By Jocelyn Porteria
Last issue, I provided useful information and options if you are in danger of losing your home. I received some feedback, what about the other side of the fence? Those kababayans that are ready to buy homes like 1st time homebuyers. It is indeed the best time to buy. The Housing and Economic Recovery Act specifically have good news for first time homebuyers. This is how it works:
The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 for individual or household that hasn’t owned a home for at least three years. Taxpayers can take the credit on their 2008 tax return if you bought your house this year after April 9.
[ad#featuredpost120x600-wht]It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009 you can take the credit on your 2009 tax return.
The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so you can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500.
Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.
Any house is eligible as long as it’s a primary residence and is in the United States.
Buyers Have 15 Years to Pay Back
To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.
There’s one restriction on the type of financing that you can use if you plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if you are using below-market interest-rate financing from a public agency or nonprofit that’s funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this won’t be an issue. It’s mainly an issue for low-income buyers using special mortgage financing. Source:REALTOR.ORG/realtormag
Another good reason to buy is the VHDA/FHA Plus Loan Program for qualified homebuyers. Current interest rate is at 6.25% with 0 points as of this writing. Sellersâ€™ contributions are still up to 6% of the sales price towards closing costs! Down payment funds come from VHDA in the form of a 2nd trust. 2nd Trust rate is the same as the 1st trust. No need to increase the value of the property to offset the down payment.
When you combine the tax credit with today’s continuing low interest rates, numerous affordable loan programs, large selection of for-sale inventory, and low home prices, many of the pieces are in place for you to buy now.
Below are some inquiries I received from the previous issue:
1) â€œWhat are the options, under new laws or regulations, for those in danger or who have already missed payment of their amortizations but are still eager to hold to their homesâ€.
Your best bet is the Foreclosure Rescue which I discussed from the previous issue where lenders would write down qualified mortgages to 85% of the current appraised value and borrowers would get a new FHA 30 year fixed mortgage at 90% of appraised value. However, you will share 50% of all future appreciation with FHA. The challenge in here is if you live in an area where homes lose 20% or more in value and you have no equity at all. You may want to contact your lender or a loan officer as there are things to consider determining which program is best for you. You may also want to visit www.hud.gov for more information.
2â€I have interest only payment, I would like to negotiate to lower the value of the property to the current market price and apply for an FHA 30–year loan. How do I go about it?”
At the present times, it is so hard to say what lenders can and cannot do. It is constantly changing and they more likely will negotiate and work it out with homeowners instead of foreclosures. This requires a lot of documentation and proofs of hardships. They can offer loan modification for lower rates which FHA loan maybe one of them. You can also try Foreclosure Rescue as I discussed above. Contact your lender and they might have more options based on your situation.
3.â€I would like to buy a condo in the Philippines. What are the dangers of buying a condo that is still being built and would be ready two or three years? As a U.S. citizen is my property secured.
I watched in Balitang America where a condo was paid in full but the construction had stopped when the builders filed losses. The purchaser claims they did not get their money back. Whether your are a U.S Citizen or not, seeking legal assistance is your best defense before signing the contract. Make sure they can provide you with marketable and insurable title. You can also purchase title insurance on your own. You may want to get all these information in writing for your protection. Ask around from people you know who purchased under construction properties in the Philippines. Research online for reputable builders may also help.
(Note: Jocelyn Porteria is a RealtorÂ® licensed in VA. For more info, call her at 571-432-8335 or email at firstname.lastname@example.org)