Bryan Schroeder

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

Dear Local Real Estate Agents

You’re faced with the challenge of informing your readers about how the rapidly changing real estate and credit markets are affecting them locally. I’m here to help.

I’ve worked in the mortgage industry for 15+ years, and I’ve funded many loans in my career – and I’ve seen this market hit many highs and survive some tough lows. Let me be your resource as you cover this rapidly changing market.

In February, the President signed into law the Economic Stimulus Package in an effort to revive our battered economy. I wanted to be sure you knew that the legislation is about more than just rebate checks; it can also have a positive impact on current and future homeowners.

Many readers may not be aware of how this bill could create opportunities to save money on their home financing. Here are some of the questions I believe your readers should consider, and I would be happy to lend my experience and expertise to help explain how our community may be able to take advantage of the temporary rules created by this important legislation:

What impact does the Stimulus Package have on borrowers?

“The Economic Stimulus Act of 2008 is a $168 billion plan intended to jumpstart the sliding U.S. economy. The new bill is designed to help certain ‘high-cost regions’ of the struggling housing market by

1) Temporarily increasing the ‘conforming loan limit’ from $417,000 to as high as $729,750 in specified areas; and

2) Temporarily increasing the size of loans the Federal Housing Administration
(FHA) can insure from $362,000 to as high as $729,750 in specified areas.”

What do these new provisions mean for our community?

“For those looking to purchase or refinance real estate in a ‘high-cost region,’ this is great news. These temporary increases could help consumers avoid the higher interest rates associated with ‘non-conforming’ or jumbo, loans – which are currently more than a point higher than rates on conforming loans. This means more consumers will be able to take advantage of great real estate deals and get more home for less money. In fact, many homes that some borrowers could not afford just a few years ago could now be within reach, thanks to this temporary government program.

The Stimulus Package is also very good news for homeowners looking to refinance out of their expensive jumbo loan and into a new ‘conforming loan.’ While the legislation limits new mortgage contracts to 2008, it does not exclude the refinancing of any past mortgages. This means that, if borrowers qualify, they can take advantage of the new conforming loan limits no matter how many years have passed since they obtained their mortgage – as long as they get it done before the end of 2008.”

How is a high-cost region determined? And does our community qualify as one?

“A high-cost region is typically determined by the median value of its homes. The median value is the specific price that is halfway between the least expensive and most expensive home sold in an area over a given period of time. Not to be confused with the average home price, the median home price is the price at which half of all buyers bought more expensive homes and half of all buyers bought less expensive homes. If that sounds confusing, don't worry. It is the responsibility of the Department of Housing and Urban Development (HUD) to determine and publish what the median home price is for regions across the country. I can easily access and interpret these figures for our local residents, and help them calculate the new conforming and/or FHA loan limits within minutes.”

I look forward to hearing from you.

The Big Score by Linda Ferrari Like it or not, credit scores are a major deciding factor in the outcome of our financial futures. High credit scores not only open doors for buying a home and financing cars at preferred rates, they can make it easier to save more money and put even more away for retirement.

Low credit scores, however, impair a consumer's ability to function in today's society, making it difficult to get insurance, an apartment, a cell phone, and even a job. And it is only going to become more and more invasive in the future.

Let's face it, there are far too many self-proclaimed credit and financial experts out there offering credit improvement strategies and tips that don't work, have never worked, and sometimes even make things worse. You and your clients need accurate and reliable information about credit and credit repair from experts you can trust.

That's why we're recommending The Big Score: Getting It and Keeping It, Credit Management for Life by Linda Ferrari. As president of Credit Resource Corp, Linda Ferrari has dug through 14,000 credit reports, and has helped thousands of consumers from all walks of life understand what goes into the credit score and how to turn them around.

A national expert in the credit education and scoring industry, Ferrari has seen it all, has fixed it all and, in her book, she tells it all in a comprehensive hands-on guide to credit improvement and lifetime management that you and your clients will truly appreciate.

"The Government may bail out corporate credit," says Linda Ferarri. "But, as a consumer, you are on your own. I wrote this book to help consumers help themselves, and believe me, they need this information."

Help your clients reach all of their financial goals and needs. Give them The Big Score by Linda Ferrari. To purchase the book, visit www.LindaFerrari.com. If you'd like to read a sample chapter before making a commitment, click on "Inside The Big Score" from the site.

If you'd like to discuss this book further and how we can utilize it to increase our businesses together, don't hesitate to give us a call. We'll gladly share a copy of Linda Ferrari's Special Report on credit improvement, an informative 20-page document that is a great introduction to the concepts Ferrari shares in her book.

Did you know the word blog was recently the most looked-up word in Merriam Webster's online dictionary? Clearly, people are interested in blogs – but why?

The word blog is short for Weblog, and refers to a website that contains an online journal with views, reflections, comments, and often hyperlinks provided by the writer. A blogger is the one doing the writing, and blogging is the act of writing itself. Blogs are utilized for anything and everything: breaking news and commentary, business, personal journaling, educational resources, and political observations.

Quickly becoming a mainstream method of communicating, blogging is a dynamic, flexible tool that requires minimal technology know-how and little-to-no cost to maintain. In fact, many in the business world are now using blogs as an essential part of growing their network. Where a website is fairly fixed and can become somewhat boring, a blog allows you to become personal with those you want to do business with. In this way, bloggers are more visible and can gain credibility as experts in their field. Blogging is a way to differentiate yourself from the competition.

According to Michael Sippey, General Manager of TypePad, people read blogs to find out the point of view and connect with the writer. This is key to those in relationship businesses, as a blog can take an informal tone yet still pass along valuable information to the reader. Your passion and knowledge will translate into loyalty from those who read your blog. This, along with your passion, is what will sell your services. And as blogs are becoming more common in the business world, more customers are using them as a shopping tool. They want to feel connected to the professionals that will help them with real estate, financial, and legal needs.

So you want to build your business by blogging? It's easy and effective – here's how it's done.

There are two main components of a successful blog: interesting content and getting the right people to look at it. Most people in sales are good at talking. That's why they are good at sales. Don't get hung up about the writing being "perfect." Use your own voice in your blog, describe your specialty, products and services and how you can benefit your customers. Post tips that are valuable to those you are trying to attract to your blog. You can include success stories and testimonials from clients. Post links to articles you liked (or didn't like) with a few comments. Your blog can also contain pictures, audio, PowerPoint and Excel files, video, and links anywhere on the web you want people to go.

To get your blog read, invite everyone you speak with to visit and comment. Make sure every marketing piece you send out has at least one line inviting them to visit your blog. Add the blog web address to your business card, and to your e-mail signature. Put a link on your web-site. To help increase return traffic, readers can even subscribe, and then be notified when you have a new post.

Search engines like blogs, and you will notice your rankings improve as you increase traffic to your blog. You can also register your blog for free with many blog-specific search engines. Post comments on other blogs related to your field and your comment will link back to your site. The more you can utilize this cost-effective tool, the quicker you will see an increase in clients and sales.

www.WordPress.com and www.TypePad.com are two well-established blogging services that can quickly and easily walk you through the process of setting up your own blog, and both offer many tools to make your blog successful.