http://online.wsj.com/article/SB125486796534968995.html?mod=rss_whats_news_us_business
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Showing posts with label credit. Show all posts
Showing posts with label credit. Show all posts
Tuesday, October 6, 2009
Fannie, Freddie to Aid Mortgage Banks
Fannie Mae and Freddie Mac are preparing to introduce a program aimed at helping independent mortgage banks acquire the short-term credit they need to make home loans.
Fannie, Freddie to Aid Mortgage Banks
Fannie Mae and Freddie Mac are preparing to introduce a program aimed at helping independent mortgage banks acquire the short-term credit they need to make home loans.
http://online.wsj.com/article/SB125486796534968995.html?mod=rss_whats_news_us_business
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This article was sent using my Viigo.
For a free download, go to http://getviigo.com
Sent from my Verizon Wireless BlackBerry
Wednesday, June 24, 2009
Dumping Your Debt
Dumping your debt
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Dumping Your Debt
Dumping your debt
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Millions of Americans set a goal for and succeed in paying off their credit card debt each year – is this one of your goals? With a little determination and a plan, you can take control of your credit, and improve your credit score in the process. Here’s how:
Cut the Cards
The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely. Try one (or all) of the tips below to break this habit:
a) Carry Cash – give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending
b) Use debit, not credit – for times when only plastic will do, use your debit card instead of a credit card.
c) Out of sight, out of mind – keep your credit cards at home and you’ll be less likely to use them.
d) Think strategically – decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have).
Lower Rates/Cut a Deal
Once you’ve got your spending under control, focus on reducing your interest rates:
a) Negotiate rates – call up your credit card issuers and ask for a better rate. Explain that your plan to transfer the balances to another card unless your rates are lowered. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.
b) Transfer balances – consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print and pass up offers from cards with hidden fees or costs.
c) Shop around – do a little investigative work to find the best card offers. Check out www.cardweb.com for current offers.
Reduce Your Debt
Now it’s time to start chipping away those balances. Develop a strategy and make it happen, using the following tips:
a) Sort it out – make a list of each credit card you have, its existing balance, minimum payment and interest rate. Use any of the online calculators listed here to help you determine which card to pay off first: CNN Money Magazine at http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp or Quicken at http://www.quicken .com/planning/debt/
b) Develop a plan – pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cares. This additional payment on the high-rate card will help to pay off the principal faster.
c) Build a debt snowball – once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum on the card with the next highest interest rate (this is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you are debt-free.
d) Have a back-up – keep one low-interest card put away for emergencies, but maintain a zero monthly balance at all times by paying it off when due.
Think Ahead
Now that you’re debt-free, start thinking even further ahead:
a) Invest – begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.
b) Visualize – spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase and looking forward to a comfortable retirement!
TIP: Call 1-888-5-OPTOUT to stop the flood of credit card offers from reaching your mailbox.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Tuesday, June 23, 2009
10 Mistakes Buyers Make When Purchasing a Home
1. Making an offer on a home without being prequalified: Prequalification will make your life easier - so take the time to speak with a lender. Their specific questions in the regard to income, debt. etc., will help you determine the price range you an afford. It is an important setup on the path to home ownership.
2. Not having a home inspection: Trying to save money today can end up costing you tomorrow. A qualified home inspector will detect issues that many buyers can overlook.
3. Limiting your search to open houses, ads or the internet: Many homes listed in magazines or on the Internet have already been sold. Your best course of action is to contact a Realtor. They have up-to-date information that is unavailable to the general public and are the best resource to help you find the home you want.
4. Choosing a real estate agent who is not committed to forming a strong business relationship with you: Making a connection with the right Realtor is crucial. Chose a professional who is dedicated to serving your needs-before, during and after the sale.
5. Thinking there is only one perfect house out there: Buying a new home is a process of elimination, not selection. New properties arrive on the market daily, so be open to all possibilities. Ask your Realtor for a comparative market analysis. This compares similar homes that have recently sold, or are still for sale.
6. Not considering long-term needs: It is important to think ahead. Will the home suit your needs 3-5 years from now?
7. Not examining insurance issues: Purchase adequate insurance. Advice from an insurance agent can provide you with answers to any concerns you may have.
8. Not buying a home protection plan: This is essentially a mini insurance policy that usually lasts one year from the close of escrow. It usually covers basic repairs you may encounter and can be purchased for a nominal fee. Talk to your agent to help you find the protection plan you need.
9. Not knowing total costs involved: Early in the buying process, ask your Realtor or lender for an estimate of closing costs. Title company and attorney fees should be considered. Pr-pay responsibilities such as Homeowner Association fees and insurance must also be taken into account. Remember to examine your settlement statement prior to closing.
10. Not following through on due diligence: Buyers should make a list of any concerns they have relating to issues such as; crime rates, schools, power lines, neighbors, environmental conditions, etc. Ask the important questions before you make an offer on a home. Be diligent so that you can have confidence in your purchase.
