Bill Kamboukos

HOME BUYER TAX CREDIT REVISED:

$8,000 TAX CREDIT TO TAKE EFFECT WITH NEW BILL

After debate over the final dollar amount, the new economic stimulus bill awaiting President Obama's signature on Tuesday will contain an $8,000 tax credit. First-time buyers can claim the credit worth $8,000 or 10% of the home's value, whichever is less either on their 2008 or 2009 taxes.

This credit will be refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pay when they filed their returns - was less than that amount.

To qualify for the credit, potential home owners must have purchased January 1, 2009 or later and will have up until November 30, 2009 to close on their new home. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. Although higher-income buyers may receive a partial credit.

In addition, applying for the credit will be easy as home buyer will be able to just claim it on their return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

This new plan improves on the current $7,500 tax credit, which was passed in July and was more of an interest free loan than an actual credit. But it did not go as far as a proposed a $15,000 non-refundable credit for all homebuyers.

According to the National Association Realtors, the $8,000 credit will bring an additional 300,000 new homebuyers into the market between now and its expiration on November 30, 2008 which should somewhat improve the housing market.

In addition, a carryover effect may occur because each first-time homebuyer sale will lead to two more trade-up transactions down the line. As it will allow more existing sellers to sell their homes to potential first time buyers. The true impact is yet to be determined, but the credit is a step in the right direction to help further stimulate the housing market.

For more information on home buyer tax credits, current mortgage programs, rates and more, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

$15,000 Home Buyer Tax Credit:

What We Know So Far

DO HOME OWNERS WHO BOUGHT HOMES ALREADY AND QUALIFIED FOR THE $7,500 TAX CREDIT, QUALIFY FOR THIS $15,000 CREDIT AS WELL? - Most likely the answer is no, because the effective date of the new amendment is effective date the new provision will be enacted. This means that if you already purchased a home, you will probably not qualify for the new program.

WHAT WOULD HAPPEN TO THE EXISTING $7,500 TAX CREDIT? - The current $7,500 new home buyer tax credit will be replaced by the proposed $15,000 credit and this new provision applies to all home purchases. So essentially, no one will be able to take the $7,500 tax credit any longer once the new credit is enacted.

WILL THIS ACTUALLY PASS? -We should know this answer very soon as it is a component of the new version of the economic stimulus package. The House of Representatives has already passed its version of the stimulus bill, and the White House is putting pressure on the Senate to do the same. However, there are still hurdles to go through to pass the $900 billion package. However, chances are that if and when a version of this stimulus package is passed, this new home buyer tax credit will remain in the bill and passed into law.

DOES THE NEW CREDIT HAVE TO BE PAYED BACK LIKE THE CURRENT CREDIT? - In the case of the new $15,000 home buyer tax credit, it will not have to be paid back. This will be in contrast from the current $7,500 first-time home buyer credit, which was essentially an interest free loan.

WHAT TYPES OF RESTRICTIONS ARE ON THE NEW HOME BUYER TAX CREDIT? - The new tax credit would be limited to primary residences, but will not come with an income restriction. In addition, you must occupy the home for at least two years as your primary residence and will apply to any home, meaning a condo, a house, foreclosed, new or previously owned property.

WHAT IS THE TAX LIABILITY RESTRICTION? - One potential drawback to the $15,000 tax credit for lower income families is that the tax credit will also correlate to your amount of tax liability. Your tax liability is the amount of taxes paid out to the government, after your deductions. For example, if you had $9,000 withheld from your paycheck for the entire year and received a $1,000 refund at the end of year from the government, your tax liability would be $8,000 and you would be able to only receive that amount back from the tax credit. However, you could also split the credit over two years, meaning you could take the additional $7,000 in left over credit the following year if you had that much tax liability the following year.

IF I PURCHASE A HOME IN 2009 CAN I TAKE THIS CREDIT FOR MY 2008 TAXES? -You will be able to take the credit toward your 2008 taxes, even if you purchase the home in 2009.

For more information on current mortgage programs, home buyer incentives, rates and more, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Lower Rates For Home Loans:

Purchasers and Refinances Benefit From Interest Rates, But Is It Time For You?

The recent talk of the town in the mortgage and real estate industry has been lower home loan rates. Though rates currently sit above the recent lows, there has been a substantial enough move downward in interest rates to propel many new applicants to attempt to refinance their current home loans. As well as to initiate home buyers to make a move to purchase.The question may now be is it the right time for you to make a move as well?

Home Purchase

There are many opinions out there in regard to the purchase of a home and the current real estate market. With much of what is being reported, just speculation at this point. What we do know is that interest rates are near historical lows currently and the long term probability of them staying low, say this time next year is perhaps unlikely.

Also, the $7,500 first time home buyer tax credit is due to expire on June 30, 2009 and there have been no talks of an extension on this one time credit.

With the market full of low priced properties and opportunities for deals on many properties, such as bank owned homes. There is also the ability for home purchasers to drive down their new payments even lower.

