Tammy Lehman

Congress has extended and expanded the homebuyer tax credit to include home buyers who have lived in their existing principal residence consecutively for 5 of the last 8 years.

Highlights

First Time Home Buyers can still receive an $8,000 ($4000 married filing seperate) tax credit for homes purchased between December 1, 2009 - April 30, 2010

Current Homeowners can receive a $6500 ($3250 married filing seperate) tax credit for new home purchases provided that they have used their home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.

Credits terminate for purchases after April 30, 2010. Unless there is a written binding contract to purchase a home is in effect prior to April 30, 2010. The purchases would have until July 1, 2010 to close.

Income limits: $125,000 single, $225,000 married

Limitation on cost of Home is set at $800,000

All purchasers ust attach documentation to purchace on their tax return.

For a side by side chart comparison between the 2 tax credits please see below link courtesy of the National Association of Realtors http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf

Chelsea in June 2008 Average Listing Price was $252,700

Chelsea in June 2009 Average Listing Price is $277,600

The sales figures for June, reported by the Ann Arbor Area Board of REALTORS®, show

some stable market activity with increased in sales prices in Ann Arbor, Ypsilanti, Whitmore Lake and

Saline. On a national level, pending home sales show a sustained upward trend, rising for four

consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting

activity. "Lawrence Yun, NAR chief economist, cautions that there could be delays in the number of

contracts that go to closing. "Closed existing-home sales have improved but are coming in

lower than expected because some contracts are delayed or falling through from the

application of new appraisal rules for many transactions," he said. "Rises in contract activity

show buyers are becoming more active even as they face much more stringent loan

underwriting standards. Speedy clarification of the appraisal rules could smooth a housing

market recovery and support the overall economy." This is good news I wish the rules would have been

clarified sooner, May and June closing were definately affected about the new appraisal rules and

guidelines.

The Federal Housing Administration (FHA) will allow homebuyers to apply the new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. This is a fabulous step to further stabilize the housing market by stimulating home sales.

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Previously families could only access this credit after filing their tax returns with the IRS. Now FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. Families will now be able to apply their anticipated tax credit toward their home purchase right away. This will help in two ways it will allow families to purchase their first home but most importantly it will benefit local communities by reducing the amount of inventory and will stabelize home prices.

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment. However lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. This will help homebuyers because it will allow them to shop for the best home price and services using their anticipated tax credit.

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