Oh, by the way...whenever you come across people who are thinking about buying or selling a home and who would appreciate the kind of service I offer, I'd love to help them. So, as these people come to mind, just give me a call with their name and business phone number. I'll be happy to follow up and take care of them.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
10 Mistakes Buyers Make When Purchasing a Home
1. Making an offer on a home without being prequalified: Prequalification will make your life easier - so take the time to speak with a lender. Their specific questions in the regard to income, debt. etc., will help you determine the price range you an afford. It is an important setup on the path to home ownership.
2. Not having a home inspection: Trying to save money today can end up costing you tomorrow. A qualified home inspector will detect issues that many buyers can overlook.
3. Limiting your search to open houses, ads or the internet: Many homes listed in magazines or on the Internet have already been sold. Your best course of action is to contact a Realtor. They have up-to-date information that is unavailable to the general public and are the best resource to help you find the home you want.
4. Choosing a real estate agent who is not committed to forming a strong business relationship with you: Making a connection with the right Realtor is crucial. Chose a professional who is dedicated to serving your needs-before, during and after the sale.
5. Thinking there is only one perfect house out there: Buying a new home is a process of elimination, not selection. New properties arrive on the market daily, so be open to all possibilities. Ask your Realtor for a comparative market analysis. This compares similar homes that have recently sold, or are still for sale.
6. Not considering long-term needs: It is important to think ahead. Will the home suit your needs 3-5 years from now?
7. Not examining insurance issues: Purchase adequate insurance. Advice from an insurance agent can provide you with answers to any concerns you may have.
8. Not buying a home protection plan: This is essentially a mini insurance policy that usually lasts one year from the close of escrow. It usually covers basic repairs you may encounter and can be purchased for a nominal fee. Talk to your agent to help you find the protection plan you need.
9. Not knowing total costs involved: Early in the buying process, ask your Realtor or lender for an estimate of closing costs. Title company and attorney fees should be considered. Pr-pay responsibilities such as Homeowner Association fees and insurance must also be taken into account. Remember to examine your settlement statement prior to closing.
10. Not following through on due diligence: Buyers should make a list of any concerns they have relating to issues such as; crime rates, schools, power lines, neighbors, environmental conditions, etc. Ask the important questions before you make an offer on a home. Be diligent so that you can have confidence in your purchase.
Oh, by the way...whenever you come across people who are thinking about buying or selling a home and who would appreciate the kind of service I offer, I'd love to help them. So, as these people come to mind, just give me a call with their name and business phone number. I'll be happy to follow up and take care of them.
Rob Alley, Realtor of The Avery Group at Roy Wheeler
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
Monday, February 23, 2009
'Stimulus' and 'Stability' Equal Help for Homeowners
'Stimulus' and 'Stability' Equal Help for Homeowners
Here is an overview of some benefits of the Economic Stimulus Plan for 2009 and the Homeowner Affordability and Stability Plan that may impact you.
Stimulus Plan - Tax Credit for Homebuyers
The $787 Billion stimulus bill is made up of tax cuts and spending programs aimed at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. One of the major benefits of the plan is a tax credit for new homebuyers. According to the plan, 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.
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 you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.
Better still, the tax credit is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you're liable for $4,000 in income tax, you can offset that $4,000 with half of the tax credit... and still receive a check for the remaining $4,000!
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
The tax credit is applicable to any home that will be used as a principle 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 principle residence also qualify. Buyers will have to repay the credit if they sell their homes within three years.
While details are sketchy - we will expect to get some clarity soon as to an 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 would be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.
Homeowner Affordability and Stability Plan
President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes. The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. Many of the plan's details are still being worked out and will not be announced until March 4. Here is an overview of the plan's main components.
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.
According to the plan, "credit-worthy" or "responsible" homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.
As with the rest of the plan, details about this initiative will be released at a future date--including what, if any, credit score requirements will be included.
Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
The goal of this initiative is simple: "reduce the amount homeowners owe per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31% of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.
Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.
This initiative also includes a number of additional elements and incentives, including an extra incentive for borrowers to keep paying on time. The initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify.
Information was provided by Leonard Winslow of Gateway.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Here is an overview of some benefits of the Economic Stimulus Plan for 2009 and the Homeowner Affordability and Stability Plan that may impact you.
Stimulus Plan - Tax Credit for Homebuyers
The $787 Billion stimulus bill is made up of tax cuts and spending programs aimed at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. One of the major benefits of the plan is a tax credit for new homebuyers. According to the plan, 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.
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 you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.
Better still, the tax credit is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you're liable for $4,000 in income tax, you can offset that $4,000 with half of the tax credit... and still receive a check for the remaining $4,000!
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
The tax credit is applicable to any home that will be used as a principle 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 principle residence also qualify. Buyers will have to repay the credit if they sell their homes within three years.
While details are sketchy - we will expect to get some clarity soon as to an 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 would be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.
Homeowner Affordability and Stability Plan
President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes. The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. Many of the plan's details are still being worked out and will not be announced until March 4. Here is an overview of the plan's main components.
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.
According to the plan, "credit-worthy" or "responsible" homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.
As with the rest of the plan, details about this initiative will be released at a future date--including what, if any, credit score requirements will be included.
Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
The goal of this initiative is simple: "reduce the amount homeowners owe per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31% of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.
Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.
This initiative also includes a number of additional elements and incentives, including an extra incentive for borrowers to keep paying on time. The initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify.
Information was provided by Leonard Winslow of Gateway.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
'Stimulus' and 'Stability' Equal Help for Homeowners
'Stimulus' and 'Stability' Equal Help for Homeowners
Here is an overview of some benefits of the Economic Stimulus Plan for 2009 and the Homeowner Affordability and Stability Plan that may impact you.
Stimulus Plan - Tax Credit for Homebuyers
The $787 Billion stimulus bill is made up of tax cuts and spending programs aimed at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. One of the major benefits of the plan is a tax credit for new homebuyers. According to the plan, 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.
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 you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.
Better still, the tax credit is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you're liable for $4,000 in income tax, you can offset that $4,000 with half of the tax credit... and still receive a check for the remaining $4,000!
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
The tax credit is applicable to any home that will be used as a principle 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 principle residence also qualify. Buyers will have to repay the credit if they sell their homes within three years.
While details are sketchy - we will expect to get some clarity soon as to an 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 would be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.
Homeowner Affordability and Stability Plan
President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes. The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. Many of the plan's details are still being worked out and will not be announced until March 4. Here is an overview of the plan's main components.
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.
According to the plan, "credit-worthy" or "responsible" homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.
As with the rest of the plan, details about this initiative will be released at a future date--including what, if any, credit score requirements will be included.
Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
The goal of this initiative is simple: "reduce the amount homeowners owe per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31% of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.
Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.
This initiative also includes a number of additional elements and incentives, including an extra incentive for borrowers to keep paying on time. The initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify.
Information was provided by Leonard Winslow of Gateway.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Here is an overview of some benefits of the Economic Stimulus Plan for 2009 and the Homeowner Affordability and Stability Plan that may impact you.
Stimulus Plan - Tax Credit for Homebuyers
The $787 Billion stimulus bill is made up of tax cuts and spending programs aimed at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. One of the major benefits of the plan is a tax credit for new homebuyers. According to the plan, 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.
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 you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.
Better still, the tax credit is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you're liable for $4,000 in income tax, you can offset that $4,000 with half of the tax credit... and still receive a check for the remaining $4,000!
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
The tax credit is applicable to any home that will be used as a principle 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 principle residence also qualify. Buyers will have to repay the credit if they sell their homes within three years.
While details are sketchy - we will expect to get some clarity soon as to an 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 would be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.
Homeowner Affordability and Stability Plan
President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes. The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. Many of the plan's details are still being worked out and will not be announced until March 4. Here is an overview of the plan's main components.
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.
According to the plan, "credit-worthy" or "responsible" homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.
As with the rest of the plan, details about this initiative will be released at a future date--including what, if any, credit score requirements will be included.
Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
The goal of this initiative is simple: "reduce the amount homeowners owe per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31% of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.
Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.
This initiative also includes a number of additional elements and incentives, including an extra incentive for borrowers to keep paying on time. The initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify.
Information was provided by Leonard Winslow of Gateway.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Thursday, February 19, 2009
Frequently Asked Questions About the Home Buyer Tax Credit
First-Time Home Buyer Tax Credit
Frequently Asked Questions About the Home Buyer Tax Credit
1. Who is eligible to claim the tax credit?First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
2. What is the definition of a first-time home buyer?The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
3. How is the amount of the tax credit determined?The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
4. Are there any income limits for claiming the tax credit?The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
5. What is "modified adjusted gross income"?Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
7. Can you give me an example of how the partial tax credit is determined?Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
9. How do I claim the tax credit? Do I need to complete a form or application?Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.
10. What types of homes will qualify for the tax credit?Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
11. I read that the tax credit is "refundable." What does that mean?The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?No. You can claim only one.
16. I am not a U.S. citizen. Can I claim the tax credit?Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
17. Is a tax credit the same as a tax deduction?No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
18. I bought a home in 2008. Do I qualify for this credit?No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.
19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.
20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.
21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Frequently Asked Questions About the Home Buyer Tax Credit
The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.
1. Who is eligible to claim the tax credit?First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
2. What is the definition of a first-time home buyer?The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
3. How is the amount of the tax credit determined?The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
4. Are there any income limits for claiming the tax credit?The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
5. What is "modified adjusted gross income"?Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
7. Can you give me an example of how the partial tax credit is determined?Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
9. How do I claim the tax credit? Do I need to complete a form or application?Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.
10. What types of homes will qualify for the tax credit?Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
11. I read that the tax credit is "refundable." What does that mean?The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?No. You can claim only one.
16. I am not a U.S. citizen. Can I claim the tax credit?Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
17. Is a tax credit the same as a tax deduction?No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
18. I bought a home in 2008. Do I qualify for this credit?No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.
19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.
20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.
21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Frequently Asked Questions About the Home Buyer Tax Credit
First-Time Home Buyer Tax Credit
Frequently Asked Questions About the Home Buyer Tax Credit
1. Who is eligible to claim the tax credit?First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
2. What is the definition of a first-time home buyer?The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
3. How is the amount of the tax credit determined?The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
4. Are there any income limits for claiming the tax credit?The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
5. What is "modified adjusted gross income"?Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
7. Can you give me an example of how the partial tax credit is determined?Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
9. How do I claim the tax credit? Do I need to complete a form or application?Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.
