Darrell Walters

The IRS has officially released Form 5405 for the first time home buyer tax credit included in the American Recovery and Reinvestment Act of 2009.

To determine your eligibility for the $8,000 tax credit you simple fill in the 10 fields on the form. The IRS was nice enough to include 3 pages of instructions to help answer your questions regarding the First Time Homebuyer Credit.

Included in these instructions is the definition of a first time homebuyer. According to the IRS, a first time home buyer is someone that hasn't owned a primary residence in the last 3 years.

The IRS also makes clear the fact that not every first time home buyer will qualify for the tax credit. Would be home buyers will not qualify if they:

1. Acquire the home from a family member
2. Acquire the home from a business in which they are a majority owner
3. Acquire the home from an inheritance or gift

Even if you are eligible for the credit you may not receive the full $8,000 credit. There are two reasons that you may not receive the full credit. First, the tax credit is limited to 10 percent of the purchase price. For example, if you purchased a home for $55,000, you would receive a maximum credit of $5,500.

Second, the tax credit phases out as income levels increase. If you file separately, the credit phases out at $75,000 and at $150,000 for those first time home buyers filing jointly.

If you determine that you are eligible for the tax credit, remember that you must stay in the home as your primary residence for three years or you will be required to pay back the tax credit in full.

For more information regarding how the IRS Form 5405 is applicable to you, I would recommend contacting your accountant. Call or email me if you need a recommendation for a professional accountant.

Image Source: The Mortgage Reports Blog

This week the Federal Reserve met and made big news in the mortgage markets.

In its Wednesday press release, the FOMC made note of a key economic issues, including:

1. Weak sales and difficulty for businesses to obtain credit
2. U.S. trading partners are falling into a recession
3. Consumer sentiment and spending are down

In light of those issues the Fed continues to declare that they will use "all available tools" for economic recovery.

Those tools include leaving the Fed Funds Rate at zero to 0.25% and continuing the current range for an extended period of time. They will also buy up to $300 billion in long-term U.S. Treasuries along with purchasing $1.25 trillion in Fannie Mae and Freddie Mace backed securities.

With a renewed effort to purchase mortgage bonds, this should continue to put pressure on the mortgage market for lower rates. This is potentially great news for home buyers are those looking to refinance.

Source: Parsing the Fed Statement
The Wall Street Journal Online
March 18, 2009

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In this NBC interview with Barbara Corcoran she reminds us that real estate fortunes were made in bad times like this.

This interview will help those of us interested in buying investment property in our current market.

In the short interview, Barbara Corcoran gives pointed advice on buying foreclosure properties, including:

1. The best deal is in your own backyard.
2. Start small.
3. Buy for the neighborhood and not the house.

She also talks about her own experience in investing with rent receipts, managing tenants, and finding a good business partner.

With many banks looking to sell their foreclosed homes and a number of new short sale possibilities, now is a good time for real estate investors to buy.

For more information about financing your investment property purchase email dwalters@integritymtgonline.com.

RealtyTrac recently reported that foreclosures were up 6 percent nationally in February. This report, that 1 in 8 homes are in some level of the foreclosure process, has been greatly reported by the news media.

However, by looking at the USA Today 2008 Foreclosures By State map we can see that the media is only reporting the half truth.

What the USA Today map shows us is that by removing 35 counties in high foreclosure areas such as Florida, California, Arizona, and Nevada, the number of foreclosures nationally decreases by half.

In fact since 2006, in approximately one fifth of the nation, the foreclosure rate dropped.

The truth is that 1 in 8 homes are facing foreclosure. The reality is that this is a nationally statistic and is rarely applicable to your local real estate market.

For more information regarding financing or for a referral to a professional realtor email dwalters@integritymtgonline.com or call 678.648.5626.

Source: USA Today

The U.S. Treasury recently announced specifics of the Obama administration's "Making Home Affordable Plan". The plan, which is intended to assist up to nine million homeowners, has been widely reported by the news media.

Here are a few keys of the announcement:

• Home owners in need of financial assistance receive detailed loan modification guidelines
• Home owners that have lost equity and need to refinance receive very little guidance

First, for the approximately four million home owners that need financial assistance, the government provided comprehensive instructions detailing how the loan modification process will work. The program also offers subsidies to mortgage servicers to modify loans so that at risk home owners will not lose their homes.

In order to determine your eligibility, the government created an online form entitled "Am I Eligible For Making Home Affordable."

The second part of the plan gave very little guidance to the approximately five million home owners that need to refinance but owe more than their home is worth. The Treasury offers only a basic Q&A info sheet and encourages would be borrowers to contact Freddie Mac or Fannie Mae to determine if they are eligible.

These borrowers should be current with their mortgage, have their loans held by Fannie Mae or Freddie Mac, and cannot owe more than 105% of the value of their home. Fannie Mae and Freddie Mac, as opposed to the Treasury, will then set the guidelines for refinancing.

Another interesting aspect of this announcement is that the Treasury isn't as concerned with driving mortgage rates down to 4.5% or lower. The Fed is continuing to purchase mortgage backed securities which is helping to keep rates low, but market forces are in effect.

If you are in the home financing process, whether a new home purchase or refinance, stay the course and close the loan. If mortgage guidelines change in a positive direction later this year, you could always make the necessary adjustments at that point.

Image Source: The Wall Street Journal