You've probably heard a lot about a tax credit of $8,000 for purchasing your first home. So what are the specifics?
First and foremost, anyone looking to take advantage of this First Time Home Buyer Tax Credit should seek the assistance of a tax professional. This author is not a tax professional and this is only my interpretation of the basics on how the tax credit works.
That being said here are few points to consider.
What it is;
A tax credit of 10% of a home's purchase price up to a maximum of $8,000. It is a tax credit meaning you must purchase the home before you are able to claim it.
Timeframe;
You must purchase a home before December 1, 2009
Do you qualify;
You must be a First Time Home Buyer meaning you can't have owned real estate within the previous three years. In addition you have to fall within the income limits of $75,000 AGI if filing single and, $150,000 AGI if filing jointly to qualify for the full credit.
Do you have to repay;
If you live in the home for the first three years of ownership you will not be required to repay the credit.
When can you claim it;
You can claim it on your 2008 Tax Return or 2008 Amended Tax Return if you've already filed. You can also claim it on your 2009 Tax Return.
Obviously the tax credit is a hefty incentive to purchase a home this year. To take advantage of what essentially amounts to "free" money you should seek the advice of a tax professional and a mortgage professional so you can get to the bottom of just how much you can expect to receive and what you can afford. With rates in the mid 5.00% range, prices lower than they've ever been and the limited time frame for the tax credit First Time Home Buyers are in a better position than ever to take the leap.
- Andrew
Tuesday, March 10, 2009
Monday, March 9, 2009
Affordable Refinance & Modification
Good Afternoon Folks,
By now we've been bombarded with speculation over the details of the PBO's Homeowner Affordability & Stability Plan. I'm sure many of you out there are wondering how to take advantage of it.
The specifics available currently can be found at the Treasury Department website. There are basically two parts to the plan.
The first is The Home Affordable Refinance. In a nutshell this is a program that is not widely available yet, but will be 4/4/2009. Through it, homeowners who owe more than 80% of what their home is currently worth will be able to refinance to lower interest rates with no Private Mortgage Insurance. It will also allow homeowners to refinance from ARMs to Fixed-Rate loans.
The caveat is that your loan must be owned by one of the Government Sponsored Entities (GSE); Fannie Mae or Freddie Mac. You will also need to be current on the mortgage with a good payment history.
To find out if your loan is owned by Fannie Mae click here.
To find out if your loan is owned by Freddie Mac call 1-800-FREDDIE.
The second part the of the plan is The Home Affordable Modification. The specifics of the modification are a bit murkier in that not every loan servicer, lender or bank is required to take part. It seems that it will be required that any entity using TARP or TALF funds will have to though. The place to begin for those homeowners in trouble and at risk of foreclosure is to contact your servicer. You should also contact a HUD Housing Counselor for assistance. Negotiating with mortgage servicers can be difficult and to make sure you have the best chance for a meaningful modification that will be a successful long-term solution you should enlist the advice of a counselor. In Rhode Island you can also contact Rhode Island Housing.
Now onto an update of interest rates.
Currently we're seeing rates holding steady across the board around 5.50% for Conventional and Government loans. Portfolio mortgage program rates for 30 Year Fixed loans are holding around 5.375%. The yield on 10-Year Treasuries is fluctuating between 2.85 - 2.95. As I've maintained until we see the yield drop into the mid to low 2.00 range mortgage rates won't decrease meaningfully.
- Andrew
By now we've been bombarded with speculation over the details of the PBO's Homeowner Affordability & Stability Plan. I'm sure many of you out there are wondering how to take advantage of it.
The specifics available currently can be found at the Treasury Department website. There are basically two parts to the plan.
The first is The Home Affordable Refinance. In a nutshell this is a program that is not widely available yet, but will be 4/4/2009. Through it, homeowners who owe more than 80% of what their home is currently worth will be able to refinance to lower interest rates with no Private Mortgage Insurance. It will also allow homeowners to refinance from ARMs to Fixed-Rate loans.
The caveat is that your loan must be owned by one of the Government Sponsored Entities (GSE); Fannie Mae or Freddie Mac. You will also need to be current on the mortgage with a good payment history.
To find out if your loan is owned by Fannie Mae click here.
To find out if your loan is owned by Freddie Mac call 1-800-FREDDIE.
The second part the of the plan is The Home Affordable Modification. The specifics of the modification are a bit murkier in that not every loan servicer, lender or bank is required to take part. It seems that it will be required that any entity using TARP or TALF funds will have to though. The place to begin for those homeowners in trouble and at risk of foreclosure is to contact your servicer. You should also contact a HUD Housing Counselor for assistance. Negotiating with mortgage servicers can be difficult and to make sure you have the best chance for a meaningful modification that will be a successful long-term solution you should enlist the advice of a counselor. In Rhode Island you can also contact Rhode Island Housing.
