credit, the homebuyer may have a total adjusted income up to $95,000 ($170,000 on a joint return) or those who qualify as a first-time homebuyer. Also for the first-time homebuyers, if the $8,000 is greater than the tax you owe, then you will get a refund check for the difference.
  • A home buyer meeting the basic requirements who purchase before December 1, 2009

Obviously, there are many homebuyers who will benefit from these tax advantages when buying real estate in 2009. We advise prospective home buyers to talk with their tax professional first and then see us about finding a home before the deadline. In fact, this new home buying incentive may already be taking effect. According to the California Association of Realtors, buyers took advantage of a 41 percent decline in the median price of an existing home as California home sales doubled in January from a year earlier. We hope this guide will help those considering the purchase of a home in 2009. Please contact us with any further questions.

Monday, March 9, 2009

Home Buying for Veterans – Understanding The VA Loan Program

Many Veterans, including those returning from overseas need assistance in transitioning to civilian lives. Buying a home is often a first step in doing this and VA loans is one way our great nation helps them to do just that. Here are some important facts about VA loans that veterans, both old and young, need to know.

The Veterans Administration (VA) does not make loans. It guarantees loans made by an approved institutional lender, much like the FHA. The main differences between the two government programs are:

1) Only an eligible veteran may obtain a VA loan.
2) The VA does not require a down payment up to a certain loan amount.

Both programs were created to assist people in buying homes when the conventional loan programs do not fit their needs. When a veteran finds a home they wish to purchase, they will need to see a VA approved lender who will make the application and process the loan for them.

Important Facts About VA Loans

- A veteran must possess a Certificate of Eligibility, which is available from the VA, before applying for a VA loan. The certificate will show the veteran’s entitlement, or right to obtain a loan.

- A major benefit of a loan guaranteed by the VA is that no down payment is required on many of the loans. There is a maximum loan amount that is allowed for a zero down type of loan, and a very reasonable formula for calculating the minimum down needed for higher loans.

- If a veteran sells his or her home and the buyer gets a new loan that pays off the VA loan, then the veteran may restore the VA eligibility and apply for a new VA loan.

- A VA appraisal is called a Certificate of Reasonable Value (CRV). A loan may not exceed the value established by the CRV.

- Maximum loan amounts vary by state and by local community values, but there is no upper maximum price that a veteran can pay for a home.

Veteran Must Live In The Home

For VA loans the veteran must live in the home, there are no exceptions to this rule. Other criteria apply for these loans, and points are charged to the seller, which can be a big drawback. Also, there are no prepayment penalties allowed on VA loans and the seller usually has to pay discount points on these loans, unless it is a refinance. Many different types and terms of loans, also known as length of time to pay back the loan, are available for VA buyers.

Special Advantages for VA Loans

Even if you have foreclosure in your past, the VA has special programs to help buy another home but you have to contact them first to see if you qualify. Two of the biggest advantages are that there are no mortgage insurance premiums required and assumable loans are available.

We would like to extend our sincerest gratitude and thank all of our veterans, both young and old, for serving our country. The United States truly is the greatest nation in the world as evidenced in part by programs like VA home loans. Our hope is that this information will educate veterans about all the home buying and loan opportunities available to them. It is our desire that veterans will take advantage of this liberty. If you are a veteran or a family member of a veteran and have any further questions regarding VA loans, please contact us.