Earlier today I received an update from the President of McCue Mortgage, Bill McCue, on the Stimulus package that the House and Senate have come to agreement on, and expected to be signed by President Oboma some time today. This update was mainly on the Tax Credit which has been in place for almost a year and has now been altered by new legislation.
The legislation that was finally agreed upon has be significantly altered from what I posted ten days ago. As in my previous blog I am going to just concentrate on the Tax Credit portion of the legislation at this time, and will give further updates on other parts of it at a later date.
- The tax credit is only for first time buyers just as defined in the past.
- The credit is increased from $7,500 to $8,000.
- The credit is no longer an interest free loan. No repayment is required now.
- The credit is now available to Connecticut Housing Finance Authority (CHFA) borrowers.
- The new credit will be effective as of 01/01/09
- The new credit will end on 12/01/09
- The $15,000 Tax Credit that was part of the senate version of the bill is now gone.
The previous Tax Credit will continue to apply to all First Time Homebuyer that purchase between April 8, 2008 and December 31, 2008. First Time Homebuyers who closed on their home beginning January 1, 2009 will be eligible for the new Tax Credit until December 31, 2009. For example, a CHFA loan that closed on 12/31/08 gets no tax credit but one that closed the next day gets the new credit. A market rate borrower who closed on 12/31/08 gets a $7,500 interest free loan while one that closed the next day gets an $8,000 tax credit with no repayment required. I’m sure this will make some people unhappy. Remember nobody has to take the tax credit.
I hope to post another update when we have a better understanding of what the new FHA loan limits will be, the maximums have gone up a little, but not to the limits that had been hoped for. The new limits are not an across the board increase, they are county by county, and not all counties will see a change.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
George, Nice comprehensive summary with easy to follow rules, sounds like all first time buyers closing within the first 11 months of this year get an $8000 bonus!
Dan, yes, and this time CHFA Borrowers will also qualify. That is HUGE since that is the main goto loan program for First Time Homebuyers here in Connecticut.
George - Thanks for putting this information out there that is so simple and easy to understand. Now let's hope we can get a lot of buyers to take advantage of it.
Okay....thanks for the update...I was getting all confused and I like plain and simple. :)
Donna the $8,000 with no repayment should motivate First Time Homebuyers to by now.
Sally, simple is the only way I know how to right. After all it is coming from a simple mind ......... LOL
George,
Thanks for the summary.
I'm assuming that the rules for first time home buyer being the same as before means that the buyer must not have owned a home in the last 3 years. Since the original $7500 credit applied to both single family, town houses and condos, I'm assuming that a client who owns a condo and buys a house will not qualify? Also, if the client has a tax payment less than $7500, can they carry any excess credit to the next year?
Thanks for the update George. This is really different from what I thought it would be.
Ed, yes your assumptions are correct about who is a first time homebuyer. But I am not sure that I understand your final questions about carrying over an excess amount. The way the first tax credit works is that if the borrower was going to get a $1,000 back on their income tax, now they would get $8,500. If they had to pay $1,000 they now would get back $6,500. I don't know if that answers your question. Call me on the Cell Phone if you need further clarification.
Jen, it is a lot different than most of us expected.
Appreciate the update, George. Will be interesting to see what the impact is.
Jeff
George:
Thanks for this update........ I appreciate it so much!
Jeff, time will tell.
Fran your welcome.
great stuff... have you syndicated at real estate loans dot com?
Hi George- I too like simple....just give me the facts please LOL :) Seriously, thanks for the update.
Motivated, I am not sure what that means anymore. I am thinking about a car battery & jumper cables for some of my buyers.
we really needed the credit to be for all buyers, not just first time buyers, but this is a start... we shall see what happens in the future, if this does not "stimulate" enough sales...
Great post.
George,
Great article...I read another one from another Mortgage Broker..what a difference...she was doom and gloom you were on point, and articulate. Very easy to understand. I am glad there are SOME Mortgage Brokers who see the glass as half full instead of half empty!