10. What types of homes will qualify for the tax credit?Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
11. I read that the tax credit is "refundable." What does that mean?The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?No. You can claim only one.
16. I am not a U.S. citizen. Can I claim the tax credit?Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
17. Is a tax credit the same as a tax deduction?No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
18. I bought a home in 2008. Do I qualify for this credit?No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.
19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.
20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.
21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Frequently Asked Questions About the Home Buyer Tax Credit
The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.
1. Who is eligible to claim the tax credit?First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
2. What is the definition of a first-time home buyer?The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
3. How is the amount of the tax credit determined?The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
4. Are there any income limits for claiming the tax credit?The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
5. What is "modified adjusted gross income"?Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
7. Can you give me an example of how the partial tax credit is determined?Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
9. How do I claim the tax credit? Do I need to complete a form or application?Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.
10. What types of homes will qualify for the tax credit?Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
11. I read that the tax credit is "refundable." What does that mean?The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?No. You can claim only one.
16. I am not a U.S. citizen. Can I claim the tax credit?Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
17. Is a tax credit the same as a tax deduction?No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
18. I bought a home in 2008. Do I qualify for this credit?No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.
19. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.
20. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.
21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
First-Time Home Buyer Tax Credit
First-Time Home Buyer Tax Credit
$8,000 Home Buyer Tax Credit at a Glance
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
$8,000 Home Buyer Tax Credit at a Glance
- The tax credit is for first-time home buyers only.
- The tax credit does not have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
First-Time Home Buyer Tax Credit
First-Time Home Buyer Tax Credit
$8,000 Home Buyer Tax Credit at a Glance
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
$8,000 Home Buyer Tax Credit at a Glance
- The tax credit is for first-time home buyers only.
- The tax credit does not have to be repaid.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
- Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
Thursday's Bond Market February 19, 2009
Thursday's bond market has opened well into negative territory following the release of much stronger than expected economic data. The stock markets are relatively flat with the Dow and Nasdaq both down 2 points. The bond market is currently down 19/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.Both of today's monthly reports gave us stronger than expected results. The first and more important of the two was January's Producer Price Index (PPI) from the Labor Department. They announced a 0.8% jump in the overall reading and a 0.4% rise in the core data when they were expected to show 0.3% and 0.1% increases respectively. This means that prices paid at the producer level of the economy rose much more than expected. That is considered bad news for bonds and mortgage rates because it raises inflation concerns that make bonds less appealing to investors.The second piece of data p osted this morning was January's Leading Economic Indicators (LEI). This Conference Board report attempts to predict economic activity over the next three to six months and showed an increase of 0.4% compared to the 0.1% increase that latest forecasts were calling for. This means that the data is predicting economic activity to increase over the next few months at a faster pace than analysts had thought. This is negative news for bonds and mortgage rates.The Labor Department also posted weekly unemployment figures, showing that 627,000 new claims for benefits were filed last week. This matched the previous week's revised total but was higher than expected. The higher total of claims is good news for bonds, but since it tracks only a week's worth of claims it is not considered to be of high importance to the markets, especially with the inflation related readings being posted this morning.The Labor Department will also release January's Consumer Pr ice Index (CPI) early tomorrow morning, which measures inflationary pressures at the very important consumer level of the economy. With exception to maybe the Employment report, the CPI is the most important report that we see each month. Its results can have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall.If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and c annot be guaranteed to be in the best interest of all/any other borrowers.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Thursday's Bond Market February 19, 2009
Thursday's bond market has opened well into negative territory following the release of much stronger than expected economic data. The stock markets are relatively flat with the Dow and Nasdaq both down 2 points. The bond market is currently down 19/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point.Both of today's monthly reports gave us stronger than expected results. The first and more important of the two was January's Producer Price Index (PPI) from the Labor Department. They announced a 0.8% jump in the overall reading and a 0.4% rise in the core data when they were expected to show 0.3% and 0.1% increases respectively. This means that prices paid at the producer level of the economy rose much more than expected. That is considered bad news for bonds and mortgage rates because it raises inflation concerns that make bonds less appealing to investors.The second piece of data p osted this morning was January's Leading Economic Indicators (LEI). This Conference Board report attempts to predict economic activity over the next three to six months and showed an increase of 0.4% compared to the 0.1% increase that latest forecasts were calling for. This means that the data is predicting economic activity to increase over the next few months at a faster pace than analysts had thought. This is negative news for bonds and mortgage rates.The Labor Department also posted weekly unemployment figures, showing that 627,000 new claims for benefits were filed last week. This matched the previous week's revised total but was higher than expected. The higher total of claims is good news for bonds, but since it tracks only a week's worth of claims it is not considered to be of high importance to the markets, especially with the inflation related readings being posted this morning.The Labor Department will also release January's Consumer Pr ice Index (CPI) early tomorrow morning, which measures inflationary pressures at the very important consumer level of the economy. With exception to maybe the Employment report, the CPI is the most important report that we see each month. Its results can have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall.If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and c annot be guaranteed to be in the best interest of all/any other borrowers.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Thursday, October 16, 2008
Bond Market Update October 16th
Technorati Profile
Thursday's bond market opened in negative territory but has since rebounded as the markets continue their see-saw activity. The stock markets are posting sizable losses after yesterday's sell-off dropped the Dow 733 points. With the Dow down 190 points this morning, it has given back all of Monday's record gain of 936 points. The Nasdaq is currently down 30 points and is also below its Friday closing level. The bond market is currently up 2/32, but due to a significant rally late yesterday, we should see mortgage rates improve this morning by approximately .500 of a discount point or .125 of a percent in rate.
