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I get tired of reading all the crap about the $8,000 tax credit, as everyone and their mother want to get you to buy from them. Many times, these so-called professionals are asking you to do what can best be described as tax fraud, so watch out. Here is a Press Release that the IRS just put out a few minutes ago, IR-2009-14...

WASHINGTON - The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

"For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. "This important change gives qualifying homebuyers cash they do not have to pay back."

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

If you still have questions, I suggest talking with the IRS, not a "salesperson". Hopefully this information will keep you from paying a lot of extra money in tax penalties and interest, not to mention keep you out of jail.

That is the question our government would be asking you if they were your waiter. While I was doing this morning's mortgage market update, that thought came to mind as a great way to sarcastically explain the government's actions thus far.

With job losses mounting, the government claims they need to force through another stimulus package which creates more jobs, government jobs that is. And they did exactly that, well not exactly as the amount of jobs they actually will create versus what they claim will not equal each other, and it will be inversely proportional to how much the cost is. In simpler terms, they won't create the promised amount of jobs and it will ultimately cost more than what they said. Also, history shows that growing the government is exactly opposite of what the government should be doing, at least in a capitalistic society. maybe the dessert selection will be socialism?

I don't think there are many out there that didn't have money in the markets in one form or another, 401(k)s, IRAs, etc. With real estate prices already tanked, stocks and even bonds crashing (or about to), virtually everyone approaching retirement right now is facing a new reality. That reality is that they will be forced to work a lot longer than they expected. Those of us whom have more time on our hands, well, chances are you are freaking out about your losses right now, but you will recover in the long run, again based on history.

Don't think history repeats itself? Look again.

Please read the remainder of the post over at Florida Mortgage Report...

On Friday, we saw the release of the CPI (Consumer Price Index) and it showed inflation to be tame overall, actually falling into Bernanke's concerns, deflation. Even when you look at the Core CPI, removing volatile food and energy from the equation, you still only see a small inflationary rate over the last year, just 1.7%. But is the inflation rate really that low, or is it that the CPI is not showing reality, at least not yet?

First off, CPI can be manipulated somewhat, so let's just look at what we buy in the supermarkets everyday. Everywhere you look, if you look closely enough, you can see "hidden inflation." You can see it in the packaging of the products we buy, as the prices have not changed while the packaging has actually shrunk. You may not even notice it, but look again and you will see that a half gallon of ice cream is no longer a half gallon. A jar of peanut butter may have a larger dome in the bottom to hide the fact it is smaller as well. Just take a look at a lot of the products you buy daily and you may very well see that inflation is being hidden right in front of your eyes.

Now, what is inflation in reality? In a post I did a while back, When Lethargic Rabbits Start Running, I discussed inflation in detail along with the real problem today, which is the velocity of money. Please read that post, or even re-read it, before you continue as its key points will be brought up again.

While Bernanke and his buddies keep bringing up deflation, etc. to justify their positions (and desires), reality lurks in the darkness. Bernanke stated in his 2002 speech that he wants nothing more than to debase the dollar in order to create inflation. Evidence shows that the broad money supply (M3) is back on the rise, including growth in the required reserves at depository institutions, hinting that the velocity of money is rising again (aka lethargic rabbits start running), with some believing that double digit inflation may be seen later this year.

Adding to the problem is the fact the Federal Reserve may begin monetizing Treasury debt due to the likely drop off of foreign demand in US Treasuries, which we are already seeing. With the Treasury needing to increase fundings to cover the stimulus package and the additional relief/bailout efforts, the Feds may be buying up Treasuries and will assist in reigniting inflationary pressures. Wonder the truth of that, just read the Fed's last FOMC statement where they outlined it...

"The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets."

With the government printing presses running full-time around the clock, the debasing of the dollar as commanded by Bernanke is in full swing. The only saving grace we have right now is that the US dollar is still the best of the worst paper out there and that is keeping the dollar's value alive, which is keeping much of the commodity prices in check as well. Gold is not taking the bait, though, as it is back over $1,000, so gold traders are signaling inflation is alive and well.

What does this mean for mortgage rates? Mortgage bond traders, you know those mortgage backed securities that I told you are the driving force of mortgage rates, are already signaling their concerns about inflation by preventing mortgage rates from dropping further. As chart patterns solidify, all signs are indicating that mortgage rates will be climbing again and may very well do so even if the Feds buy all the MBS. Of course, that all makes sense since inflation is the arch enemy of bonds, mortgage bonds included, and as their prices drop, yields rise and that translates to higher mortgage rates.

