The bill will allow first time homebuyers and any eligible borrower until September 30^th to close on their home.  So if you recently put your home purchase on the back burner because you didn’t think you would get the tax credit, call your loan officer and get your mortgage moving again!

As always, if you have any questions about the tax credit (or home loans in general) please don’t hesitate to CONTACT US and we will get back to you as soon as possible.  You can also fill out this LOAN OFFICER CONTACT FORM and one of our representatives will review your situation and see if we can help you out!

As of today, to receive the tax credit for first time home buyers, you would need to meet two guidelines in regard to time.  First of all, you had to have your initial contract signed by the end of month in April, and you have to actually close on the transaction by the end of June.  Sounds simple enough, right?

Well, the problem arose when (just like always) people drug their feet and waited until the last minute to find a house or get a home loan.  Consequently, a bevy of loans went to the lenders, and due to the high volume they couldn’t close them in time.  Next thing you know, it is the end of June and literally thousands of loans are in danger of not closing in time.  You would think that there would be a contingency plan in place for just this type of situation, but unfortunately that’s not the case.

Meanwhile, on Wednesday, the Senate approved a three-month extension,which would give buyers until Sept. 30 to close, but it’s attached to another bill which has yet to be passed by the House.  The fact that the House may be in the process of a filibuster doesn’t help one bit.

According to the National Association of Realtors, as many as 180,000 buyers who were hoping to close by the end of June are more than likely to miss the deadline.  Ouch.  Rumors are swirling that if it takes a month to pass the extension home buyers would be able to apply for the credit after the fact, but this has neither been confirmed or denied as of yet.  So keep your fingers crossed, and we will let you all know as soon as we hear anything about it.

If you have questions about the tax credit (or getting a home loan in general) please don’t hesitate to CONTACT US and we will get back to you as soon as possible.  You can also fill out this LOAN OFFICER CONTACT FORM and one of our representatives will review your situation and see if we can help you out. 

This past November, when the credit was initially extended, Senators Johnny Isakson, (R., Ga.) Christopher Dodd, (D., Conn.) both said that the credit would lose its effectiveness to boost house sales if it was continued any further.

“This is the last extension of the home buyer tax credit,” Isakson said. “Tax credits like this only work by creating the sense of urgency to take advantage of it, and to bring the market back.”

Coupled with this, the National Association of Realtors is also not seeking an extension to the credit, although they admit that we may see home sales bolster one last time before its expiration.  NAR spokesman Lucien Salvant was quoted recently as saying “We think this one is going to do the trick… It’s developing right now that it’s going to have the same kind of surge that the last one had in November. When it got down to the deadline on the tax credit, there was an upsurge in pending home sales.”

Ironically, just last month The New York Times reported that “After several disastrous months for home sales across the country, when volume dropped by 23%, the pace appears to be picking up again.”  Of course this surge can be directly attributed to the fact that the credit is set to expire on April 30, and people are moving quickly to take advantage of it.

You may be thinking “whats so wrong with that?”  Well, in the most basic sense it’s like the story of The Boy Who Cried Wolf.  If we constantly change our minds and keep re-extending the credit, eventually consumers will be less moved by our threats of expiration and not take advantage of it at all.

So what do you think?  Should we extend the tax credit again or let it expire?  Let us know!

If you have any questions about the tax credit or anything else mortgage related, please don’t hesitate to CONTACT US and we will get back to you as soon as possible.

But the government didn’t stop there.  Not even close.  The new bill even makes more homeowners eligible to claim the credit on their taxes.  First-time homebuyers (those who haven’t owned a a home in the past 3 years) still qualify for the existing credit of $8000, but now those who have owned (and lived in) a residence for at least 5 years can claim a credit in the amount of $6500!

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

You might be asking “how does this crazy tax credit work?”  Well, the tax credit is applied in relation to the taxes you actually owe. For example, if you owe $8750 in taxes and then apply your $8000 credit, your new tax bill will be reduced to only $750!  If you only owe $500 you will get a credit back in the amount of $7500.  It’s that easy.  As always, you can still amend your 2008 return and take the deduction in 2008, as long as you closed on a home before November 6, 2009.

ONE IMPORTANT THING TO CONSIDER:

If you purchase a home and take advantage of the tax credit, you can’t sell your home within the first 3 years of ownership without the entire amount of the tax credit being recaptured. This means you will be required to give that money back to the I.R.S.  So, if you take advantage of the tax credit, plan to stay put for 3 years.  After that you won’t owe anything!

As always, if you have any questions about the tax credit, don’t hesitate to CONTACT US and we will get back to you blazing fast!  You can’t even imagine how fast we will get back to you!  Just try it!  I dare you!

Here are some of the basic guidelines to see if you might qualify for the tax credit.  First of all, a “first time home buyer” is considered to be someone who has not owned a home for the past three years.  As for the limit you can receive, just look at the purchase price of the home and take 10%.  The max is  capped at $8,000, and is subject to income limitations, meaning that if you are single you would need a modified adjusted gross income of $75,000 or less to qualify for the full credit.  Married couples need a gross income of $150,000. If you happen to make more than that, you may in fact be eligible for reduced credits.  The last main requirement is that you must live in the house as your primary residence for at least 3 years.

Honestly it would be a big mistake to miss out on this opportunity.  I don’t care who you are, but $8000 is a good chunk of change to get for buying a house.  We may never see something like this come about again.

To see a video explaining the tax credit in further detail, please CLICK HERE.

And if you don’t feel like doing the research yourself just CONTACT US and we will find out if you qualify.  Here at dfwmortgageguide.com we will do everything we can to get you in a new house and out of the rent race.