Keith & Jason Renno

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!

Homes that Qualify

The tax credit is applicable to any home that will be used as a principal 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 principal residence also qualify.

Higher Loan Amounts

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.

Effective Monday, February 9, 2009, Pacific Funding Mortgage Division is pleased to announce the Fannie Mae HomePath Program. The Fannie Mae HomePath Program is specifically for borrowers purchasing a real estate owned (REO) property directly from Fannie Mae. It includes standard fixed and adjustable-rate products, Flex 97, Flex with Subordinate Financing, High Balance and Expanded Approval options. Some benefits include NO Mortgage Insurance above 80% LTV, NO appraisal required, and up to 6% seller concessions. Call or email for more details.

Mortgage Interest Rates*

Rates as of Thursday, 12th February, 2009:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 30 Year Fixed Conventional 4.625% 4.767% $5.14 5.625% 5.788% $5.76 30 Year Fixed FHA 5% 5.145% $5.37 5.875% 6.041% $5.92

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

Interest rates change daily but with Pacific Funding being a direct lender we're confident our rates will remain extremely competitive. DRE# 01206008

The Fed lowered the Federal Funds Rate by .75% to a target range of 0% to .25%, and also lowered the Discount Rate by .75% to .50%. The statement that followed the cut said that the Fed was prepared to take aggressive steps to revive the sagging US economy. But it was a comment from the Fed that sparked yesterday's rally in Mortgage Bonds, when the Fed stated that they will buy as much as $600 Billion of debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage businesses in an effort to lower home loan rates. In the past, Mortgage Bonds have reacted negatively to Fed cuts as fears of inflation come to life. But the Fed went on to say that inflation pressures have diminished appreciably and expects inflation to moderate further in coming quarters.

CALL US TODAY SO YOU CAN TAKE ADVANTAGE OF THESE HISTORIC TIMES!

The mortgage industry received a nice boost because the Fed is going to buy Mortgage Bonds. The Federal Reserve announced that it would purchase $600B of Mortgage-Backed Securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. This brilliant move by the Fed is designed to help increase the availability of credit, while lowering fixed mortgage rates.

Please call us today with any questions or to be Pre-Approved for your Santa Clarita home.

Also, looking to refinance? Now is the time to secure a low rate!!