This morning's economic data added more concern about the status of the economy and the likelihood of a quick recovery. The Labor Department said that the Consumer Price Index (CPI) for September went unchanged from August's level and that the core data that excludes more volatile food and energy prices rose only 0.1%. Both of those readings were bel ow forecasts, indicating that inflationary pressures are weaker than thought at the consumer level of the economy. That is good news for the bond market and mortgage rates.
The biggest surprise came from September's Industrial Production data that showed a whopping 2.8% monthly drop in output. This was the biggest monthly decline in 34 years and points towards a quickly slowing manufacturing sector. That is also good news for the bond market and mortgage rates.
The Labor Department said that 461,000 new claims for unemployment benefits were filed last week. This was a smaller number than was expected but since the data tracks only a week's worth of claims, it had little impact on trading this morning.
The remaining two reports are both scheduled for release tomorrow morning. September's Housing Starts is the first, but is the week's least important piece of monthly data. It gives us an indication of housing sector strength and mortgage cre dit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 65.0, down from September's final of 70.3.
Thursday's bond market opened in negative territory but has since rebounded as the markets continue their see-saw activity. The stock markets are posting sizable losses after yesterday's sell-off dropped the Dow 733 points. With the Dow down 190 points this morning, it has given back all of Monday's record gain of 936 points. The Nasdaq is currently down 30 points and is also below its Friday closing level. The bond market is currently up 2/32, but due to a significant rally late yesterday, we should see mortgage rates improve this morning by approximately .500 of a discount point or .125 of a percent in rate.
This morning's economic data added more concern about the status of the economy and the likelihood of a quick recovery. The Labor Department said that the Consumer Price Index (CPI) for September went unchanged from August's level and that the core data that excludes more volatile food and energy prices rose only 0.1%. Both of those readings were bel ow forecasts, indicating that inflationary pressures are weaker than thought at the consumer level of the economy. That is good news for the bond market and mortgage rates.
The biggest surprise came from September's Industrial Production data that showed a whopping 2.8% monthly drop in output. This was the biggest monthly decline in 34 years and points towards a quickly slowing manufacturing sector. That is also good news for the bond market and mortgage rates.
The Labor Department said that 461,000 new claims for unemployment benefits were filed last week. This was a smaller number than was expected but since the data tracks only a week's worth of claims, it had little impact on trading this morning.
The remaining two reports are both scheduled for release tomorrow morning. September's Housing Starts is the first, but is the week's least important piece of monthly data. It gives us an indication of housing sector strength and mortgage cre dit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 65.0, down from September's final of 70.3.
Bond Market Update October 16th
Technorati Profile
Thursday's bond market opened in negative territory but has since rebounded as the markets continue their see-saw activity. The stock markets are posting sizable losses after yesterday's sell-off dropped the Dow 733 points. With the Dow down 190 points this morning, it has given back all of Monday's record gain of 936 points. The Nasdaq is currently down 30 points and is also below its Friday closing level. The bond market is currently up 2/32, but due to a significant rally late yesterday, we should see mortgage rates improve this morning by approximately .500 of a discount point or .125 of a percent in rate.
This morning's economic data added more concern about the status of the economy and the likelihood of a quick recovery. The Labor Department said that the Consumer Price Index (CPI) for September went unchanged from August's level and that the core data that excludes more volatile food and energy prices rose only 0.1%. Both of those readings were bel ow forecasts, indicating that inflationary pressures are weaker than thought at the consumer level of the economy. That is good news for the bond market and mortgage rates.
The biggest surprise came from September's Industrial Production data that showed a whopping 2.8% monthly drop in output. This was the biggest monthly decline in 34 years and points towards a quickly slowing manufacturing sector. That is also good news for the bond market and mortgage rates.
The Labor Department said that 461,000 new claims for unemployment benefits were filed last week. This was a smaller number than was expected but since the data tracks only a week's worth of claims, it had little impact on trading this morning.
The remaining two reports are both scheduled for release tomorrow morning. September's Housing Starts is the first, but is the week's least important piece of monthly data. It gives us an indication of housing sector strength and mortgage cre dit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 65.0, down from September's final of 70.3.
