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First Time Homebuyer Tax Credit Extended Into 2010! Plus...A New Tax Credit for Certain Existing Home Owners!

First Time Homebuyer Tax Credit Extended Into 2010!
Plus...A New Tax Credit for Certain Existing Home Owners!

It's official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit - Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

  • You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
  • You do not use the home as your principal residence.
  • You sell your home before the end of the year.
  • You are a nonresident alien.
  • You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
  • Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
  • You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.

Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

If you have any questions that fall outside the situations here, give me a call and if you do not have an accountant to speak with, I can refer you to one.

Karl Peidl

Loan Officer

Pleasant Valley Home Mortgage Corp.

305 Harper Drive

Suite 3

Moorestown, NJ 08057

856-252-1200 x1224

856-252-1240 (fax)

877-296-5454 (toll free)

www.pleasantvalleyhomemortgage.com

Are You In for a Trick or Treat? Learn What Remains for Those Seeking a Home or Loan

Are You In for a Trick or Treat?
Learn What Remains for Those Seeking a Home or Loan

Are You In for a Trick or Treat? - Learn What Remains for Those Seeking a Home or Loan

The last weekend in October you were likely treated to a host of Halloween characters, all in search of treats, not tricks. People searching for a new home or a mortgage, whether they donned a costume or not, may have gotten a little of both.

Home loan seekers have been treated to great rates all year long since the Federal Reserve announced it would be purchasing mortgage backed securities, with rates diving below 6.00% since last December. However, if you are looking to buy a home, according to the Case-Shiller index, home prices increased for the fourth straight month, possibly signaling the end to home price declines. So, the question now is what lies ahead?

How About a Little Perspective?
Applications for home loans fell the last few weeks of October as average reported rates for a 30 year fixed rate climbed above 5.00% according to both the Mortgage Bankers Association of America and Freddie Mac. The reason most cited for the decline in applications was increasing rates. Which means that for many people a rate above 5.00% was the cause for a decline in applications.

Perhaps this could be for one of two reasons. The first could be that anyone who could refinance into a sub-5.00% rate had already done so. The second is that people could be thinking that either rates will fall below 5.00% again or that rates in the low 5.00% range are simply not that attractive.

If we were to take a look at home loan rates dating back to 1980, a span of nearly 30 years, the average monthly reported rate for a 30 Year Fixed Rate loan according to Freddie Mac was 9.07%. While the thought of a rate in the 9.0% range seems exorbitant today, today's rates were inconceivable prior to 2001...and especially in October 1981 when rates were a whopping 18.45%!

The chart below shows the average reported monthly interest rates since January 1980. This graph does not take into account the amounts paid to obtain these rates, which were as high as 2.6% in 1984, compared to 0.7% in 2009. The red line represents 7.00%, showing that rates below 7.00% were an abnormality prior to 2002.

The low rates we have seen this decade are largely attributable to the impact of the 9/11 bombing which launched global economies into a tailspin. The result was an aggressive lowering of rates from the Federal Reserve to stabilize the economy. The impact of low interest rates resulted in a rapidly and unsustainable appreciation in property values.

As property values started their return to "normal" we witnessed the plunge into our current recession. We also saw the Federal Reserve get into the mortgage backed securities (MBS) market, becoming the major buyer of MBS this year, driving rates to current and lower levels.

While rates may appear a little less attractive based on where they have been this year, do not let that cloud your judgment. Any home loan rate with a five as the first number followed by a decimal point is a fantastic rate, when all things are considered.

Just as Halloween Has Passed, So Will These Rates
In short, as the Federal Reserve begins to pull back their purchase of MBS, as was started in October, mortgage rates will rise. It is not inconceivable to believe we will see interest rates well above 6.00% at some point in 2010, in particular after March as the Fed is scheduled to wrap up its MBS purchase program on March 31, 2010. Regardless of where we have been, for those wanting a phenomenally low interest rate, acting sooner rather than later is the best decision.

Try These Numbers on for Size
For comparison sake, just to offer a little more perspective, if one were to look at borrowing $150,000 for 30 years, here are some principal and interest payments to consider. A rate of 5.25% would yield a monthly principal and interest payment of $828. The average interest rate of 9.07% since January of 1980 would yield a payment of $1,214 or nearly $400 higher. The highest interest rate of 18.45%, in effect in October 1981, would require a payment of $2,316, a whopping $1,488 a month more. Viewed from a different perspective, one could borrow $417,000 at 5.25% for $13 less a month.