Verdict: If you are a home a buyer and looking to purchase a home to live in, now may be the time to purchase to take advantage of low rates, low prices and tax advantages while they still exist.

Home Refinance:

As interest rates have dropped the amount of home loan applications has swelled with home owners looking to refinance into a lower interest rate loan, with a fixed term. The question is, is this the right time to refinance for you?

First, you must make sure that you can qualify for a home loan. Mortgages are not impossible to obtain in today's market, but you must be able to document income, have a decent credit score and some equity in your home to qualify for the best interest rates.

Second, if you have an adjustable rate mortgage, now is the time to refinance out of it into a fixed rate loan. Even if you still have a little time left until the adjustment period of your loan begins, there is no telling what will happen with rates going forward. And history tells us that rates will rise again sooner or later, making this the time to refinance if you have a fixed rate loan.

Additionally, if you are looking to take out a new mortgage to consolidate debt, now is an opportune time. You will pay a slightly higher rate for this type of mortgage, but that slightly higher rate may be even higher if you wait, since Fannie Mae and Freddie Mac have implemented additional price adjusters soon to hit these types of mortgages.

Finally, if you are just looking to refinance for a lower interest rate you must first evaluate your situation. All refinances will include some form of closing costs or if not you will pay a higher interest rate for a no cost loan. Most refinances will involve closing costs for the lowest rates and as such you must factor the cost of the refinance, against the monthly savings and the amount of time you will stay in the home.

For instance, if you were to recoup the cost of the loan over the next 12 months (via the monthly payment savings) and planning on staying in your home for the next five years, than this would be a worthwhile refinance.

Verdict: All situations will vary, but if you are looking to refinance from an adjustable rate loan to a fixed rate, do a debt consolidation loan or can recoup the cost through monthly savings in a sufficient time frame, then a refinance may be the best option for you.

There are no clear cut answers as to where interest rates are heading going forward. However, if the mortgage market has taught us anything it is that is unpredictable in nature. Given that fact, it may be time to look into taking advantage of low interest rates while they last.

For more information on current mortgage programs, rates and more, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com

Second Half Of Funds Should Be Aimed At Main Street

$700 Billion TARP Funds To Now Be Used For Consumers

With today marking the inauguration of Barack Obama, new is that his presidency will focus more on helping consumers, local governments and businesses than banks as his administration deploys the second half of the $700 billion rescue fund, said Lawrence Summers, the president- elect’s top economic adviser.

“The focus isn’t going to be on the needs of banks; it’s going to be on the needs of the economy for credit,” Summers said on CBS’s “Face the Nation” program. Obama’s team will manage the Troubled Asset Relief Program “in a very different way,” he said.

In fact, Summers’ remarks indicate banks and their executives face tougher scrutiny in seeking money from the bailout after the Obama administration takes office Jan. 20. The TARP may be redirected to address “housing to prevent foreclosures,” “automobile loans, consumer credits, small business, municipalities,” he said.

On the other hand, Treasury Secretary Henry Paulson committed most of the initial $350 billion of the TARP to capital injections in exchange for warrants and preferred equity. Summers said banks will be subject to more oversight in their use of the funds.

“There’s going to be a very different level of rigor in the evaluation of institutions, the plans that are designed, and the expectations for institutions,” Summers said. “Institutions that are healthy, that don’t need it just to survive, are going to be expected to lend above their baseline levels as part of this program.”

Following up, Treasury Secretary-nominee Timothy Geithner and his advisers will be “carefully” monitoring Wall Street bonuses of banks that have participated in the TARP, Summers said.

Bank Take Overs

Summers also said, “What’s not going to happen is the funds that could be supporting increased lending are going to be used to finance acquisitions that may serve a bank but don’t serve the country”. The new administration will also prevent banks that accept government funds from pursuing acquisitions to the detriment of increasing lending, he said.

Summers said the results of TARP so far have been “unsatisfactory,” a sentiment echoed by another Obama adviser speaking today in a separate interview.

“It’s clear that it has to be administered in a much different way,” David Axelrod Obama’s chief political adviser, said in an interview on ABC’s “This Week” program. “The point is to get credit flowing again to businesses and families across the country -- that hasn’t happened with the expenditure of the first $350 billion.”

$825 Billion On The Way?

Summers said he is confident Congress will pass a spending plan, coupled with tax cuts, similar to the $825 billion package that Obama has offered. Such a stimulus has been forecast to create 3 million to 4 million jobs, he said.

“I expect the program will pass within in a month,” Summers said. “He is going to do what is necessary to get us out of this economic hole.”

As the U.S. economy showed further signs of buckling, according to reports last week, it is clear there is still work to be done.

“There’s almost no question that the economy is going to decline for some time to come,” said Summers, who served as Bill Clinton's last Treasury secretary. “Our errors are not going to be of standing back.”

For more information on legislation that may affect you as a potential or current home owner, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com