I have to 100% agree with Ron, this report is very informative and to the point.
Just for your info this what I have comment in that other mortgage broker"s blog
"Generally speaking I am 100% sure that USA is a tax parities! The majority of people are in the 25% tax bracket that includes social security, and sales taxes are approximately around 6-7% vs other countries like in Europe that income taxes starts with almost 45% and the sales taxes are about 19%. So my friends let us not always complain about taxes. Naturally the European streets, bridges and medical system is fare better than ours. Some way some one has to pay for all the goodies OR?
I would suggest if I may let us focus on our real challenges like In Missouri MO and Kansas KS where I sell real estate, indeed we have also lots of real estate for sale, bank owned properties, reo properties and short sales that make the real estate market look very attractive to all potential buyers and real estate investors. Let us all try to make things happen instead of complaining about the our new president, give him a chance!"
Thanks you
Timo Yannopoulos
www.asktimo.com
Mark, no I have not.
Kathy ........ LOL. You just reminded me of my wife. When she tells me something she give me ALL the details which drive me crazy (short ride in my case) and I have to tell her to just give me the short version. I don't have to know the color and type of dress someone was wearing, that is not important, just get to the point .............. LOL
Michael, let me know if that works, and I will pass it on to the Realtors I partner with ......... LOL
Paul, the tax credit in the original package was for everyone. I don't understand why they changed it, but they did, and this is what we are left with.
Ron, thank you. The News Media is spreading enough bad news without us also contributing to it. We need to be truthful in how we present things, but we need to concentrate on the positive in that truth and not the negative. No one wants to do business with a negative person, and no matter how bad something may seem, there is always hope that it will be better tomorrow.
Timo, if people think things are bad here, they should try living in another country, and you gave excellent examples of what they would find.
Hey George
why you want to send people out of the country we need buyers don't we? Keep them all here we need more Hahaha
Timo ........... LOL. Very good, you got me .......... LOL
George....short sweet and to the point. Exactly what first timers will understand! Anna Banana www.annabananarealty.com
Only time will tell. People won't be in a rush to buy.
George,
Too bad the $15,000 credit was slashed to $8,000. I just like bigger numbers, and it likely had made more of an impact on the housing market. Good thing is that it doesn't have to be paid back.
Sad that this got changed to a first time home buyer credit! I think there are many move up buyers that are sitting it out, and a tax credit for them (who usually pay more taxes, and therefore more motivated by tax credits) would have more impact on the economy.
Ann, OK I have to ask .......... how did you get a nickname of "Banana"????
Anonymous, you are right, time will tell.
Esko, not only was the $15,000 changed but to top it off only First Time Homebuyer qualify for the $8,000, unlike the $15,000 which would have applied to everyone.
Pam, that is what I kept hearing over and over today from the Realtors I talked to.
Nice post. The comments were good someone asked if the credit can be carried forward .... it's better than that. They'll send you a check for the difference.
Hi George-
Thank you so much for putting this information out there. I was trying to get a straight answer all day and nobody could seem to provide me with one. I am a first time home buyer, in the process of buying a condo right now (I close March 27th on a condo in Middletown) and I'm using CHFA. If I read your information correctly, I will be eligible for the $8,000. tax credit. What a HUGE help that will be!!!
However, I've already filed and received my 2008 income taxes...when would I be able to recieve the tax credit? In next year's return? Or can I file an amendment for this years?
-Kristine Cormier
Mike, I wasn't exactly sure what Ed was asking, but I call on Ed's office so I will be talking to him about it.
Kristine I responded to this in the e-mail that you also sent me, I hope you received it.