Yes, admit it. We have become spoiled with the best home loan rates we have ever seen. Sure, everyone would love a 30 year fixed rate that starts with the number four. However, do not let rates off their lows deter you from making a decision that could save you thousands of dollars over the time you may have your next loan in effect.

What about Home Prices?
There is no shortage of data one can choose from to base an argument for whether or not home prices have bottomed. One thing is clear though; national data is only relevant for determining overall trends, not local realities. That said, the S&P Case-Shiller index is widely touted as an accurate assessment on both national and local levels for the areas they report on.

Indexed to 100 in January 2000, it is easy to see when home prices began their rise and how they became out of sorts with where they should have been. It's also easy to determine when home prices started their decline in mid-2006.

The chart below, showing a 20 city composite of home prices, also demonstrates what many like to point to in order to demonstrate that home prices have bottomed and are on their way to stabilization and appreciation. The last four months have each marked an increase in month over previous month comparisons; although still lower than the 12 month previous number that is often used for comparison.

The red line indicates the point that many are referencing as the bottom of home prices. Whether you are a buyer looking to take advantage of prices not seen since 2003 or a homeowner looking to refinance, this point of reference could be the trigger you need to make a decision to move forward. No one wants to pay more for a home than they could have and increasing values hopefully will make it possible for more people to rid themselves of higher priced loans.

Whether housing has made a bottom or not, first time home buyers (FTHB) have voted with their wallet, showing that home prices overall are now affordable and they have been buying en masse. Washington and the IRS, FTHBs have accounted for monthly sales volume as high as 50% or more of total sales this year.

What Now?
Whether you are looking to refinance or purchase a home, the best way to determine what you may be eligible for is to speak with a professional. They can assess your situation and help you make a decision that is in your best interest.

However, in order to make the best decision and take advantage of rates that historically will be viewed as the lowest we may see in our lifetime, sooner is better than later to pick up the phone. Regardless of what happens to home prices, we do know that interest rates are on the rise. The Federal Reserve will end their program for purchasing MBS next March putting pressure on home loan rates to rise.

Go on, pick up the phone, call your mortgage professional and say "Trick or Treat!" Sure, you might be a little late according to the holiday calendar but you just might find something to be thankful for.

Karl Peidl

Loan Officer

Pleasant Valley Home Mortgage Corp.

305 Harper Drive

Suite 3

Moorestown, NJ 08057

856-252-1200 x1224

856-252-1240 (fax)

877-296-5454 (toll free)

www.pleasantvalleyhomemortgage.com

Mortgage Rate Update

Mortgage Rate Update


Rate Lock Duration

Lock durations can vary for mortgage financing, but most lenders lock in the interest rate for 60 days from the date the loan application is submitted. As long as the loan is closed within that lock-in period, the lender honors the agreed upon interest rate.

Some consumers are misled by advertising that quotes unrealistically low rates based on 15- or 30-day lock durations. This is called 'short-pricing.' The lender basically knows the borrower doesn't have time to meet their conditions and have all the necessary paperwork in order within that brief time period. As a result, the lender is not obligated to honor the low rate that was listed in their advertising.

For simple refinance transactions, a 45-day lock-in period is more realistic. For purchase transactions, which are typically much more complex, you're much safer going with a 60-day lock, even though the interest rate might be a little higher than the rate you see quoted on billboards and the Internet.

Borrowers should make sure they have a written rate lock agreement, and allow themselves a reasonable amount of time to close their loan. I prefer to lock in all my clients as soon as their application is filed, rather than gamble with predicting short-term interest rate movement. My team and I focus more on assisting clients with long-term goals and management of their mortgage debt to secure a strong financial future.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 29th October, 2009:

Term

Conforming

APR

Payment per
$1,000

Jumbo

APR

Payment per
$1,000

30-Yr. fixed

360

5.000%

5.131%

$5.37

5.250%

5.383%

$5.52

15-Yr. fixed

180

4.500%

4.723%

$7.65

4.875%

5.101%

$7.84

7-Yr. fixed ARM

360

4.250%

4.375%

$4.92

5.500%

5.635%

$5.68

5-Yr. fixed ARM

360

4.000%

4.124%

$4.77

5.375%

5.509%

$5.60

3-Yr. fixed ARM

360

4.375%

4.501%

$4.99

5.375%

5.509%

$5.60

5-Yr. Interest Only

360

4.125%

4.250%

$3.44

5.875%

6.013%

$4.90

FHA 30-year fixed

360

5.000%

5.131%

$5.37

5.250%

5.383%

$5.52

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Karl Peidl
Lincoln Mortgage Company
251 Bellevue Avenue, Suite 102
Hammonton, NJ 08037

609-878-7013

kpeidl@linc-mort.com

www.karlpeidl.com

Pennsylvania: Licensed by the PA Department of Banking as a First Mortgage Banker and licensed pursuant to the PA Secondary Mortgage Loan Act. New Jersey: Licensed by the N. J. Department of Banking and Insurance Maryland: Authorized Mortgage Lender by the State of Maryland Commissioner of Financial Regulation. Florida: Licensed Mortgage Lender by the Florida Office of Financial Regulation. Delaware: Licensed Lender by the Delaware Office of the State Bank Commissioner.





© Copyright 2009. All About News, Inc.

Practical Tips To Enhance Your Financial Freedom

Practical Tips To Enhance Your Financial Freedom

Fixer-Uppers Made Easy

If you've been passing up on buying a home because of the expense of anticipated cosmetic repairs, you're missing out on a great opportunity. Sure, it used to be that if you bought a home and then applied for a home equity loan to pay for repairs, the result would be two separate loans (or worse, a mortgage plus a short-term loan for repairs that often had a much higher interest rate). This is not the case anymore if you qualify for an FHA Streamlined 203(k) loan.

The Department of Housing and Urban Development's FHA Streamlined 203(k) loan allows qualifying home buyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, home buyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser. And the best part is, the additional funds are combined into your mortgage, so you only have to worry about one loan.

There are, of course, rules and guidelines we have to follow, and not every repair qualifies. But if you or anyone you know are interested in taking advantage of this great opportunity, give us a call, and we'll gladly provide you more information about this valuable program.

Unfeasible Fees

Despite the looming crackdown on banks for high overdraft fees, banks are still finding ways to nickel and dime consumers. Here are a couple of painful fees discussed recently by Forbes magazine.

Balance Transfer Fees aren't so balanced when banks charge a fee of between 3 and 5 percent. This means that transferring a balance from a credit card with a 15 percent interest rate to a card with a better rate of 12 percent may not save you anything at all. In fact, depending on your fee, it could cost your more.

Balance Requirement is another costly fee for many consumers with "free" checking or savings accounts. Sure, the bank waives the service charge for maintaining a set minimum balance, but fall below this number and you could be charged up to $8 every time - not to mention the opportunity cost of the money set aside for maintaining your balance in the first place.

Would you pay your broker 25 percent commission? Well, Forbes reported that Bank of America is charging customers from other banks $3 for ATM withdrawals. If your bank charges an additional fee, you're likely paying up to $5, or 25 percent, every time you take 20 bucks from the ATM. Ouch!

School Loan Forgiveness Program

Are you having trouble paying back your federal student loans or you just aren't looking forward to 25 years of monthly payments? Well, according to www.FinAid.com, you could qualify for the government's Loan Forgiveness program, which cancels all or part of qualifying federal student loans based on your work or volunteer service.

Created by The College Cost Reduction and Access Act of 2007, this program is designed to help certain borrowers with their educational expenses. To qualify, you must: perform volunteer work (AmeriCorps., Peace Corps., and Volunteers in Service to America); perform military service; and teach or practice medicine in certain communities.

Ask your Human Resource professional if you qualify or visit FinAid's website.

There's also a Public Service Loan Forgiveness Program that discharges any remaining qualifying educational debt after 10 years of full-time employment in certain positions of public service. Jobs include: emergency management, government (excluding members of Congress), military service, police officers and fire persons, public health workers (including nurses, nurse practitioners, nurses in a clinical setting, and others), public education, early childhood education, social work in a public child or family service agency, and many more.