Thursday's bond market opened in negative territory but has since rebounded as the markets continue their see-saw activity. The stock markets are posting sizable losses after yesterday's sell-off dropped the Dow 733 points. With the Dow down 190 points this morning, it has given back all of Monday's record gain of 936 points. The Nasdaq is currently down 30 points and is also below its Friday closing level. The bond market is currently up 2/32, but due to a significant rally late yesterday, we should see mortgage rates improve this morning by approximately .500 of a discount point or .125 of a percent in rate.
This morning's economic data added more concern about the status of the economy and the likelihood of a quick recovery. The Labor Department said that the Consumer Price Index (CPI) for September went unchanged from August's level and that the core data that excludes more volatile food and energy prices rose only 0.1%. Both of those readings were bel ow forecasts, indicating that inflationary pressures are weaker than thought at the consumer level of the economy. That is good news for the bond market and mortgage rates.
The biggest surprise came from September's Industrial Production data that showed a whopping 2.8% monthly drop in output. This was the biggest monthly decline in 34 years and points towards a quickly slowing manufacturing sector. That is also good news for the bond market and mortgage rates.
The Labor Department said that 461,000 new claims for unemployment benefits were filed last week. This was a smaller number than was expected but since the data tracks only a week's worth of claims, it had little impact on trading this morning.
The remaining two reports are both scheduled for release tomorrow morning. September's Housing Starts is the first, but is the week's least important piece of monthly data. It gives us an indication of housing sector strength and mortgage cre dit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 65.0, down from September's final of 70.3.
Wednesday, October 15, 2008
Rate Lock Advisory
This week brings us the release of seven economic reports that are of interest to the mortgage market. The week also gets heavy in quarterly earnings releases for companies, which could cause significant movement in the stock markets again. The earnings results could affect bond trading as investors move funds into stocks if the reports are good. The other possibility is that the earnings reports would generally disappoint, meaning investors may move funds out of stocks and into bonds as a safe-haven. The latter would be good news for the bond market and mortgage rates.
The bond market is closed tomorrow in observance of the Columbus Day holiday and will reopen Tuesday morning. The first pieces of data come Wednesday morning, which are two of the week's more important releases. The first is September's Retail Sales report. This data is very important to the markets because it measures consumer spending by tracking sales at retail establishments in the U.S. S ince consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales could fuel a stock rally and push mortgage rates higher. Current forecasts are calling for a 0.4% decline in sales.
September's Producer Price Index (PPI) is the second report of the day. This index measures inflationary pressures at the producer level of the economy and is also considered to be of high importance to the markets. Analysts are expecting to see a decline of 0.3% in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase could fuel inflation concerns in the bond market and push mortgage rates higher. But, weaker than expected readi ngs should lead to lower rates, especially if the sales report doesn't give us stronger than expected results.
Also scheduled for release Wednesday is the Fed Beige Book during afternoon trading. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. If it reveals stronger signs of inflation from the last release, we could see mortgage rates revise higher shortly after its 2:00 PM ET release.
Thursday morning also brings us two economic releases. The first is September's Consumer Price Index (CPI) that measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.1% in the overall index and an increase of 0.2% in the core data reading. A larger than expected increase in the core reading coul d raise inflation concerns in the bond market and push mortgage rates higher Thursday. However, a smaller than expected reading should ease inflation concerns and lead to lower mortgage rates.
September's Industrial Production data is the second release of the day and will be released mid-morning. It gives us an indication of manufacturing strength by tracking orders at U.S. factories, mines and utilities. It is expected to show a 0.8% drop in output from August's level, meaning that manufacturing activity fell sharply. A smaller than expected decline or an increase in output would be negative for bonds and mortgage rates while a larger drop should help push mortgage rates lower, assuming that the CPI shows favorable results.
The remaining two reports are both scheduled for release Friday morning. September's Housing Starts is the first, but is the week's least important piece of data. It gives us an indication of housing sector st rength and mortgage credit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 69.0, down from September's final of 70.3.
Overall, I am expecting to see a fair amount of movement in mortgage rates this week, but mostly the latter part of the week. The key reports are Wednesday's PPI and Retail Sales reports and Thursday's CPI data. But as we saw last week, we certainly don't need factual economic releases to see mortgage rates move. I am thinking we may still see plenty of volatility in the stock markets that may affect bond prices also. Accordingly, please proceed cautiously if you have not locked an interest rates yet.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
The bond market is closed tomorrow in observance of the Columbus Day holiday and will reopen Tuesday morning. The first pieces of data come Wednesday morning, which are two of the week's more important releases. The first is September's Retail Sales report. This data is very important to the markets because it measures consumer spending by tracking sales at retail establishments in the U.S. S ince consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales could fuel a stock rally and push mortgage rates higher. Current forecasts are calling for a 0.4% decline in sales.
September's Producer Price Index (PPI) is the second report of the day. This index measures inflationary pressures at the producer level of the economy and is also considered to be of high importance to the markets. Analysts are expecting to see a decline of 0.3% in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase could fuel inflation concerns in the bond market and push mortgage rates higher. But, weaker than expected readi ngs should lead to lower rates, especially if the sales report doesn't give us stronger than expected results.