Your direct information has been very useful. I have several comments on the package as it relates to the real estate marketplace. When the package was initiated every home buyer would have benefited by the tax credit. The signed package is quite diluted and again is only for first time buyers. There are divorced parents who can't benefit by the package because they owned a home within the past 3 years. There are buyers that have the ability to purchase a second home but won't do so without some incentative or tax credit. There are investors who are anxious to purchase a property that is in a short sale situation but aren't first time buyers. If these buyers were included our government officals would have really helped the marketplace. It is my experience that motivates my statements. I have 9 families that purchased their first homes 5 to 7 years ago that would like to retain them as investment properties and move to a larger home......with a tax credit they would be out looking right now. Yes, the package will be helping at risk homeowners. Yes, the package will help families restructure or refinance their mortgages to avoid foreclosure. Yes, the package will help communities and neighborhoods stop falling home values by stopping defaults/foreclosures. But the package will not be the savior for our current market conditions.
As a veteran in the real estate industry, I think I can speak for the thousands of us that have sold homes with 20% interest rates, that have experienced the peaks and valleys of our marketplaces, and are now called "survivors". This package is not going to stimulate real estate across the board. First time buyers are a small percentage of the population. Some of which have credit issues, don't have the minimum downpayment and are at a higher risk of loosing a job due to inexperience.
Will I sell homes this year to first time buyers? Yes! Will I sell REO homes? Yes! Will I help a seller close to loosing everything? Yes! Could this stimulus package have really helped the housing market? Yes! When homes are bought and sold it keeps tousands of folks working, earning an income, spending more, and helping to keep our economy strong. This package will not do this!
Thanks George, The auto industry and manufacturing jobs created the middle class. Perhaps this tax credit will be a 'shot in the arm' for the many businesses whose jobs depend on housing in one way or another (remodelers, flooring sales people, landscapers just to name a few).
Carol, I agree with what you stated, but this package should not have come as a surprise to anyone after what happened to the previous one. The previous package also started out on the right foot, but ended up as a shadow of itself. This should help, but all those people that believed the New Media with their claims of great things, and 4% interest rates got taken for a ride, and wasted time that they could have been looking for a house. The News Media along with the false hope that our PRESENT government put out, have only contributed to further delaying our recovery.
Marian, while this package is not all that it should have been, it will offer up some help to the industries you mentioned, and any help at this point is welcomed.
Great Post!!! Thanks for the info.
George: Thank you! As always, you give us the best information. It sums it up nicely.
Jin & Janet, Thank you.
Dianne, I am glad that you find it useful :)
Geesh...
I'm glad I am not the only one missing the top of my head. I guess I need to re size my image and try to get my face in there. But my, I could wind up losing the effectiveness of my whip :)
TLW...ROAR!
George - Thanks for the explanation. I did not realize that there would actually be money back to buyers - I thought it meant they would have an additional 8k write off on their taxes.
Judy, the original proposal for the $15,000 Tax Credit was suppose to work that way, but this one is $8,000 in their pocket as long as the property sells for $80,000 or more. If it sells for less than $80,000 then they get 10% of the selling price.
TLW you are nuts .............. LOL
I am just grateful that they did not chop of my whole head as some would love to do ........... LOL
George,
Surprisingly I have not had that many clients bring up this subject matter on their own. I guess you can plaster this all over the various media sources and there will be those who remain uninformed. There are some changes that I will find beneficial in my business/
We're seeing lots multiple offers here in Florida again, especially in the under $200K range. This was before this credit came along..
Can someone tell me if the first time homebuyer is a single person will they get the full credit or half credit?
Anita, whether it is a married couple or single person they will receive the full Tax Credit.
Hi - are you SURE that CHFA borrowers are eligible for the tax credit? I just attended a required first time homebuyer's CHFA presentation (required by the lender, presented by CHFA), where the presenter repeatedly reminded us that we, as CHFA borrowers, are NOT entitled to the tax credit. She stated that if we claimed it, we would have to pay back the tax credit we had claimed. Her statement was that because this is tax exempt bond money, we are definitely not eligible. Can you clear this up for me? Since the information came directly from a CHFA sponsored instructor, I am very confused about who has the right information here.
What about the recapture of the credit if the house is sold within three years? I have seen mention of that and do not see it referenced above.