Social Security Suffers

For the first time in 35 years, it's expected that Social Security beneficiaries will receive no cost of living adjustment (COLA) increase next year. Since the automatic COLA went into effect in 1975, beneficiaries have never failed to receive an increase, raising concerns that millions of beneficiaries will suffer a lowered standard of living since, according to The Kaiser Family Foundation, Medicare Part D (prescription plans) and Medicare Part C plans are expected to increase. In addition, about 60% of Medicare Part D plans are expected to have an annual deductible in 2010 while only 45% had an annual deductible last year.

To address these concerns, legislation has been introduced to provide an increase independent of the automatic benefit adjustment, including H.R. 3557, which seeks to provide a 2010 benefit increase based on the average COLA from the past 10 years. The projected increase in Social Security benefits would average $35 per month, or $420 annually. Congress is also considering creating a one-time payment of up to $250 for singles and $500 for couples.

At the time of the writing of this article, however, no such bills have passed, so it's important to review these programs carefully.

Pennsylvania: Licensed by the PA Department of Banking as a First Mortgage Banker and licensed pursuant to the PA Secondary Mortgage Loan Act. New Jersey: Licensed by the N. J. Department of Banking and Insurance Maryland: Authorized Mortgage Lender by the State of Maryland Commissioner of Financial Regulation. Florida: Licensed Mortgage Lender by the Florida Office of Financial Regulation. Delaware: Licensed Lender by the Delaware Office of the State Bank Commissioner.




Karl Peidl
Lincoln Mortgage Company
251 Bellevue Avenue, Suite 102
Hammonton, NJ 08037

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© Copyright 2009. All About News, Inc.

Mortgage Rate Update


Mortgage Rate Update

Interest Rates Change Daily

Interest rates change constantly, but it is important to know that rates are cyclical. If rates are currently at historical lows then we know there is a strong probability rates will go up again, and vice versa. Certain economic indicators such as unemployment data, consumer price index, retail sales data, and consumer confidence all have an effect on mortgage interest rates. But the key factor to watch is the relationship between stocks and bonds.

When the economy is slow and the stock market is "bearish," many investors move money out of stocks and into bonds and mortgage-backed securities. This causes mortgage interest rates to go down. When the economy is doing well, the stock market rallies and is considered "bullish." Investors then have a tendency to move their money out of that safe haven of bonds and mortgage-backed securities and back into stocks. As a result, mortgage interest rates go up.

My team and I keep a close eye on mortgage interest rates at all times in an effort to alert our clientele of opportunities to obtain lower financing. Call us for a free evaluation of your current loan program.

Mortgage Interest Rates for Fixed Rate Mortgages*

Rates as of Thursday, 22nd October, 2009:

Term

Conforming

APR

Payment per
$1,000

Jumbo

APR

Payment per
$1,000

30-Yr. fixed

360

5.125%

5.257%

$5.44

5.250%

5.339%

$5.52

15-Yr. fixed

180

4.500%

4.723%

$7.65

4.750%

4.900%

$7.78

7-Yr. fixed ARM

360

4.125%

4.250%

$4.85

5.500%

5.590%

$5.68

5-Yr. fixed ARM

360

4.000%

4.124%

$4.77

5.375%

5.465%

$5.60

3-Yr. fixed ARM

360

4.625%

4.753%

$5.14

5.375%

5.465%

$5.60

5-Yr. Interest Only

360

4.000%

4.124%

$3.33

5.875%

5.967%

$4.90

FHA 30-year fixed

360

5.000%

5.131%

$5.37

5.250%

5.339%

$5.52

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Karl Peidl
Lincoln Mortgage Company
251 Bellevue Avenue, Suite 102
Hammonton, NJ 08037

609-878-7013

kpeidl@linc-mort.com

www.karlpeidl.com

Pennsylvania: Licensed by the PA Department of Banking as a First Mortgage Banker and licensed pursuant to the PA Secondary Mortgage Loan Act. New Jersey: Licensed by the N. J. Department of Banking and Insurance Maryland: Authorized Mortgage Lender by the State of Maryland Commissioner of Financial Regulation. Florida: Licensed Mortgage Lender by the Florida Office of Financial Regulation. Delaware: Licensed Lender by the Delaware Office of the State Bank Commissioner.






© Copyright 2009. All About News, Inc.