Maple Grove, MN

Tax Credits Provide Outstanding Opportunities for Home Buyers!

Maple Grove, MN - We've been getting a lot of great questions regarding the changes to the Home Buyer Tax Credits. The big changes have been detailed in the blog posts below. However, for a detailed synopsis on all the changes, check out www.FederalHousingTaxCredit.com.

Two sections that caught my interest were:

Frequently asked questions about the $8,000 first-time home buyer tax credit.

Frequently asked questions about the $6,5000 tax credit for repeat home buyers.

The information on this site is very thorough and clearly laid out. If you have further questions or concerns, please don't hesitate to call.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your next home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

Directly from the National Association of REALTORS®, here are some of the most frequently asked questions regarding the changes to the Home Buyer Tax Credit:

Question: Existing homeowner credit: Must the new house cost more than the old house?

Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

Question: I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phaseout range).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?

Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.

Question: I am an eligible firsttime homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

First-Time Home Buyers and now NON-First-Time Buyers get a Tax Credit.

Maple Grove, MN - In a 98-0 vote on Wednesday, the Senate passed a bill that will extend the $8,000 First-Time Home Buyer* Tax Credit to all purchase contracts signed by April 30, 2010 and closed by June 30, 2010! The previous tax credit was set to expire at the end of this month. With most closing schedules booked solid, and lenders making provisions for after-hours and weekend closing, the environment has been electric! Throw Thanksgiving into the mix, the last Thursday of the month, and there is no cushion for error! If anything were to delay the closing... NO $8,000! Well, we can all breathe a sigh of relief, the safety net is back!

In addition to the tax credit extension, a form of the credit has also been expanded to Non-First-Time Buyers. If a home buyer has owned their current home for at least five years. They will be eligible for up to $6,500. The bill also increased the adjusted gross income cap to $125,000 for single filers ($225,000 for joint filers).

*A First-Time Home Buyer is someone who has not had ownership interest in a residence within the previous three years.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

Low Housing Prices... But for How Long?

In a CNNMoney.com article, "Homes: About to Get Much Cheaper," the argument was made that general home prices nationwide won't bottom until sometime next year. The primary factor being high unemployment contributing to an increase in foreclosures.

But Steve Havig, 2009 President of the Minneapolis Association of Realtors, argues that for the Minneapolis Metro Area, homes are moving fast and this will eventually cause prices to rise. Many price points have already turned into Seller's Markets, with multiple offers becoming a VERY common occurrence.

Take advantage of today's limited offers! The only way to know when we've "hit bottom," is when we look back and see that it's already happened.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

Rates seem to be staying stable. However, the Fed has indicated that the economy may have slight improvement and that it may have to start raising rates in the next quarter or two to stem off inflation. First time buyer credit expires 11/30/09, but there are and still will be homes that are extremely affordable and over the winter months, could be had for less than you would save with the credit.