Also scheduled for release Wednesday is the Fed Beige Book during afternoon trading. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. If it reveals stronger signs of inflation from the last release, we could see mortgage rates revise higher shortly after its 2:00 PM ET release.
Thursday morning also brings us two economic releases. The first is September's Consumer Price Index (CPI) that measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.1% in the overall index and an increase of 0.2% in the core data reading. A larger than expected increase in the core reading coul d raise inflation concerns in the bond market and push mortgage rates higher Thursday. However, a smaller than expected reading should ease inflation concerns and lead to lower mortgage rates.
September's Industrial Production data is the second release of the day and will be released mid-morning. It gives us an indication of manufacturing strength by tracking orders at U.S. factories, mines and utilities. It is expected to show a 0.8% drop in output from August's level, meaning that manufacturing activity fell sharply. A smaller than expected decline or an increase in output would be negative for bonds and mortgage rates while a larger drop should help push mortgage rates lower, assuming that the CPI shows favorable results.
The remaining two reports are both scheduled for release Friday morning. September's Housing Starts is the first, but is the week's least important piece of data. It gives us an indication of housing sector st rength and mortgage credit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 69.0, down from September's final of 70.3.
Overall, I am expecting to see a fair amount of movement in mortgage rates this week, but mostly the latter part of the week. The key reports are Wednesday's PPI and Retail Sales reports and Thursday's CPI data. But as we saw last week, we certainly don't need factual economic releases to see mortgage rates move. I am thinking we may still see plenty of volatility in the stock markets that may affect bond prices also. Accordingly, please proceed cautiously if you have not locked an interest rates yet.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
Rate Lock Advisory
This week brings us the release of seven economic reports that are of interest to the mortgage market. The week also gets heavy in quarterly earnings releases for companies, which could cause significant movement in the stock markets again. The earnings results could affect bond trading as investors move funds into stocks if the reports are good. The other possibility is that the earnings reports would generally disappoint, meaning investors may move funds out of stocks and into bonds as a safe-haven. The latter would be good news for the bond market and mortgage rates.
The bond market is closed tomorrow in observance of the Columbus Day holiday and will reopen Tuesday morning. The first pieces of data come Wednesday morning, which are two of the week's more important releases. The first is September's Retail Sales report. This data is very important to the markets because it measures consumer spending by tracking sales at retail establishments in the U.S. S ince consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales could fuel a stock rally and push mortgage rates higher. Current forecasts are calling for a 0.4% decline in sales.
September's Producer Price Index (PPI) is the second report of the day. This index measures inflationary pressures at the producer level of the economy and is also considered to be of high importance to the markets. Analysts are expecting to see a decline of 0.3% in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase could fuel inflation concerns in the bond market and push mortgage rates higher. But, weaker than expected readi ngs should lead to lower rates, especially if the sales report doesn't give us stronger than expected results.
Also scheduled for release Wednesday is the Fed Beige Book during afternoon trading. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. If it reveals stronger signs of inflation from the last release, we could see mortgage rates revise higher shortly after its 2:00 PM ET release.
Thursday morning also brings us two economic releases. The first is September's Consumer Price Index (CPI) that measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.1% in the overall index and an increase of 0.2% in the core data reading. A larger than expected increase in the core reading coul d raise inflation concerns in the bond market and push mortgage rates higher Thursday. However, a smaller than expected reading should ease inflation concerns and lead to lower mortgage rates.
September's Industrial Production data is the second release of the day and will be released mid-morning. It gives us an indication of manufacturing strength by tracking orders at U.S. factories, mines and utilities. It is expected to show a 0.8% drop in output from August's level, meaning that manufacturing activity fell sharply. A smaller than expected decline or an increase in output would be negative for bonds and mortgage rates while a larger drop should help push mortgage rates lower, assuming that the CPI shows favorable results.
The remaining two reports are both scheduled for release Friday morning. September's Housing Starts is the first, but is the week's least important piece of data. It gives us an indication of housing sector st rength and mortgage credit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 69.0, down from September's final of 70.3.
Overall, I am expecting to see a fair amount of movement in mortgage rates this week, but mostly the latter part of the week. The key reports are Wednesday's PPI and Retail Sales reports and Thursday's CPI data. But as we saw last week, we certainly don't need factual economic releases to see mortgage rates move. I am thinking we may still see plenty of volatility in the stock markets that may affect bond prices also. Accordingly, please proceed cautiously if you have not locked an interest rates yet.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
The bond market is closed tomorrow in observance of the Columbus Day holiday and will reopen Tuesday morning. The first pieces of data come Wednesday morning, which are two of the week's more important releases. The first is September's Retail Sales report. This data is very important to the markets because it measures consumer spending by tracking sales at retail establishments in the U.S. S ince consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales could fuel a stock rally and push mortgage rates higher. Current forecasts are calling for a 0.4% decline in sales.
September's Producer Price Index (PPI) is the second report of the day. This index measures inflationary pressures at the producer level of the economy and is also considered to be of high importance to the markets. Analysts are expecting to see a decline of 0.3% in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase could fuel inflation concerns in the bond market and push mortgage rates higher. But, weaker than expected readi ngs should lead to lower rates, especially if the sales report doesn't give us stronger than expected results.