Now, all of you sitting on your butts waiting for those government promised lower mortgage rates should stop laying your faith in our government and just buy that home or refinance before it costs you too much to do so. Those promised lower mortgage rates may very well never be seen!!!

Many of you reading this have been waiting for those government promised mortgage rates of 4.5%, or even lower. Do you realize those rates may never come in actuality? Can you comprehend how much money you are wasting by not refinancing or outright purchasing a property right now?

First, let's look at those of you waiting to refinance. Since rates are currently around 5% and it usually doesn't make sense to refinance with less than a 1% drop in rate, let's put together a scenario. You have a $200,000 loan at 6%, with monthly mortgage payments (not including taxes and insurance) of $1,199. You are now faced with the dilemma of refinancing since rates dropped lower, down into the 4's, but you didn't take advantage of them and they have now risen to 5%. You hear the media talk about lower mortgage rates, namely 4.5%, throughout the headlines and this causes you to wait longer in anticipation. As we near the passage of a new stimulus package, along with headlines from the federal Reserve stating they will keep buying mortgage backed securities, you think to yourself that mortgage rates must be heading lower, so I will wait.

But how much money are you wasting while you wait. Let's say that it takes 6 months to get rates that low (personally I don't think it will happen) and we will leave the tax benefits aside. If you refinanced that $200,000 right now, your monthly payment would drop to $1,074, giving you an extra $125 in cash flow. That $125 can go a long way to paying off high interest debt, or we can simply save it. That means that 6 months down the road, you would have saved $750, right? Actually it is more since when you have a lower interest rate, more money each month goes to the principal, so your savings actually are $1,000, even more if you invested the savings instead, which I highly recommend. It would take you over 15 months to recover those losses if you refinanced into a 4.5% mortgage at 6 months. And what if rates continue to go up? How much more will that cost you in the long run?

What about those of you whom continue to rent, say at $1,000 a month? If you were to buy a home with a $200,000 mortgage at 5% right now, your payment would go up, yes, to $1,074. But what about the tax savings you gain, not to mention the equity building? Let's take a look, of course I need an estimated tax bracket, so we will just use 25%.

If you were to buy the home now, your net after tax payments would go down to $865, yielding a savings of $135 each month. You can adjust your W-4 form with your employer and start reaping that savings immediately as well, instead of lending it to Uncle Sam interest free. So, in 6 months you would have paid down $1,457 in principal, plus had a net savings of $810, for a total savings of $2,267!! Again, what if mortgage rates don't go down or even continue their climb? Are you willing to risk those losses?

The reason I am writing this is not to get you to rush into taking on that new mortgage right now. rather, this is to ignite in you the realization that every decision you make, even not making one, has a profound effect on your finances, especially when it comes to your mortgage. Use your mortgage as a financial tool, and it can be the best investment you ever made. Enter into a mortgage without incorporating into your overall financial and investment plans, it could easily lead to financial disaster, and you could become another statistic or part of the next hews headline. I cannot stress the importance of seeking a genuine mortgage planner, and those are hard to come by as mortgage professionals across the country struggle to survive.

That could be one of the most intriguing, not to mention controversial, questions of the day. Congress and the rest of the government, especially president Barack Obama, believe that it is not the best solution and that everything, no matter the cost, should be done to minimize foreclosures. In other words, they are willing to sacrifice the many to save the few.

Don't get me wrong, it sucks that people have to go through foreclosure, just like it sucks that a large percentage of American homeowners are upside down, owing more than their home is worth. The problem is that most foreclosures these days are happening to those whom deserve it. You heard me right, they deserve it. They likely have bought more home than they should have, over-leveraged themselves to get into the home, or simply didn't plan for the worse. Creative financing is generally not the problem, nor mortgage professionals whom put them in those programs. Sure, there are some exceptions, but not the norm.

We can lay blame on a number of factors, much of which stemmed from our government to begin with. Other factors, and those which are more likely the causes of foreclosures, stem from the way Americans handle their debts, including using their home as an ATM machine and wasting away their equity instead of investing it. The bottom line is, no matter what got them to the point of facing foreclosure, allowing foreclosures versus the government "salvation" programs are likely the best solution and the quickest to get through the problem.

How can allowing a family to be kicked out of their home due to foreclosure be the best solution, even if undeserved?

To read the rest, please head over to Florida Mortgage Report...