Now onto an update of interest rates.
Currently we're seeing rates holding steady across the board around 5.50% for Conventional and Government loans. Portfolio mortgage program rates for 30 Year Fixed loans are holding around 5.375%. The yield on 10-Year Treasuries is fluctuating between 2.85 - 2.95. As I've maintained until we see the yield drop into the mid to low 2.00 range mortgage rates won't decrease meaningfully.
- Andrew
Monday, March 2, 2009
Market Conditions
It's Monday and other than the Dow tanking to 1997 levels not much is going on in the news that would affect mortgage rates. To top it all off there's more snow outside my window...
This morning I thought I'd give you a quick rundown of the gadget to the right under the Mortgage Calculator called Market Conditions. The two most important measures you can monitor here are 10-Year Treasury Notes and the Dow Jones Industrial Average.
Historically these are two easy-to-read indicators of the Stock and Bond markets. They usually tend to run in opposite directions. This means that while one is increasing the other is decreasing. If the DJIA is gaining it means there are more people buying stocks in general than selling. Now this has typically meant that the money to buy these stocks comes out of the Bond market. Unless you're a Wall Street CEO or the Treasury it's tough for the average investor to create money out of thin air which is why you must sell your fixed-income investments (bonds) to fund your purchase of stock.
Still with me? Good.
Obviously the opposite happens when the Bond market is rising. Unfortunately the causal relationship isn't as foolproof as it once was but that is a topic for another day.
To further complicate matters the reason we track 10-Year Treasuries is because they are very similar fixed-income investments to Mortgage-Backed Securities. They are similar in the rate-of return they yield to investors. Again though, this relationship isn't as strong as it once was due to a lack of liquidity in the MBS market. But, that is a topic for another day as well.
For the moment let's just believe we live in a ducky world where the relationships between all of these markets are absolute. If such were the case mortgage rates would drop as the yield on 10-Year Treasuries decreased. The yield would decrease as the Stock Market (DJIA) dropped. Thus, by looking at the level of the stock market and the corresponding yield on 10-Year Treasury Notes we would know if mortgage rates would be getting better or worse.
So, take a gander at the gadget on the right labeled "Market Conditions". The first ticker symbol you see is ^TNX which denotes 10-Year Treasuries. The number next to the symbol is the yield. The lower you see, the better. For sub-5.00% rates we will need to see this in the very low 2.00 range.
The ticker directly below ^DJI is for the Dow Jones Industrial Average. For mortgage rates to decrease we are generally going to want to see this decreasing. And there you have it! A down and dirty way to monitor the Stock and Bond Markets if you find yourself in the market for low mortgage rates.
- Andrew
This morning I thought I'd give you a quick rundown of the gadget to the right under the Mortgage Calculator called Market Conditions. The two most important measures you can monitor here are 10-Year Treasury Notes and the Dow Jones Industrial Average.
Historically these are two easy-to-read indicators of the Stock and Bond markets. They usually tend to run in opposite directions. This means that while one is increasing the other is decreasing. If the DJIA is gaining it means there are more people buying stocks in general than selling. Now this has typically meant that the money to buy these stocks comes out of the Bond market. Unless you're a Wall Street CEO or the Treasury it's tough for the average investor to create money out of thin air which is why you must sell your fixed-income investments (bonds) to fund your purchase of stock.
Still with me? Good.
Obviously the opposite happens when the Bond market is rising. Unfortunately the causal relationship isn't as foolproof as it once was but that is a topic for another day.
To further complicate matters the reason we track 10-Year Treasuries is because they are very similar fixed-income investments to Mortgage-Backed Securities. They are similar in the rate-of return they yield to investors. Again though, this relationship isn't as strong as it once was due to a lack of liquidity in the MBS market. But, that is a topic for another day as well.
For the moment let's just believe we live in a ducky world where the relationships between all of these markets are absolute. If such were the case mortgage rates would drop as the yield on 10-Year Treasuries decreased. The yield would decrease as the Stock Market (DJIA) dropped. Thus, by looking at the level of the stock market and the corresponding yield on 10-Year Treasury Notes we would know if mortgage rates would be getting better or worse.
So, take a gander at the gadget on the right labeled "Market Conditions". The first ticker symbol you see is ^TNX which denotes 10-Year Treasuries. The number next to the symbol is the yield. The lower you see, the better. For sub-5.00% rates we will need to see this in the very low 2.00 range.
The ticker directly below ^DJI is for the Dow Jones Industrial Average. For mortgage rates to decrease we are generally going to want to see this decreasing. And there you have it! A down and dirty way to monitor the Stock and Bond Markets if you find yourself in the market for low mortgage rates.
- Andrew
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