Also scheduled for release Wednesday is the Fed Beige Book during afternoon trading. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. If it reveals stronger signs of inflation from the last release, we could see mortgage rates revise higher shortly after its 2:00 PM ET release.
Thursday morning also brings us two economic releases. The first is September's Consumer Price Index (CPI) that measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.1% in the overall index and an increase of 0.2% in the core data reading. A larger than expected increase in the core reading coul d raise inflation concerns in the bond market and push mortgage rates higher Thursday. However, a smaller than expected reading should ease inflation concerns and lead to lower mortgage rates.
September's Industrial Production data is the second release of the day and will be released mid-morning. It gives us an indication of manufacturing strength by tracking orders at U.S. factories, mines and utilities. It is expected to show a 0.8% drop in output from August's level, meaning that manufacturing activity fell sharply. A smaller than expected decline or an increase in output would be negative for bonds and mortgage rates while a larger drop should help push mortgage rates lower, assuming that the CPI shows favorable results.
The remaining two reports are both scheduled for release Friday morning. September's Housing Starts is the first, but is the week's least important piece of data. It gives us an indication of housing sector st rength and mortgage credit demand, but usually is not a mover of mortgage rates. It is expected to show a decline in starts of new homes last month. If it varies greatly from forecasts, we could see the bond market have some reaction to the news, but probably not enough to cause much movement in rates.
The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 69.0, down from September's final of 70.3.
Overall, I am expecting to see a fair amount of movement in mortgage rates this week, but mostly the latter part of the week. The key reports are Wednesday's PPI and Retail Sales reports and Thursday's CPI data. But as we saw last week, we certainly don't need factual economic releases to see mortgage rates move. I am thinking we may still see plenty of volatility in the stock markets that may affect bond prices also. Accordingly, please proceed cautiously if you have not locked an interest rates yet.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
Credit Scoring Part IV
Credit Scoring
Part IV: Credit Remediation
If you are in need of credit remediation, and especially if you live in an area where this is an overall problem within the population, you should seek to align yourself with a credible referral source for credit repair. While government web sites will suggest that self-help may be the best option, keep in mind that for the most part people lack discipline when it comes to spending and making payments. They are not likely to have the diligence to research and remedy their own credit problems.
The Federal Trade Commission regulates credit repair services, and they provide free information to help consumer’s spot, stop, and avoid businesses with fraudulent, deceptive, or unfair practices. Be familiar with the Credit Repair Organization Act http://www.ftc.gov/os/statutes/croa/croa.htm as you seek out a genuine ally in this area. Research their background and make sure this company will cast a good reflection on you when you refer your clients to them.
written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog
Part IV: Credit Remediation
If you are in need of credit remediation, and especially if you live in an area where this is an overall problem within the population, you should seek to align yourself with a credible referral source for credit repair. While government web sites will suggest that self-help may be the best option, keep in mind that for the most part people lack discipline when it comes to spending and making payments. They are not likely to have the diligence to research and remedy their own credit problems.
The Federal Trade Commission regulates credit repair services, and they provide free information to help consumer’s spot, stop, and avoid businesses with fraudulent, deceptive, or unfair practices. Be familiar with the Credit Repair Organization Act http://www.ftc.gov/os/statutes/croa/croa.htm as you seek out a genuine ally in this area. Research their background and make sure this company will cast a good reflection on you when you refer your clients to them.
written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog
Credit Scoring Part IV
Credit Scoring
Part IV: Credit Remediation
If you are in need of credit remediation, and especially if you live in an area where this is an overall problem within the population, you should seek to align yourself with a credible referral source for credit repair. While government web sites will suggest that self-help may be the best option, keep in mind that for the most part people lack discipline when it comes to spending and making payments. They are not likely to have the diligence to research and remedy their own credit problems.
The Federal Trade Commission regulates credit repair services, and they provide free information to help consumer’s spot, stop, and avoid businesses with fraudulent, deceptive, or unfair practices. Be familiar with the Credit Repair Organization Act http://www.ftc.gov/os/statutes/croa/croa.htm as you seek out a genuine ally in this area. Research their background and make sure this company will cast a good reflection on you when you refer your clients to them.
written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog
Part IV: Credit Remediation
If you are in need of credit remediation, and especially if you live in an area where this is an overall problem within the population, you should seek to align yourself with a credible referral source for credit repair. While government web sites will suggest that self-help may be the best option, keep in mind that for the most part people lack discipline when it comes to spending and making payments. They are not likely to have the diligence to research and remedy their own credit problems.
The Federal Trade Commission regulates credit repair services, and they provide free information to help consumer’s spot, stop, and avoid businesses with fraudulent, deceptive, or unfair practices. Be familiar with the Credit Repair Organization Act http://www.ftc.gov/os/statutes/croa/croa.htm as you seek out a genuine ally in this area. Research their background and make sure this company will cast a good reflection on you when you refer your clients to them.
written by Leonard Winslow, a Mortgage Loan Officer, of Gateway Bank Mortgage, INC. for The Avery Group Real Estate Blog
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