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  1. Low Mortgage Rates and Tax Credits Indicate Blooming Spring 2010 Housing Market

    1 By on March 19, 2010

    blooms

    As we get ready to say our final goodbyes to the winter of 2010 when the clock strikes midnight tonight, welcoming in March 20, 2010 and the first day of spring, let us hope spring 2010 holds true to the significance of what spring signifies for us.

    This spring, if you haven’t been paying attention to the climate in the national housing market, existing home sales fell 7.20 percent to a seven-month low in January 2010. This decrease follows on the heels of December 2009′s decrease of 16.20 percent, which is the largest decline on record. January 2010′s decline was the largest decrease in almost 11 years.

    While many housing experts were expecting January’s existing home sales to be slow, this came as a surprise, and is raising serious concerns about the stability of the housing market recovery and the economic recovery as a whole.

    This is the perfect time to be a home buyer in America. You may be able to make a serious argument this is the best time in American history to be purchasing a home.

    Current mortgage interest rates for 30-year fixed mortgages are still in the mid to high 4 percent range and 5/1 adjustable rate mortgage interest rates are still hovering in the high 3 to low 4 percent range. The federal government’s tax credit incentive now eligible to first time home buyers, and also existing home owners to purchase a home, is still in effect until April 30, 2010 for a signed purchase contract. Home prices are still at incredibly affordable levels. The federal government also has a $1,500.00 (up to 30 percent of the cost) tax credit available until December 31, 2010, for energy improvements. The criteria of eligibility for this credit is very attractive and covers hot water tanks, windows, doors, roofing, furnace, air conditioning units etc. (see http://www.energystar.gov/index.cfm?c=tax_credits.tx_index)

    If you are a first-time home-buyer, you could collect your $8,000 tax credit then use $5,000 of the credit to purchase eligible energy efficient improvements, and receive an additional $1500 cash back from the government for improving your home. You can parlay the 8k into 5k in improvements and still end up with $4,500 in cash in your pocket, for a total credit of $9,500, not too mention the possible increase in the value of your home due to the improvement. This current environment available to home buyers makes it difficult to understand why existing home sales fell so much.

    The numbers for February existing home sales should be released sometime next week. Hopefully they will show some improvements. From here through the spring and summer months of 2010, if you live in or near the East Coast - whether the Northeast, Mid Atlantic or Southeast states - you understand what a very cold, and basically ugly winter we all just finished enduring. Hopefully, most perspective home buyers were just hibernating due to the weather, and the birth of this new spring season will get everyone out and about, looking to purchase the next home of their dreams.

    Spring is here,  meaning new hope, new beginnings, and better days for the mortgage industry. Somme incredible and historic low mortgage interest rates and federal tax credit expire very shortly. If you are considering a home purchase, now is definitely the time to stop thinking about thinking about it and to start doing something about it.

    Category: First Time Home Buyer, Mortgage Rates

  2. HUD Will Not Raise Minimum FICO for FHA Borrowers

    By on March 15, 2010

    Recently, HUD (U.S. Department of Housing and Urban Development) assistant secretary and commissioner of the Federal Housing Administration (FHA) David Stevens announced that the agency will not be raising the minimum FHA borrowing score. Stevens stated that while the agency has been facing ongoing pressure to raise the minimum FICO score for FHA borrowers from the current 580 to 620, “that won’t happen” due to “the stabilizing and stimulating influence of the government” as being “indispensable.” FHA loans are federally assisted mortgage loans that are insured by the Federal Housing Administration. While the Administration does not issue the loans to the borrowers themselves, it will pay the approved lender if a borrower defaults on the loan.

    FHA mortgage loans are a great option for those borrowers who may not meet some of the stricter lending criteria of conventional loans. FHA mortgage programs are offered through FHA approved lenders and are advantageous because FHA Mortgage Programs typically offer lower interest rates, require a smaller down payment of 3.5 percent of the value of the home (although proposed legislation would increase this down payment to 5 percent, read more about this here), and do not demand a perfect credit score or history.

    Total Mortgage Services is a fully approved FHA lender and offers some of the best current FHA mortgage rates available. Call us today at 877-868-2503 to speak with one of our mortgage professionals and see if FHA is right for you.

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    Category: Credit Score, FHA, First Time Home Buyer

  3. First-Time Home Buyer Tax Credit: Questions and Answers

    By on March 11, 2010

    First Time Home Buyer Tax Credit: Questions and Answers

    There is no doubt that timing is of the essence if a prospective homeowner is looking to benefit from the first-time home buyer tax credit. With the deadline looming to have a purchase agreement signed by April 30 and the closing completed by June 30, if the ball is not moving yet, it will have to get moving rather quickly. If you’re on the fence, or simply need a better understanding of the $8,000 first-time home buyer tax credit, below are the more common questions that prospective home buyers have been asking.

    What is the definition of a first-time home buyer?
    The definition of a first-time home buyer is a buyer who has not owned an interest in a primary residence in the past three years. The timeline is based on the closing date. Therefore, if a borrower has not owned an interest in a primary residence since April 4, 2007, the buyer will be considered a first-time home buyer again on April 4, 2010. Using this scenario, the home buyer can begin the purchase process prior to April 4, 2010, but cannot close before that date without forfeiting the benefit of the $8,000 first-time home buyer tax credit.

    If a married couple is purchasing a home and one of the spouses has owned an interest in a primary residence in the past three years, both partners are ineligible for the first-time home buyer tax credit. Ownership of a second home or investment property does no exclude a buyer from benefiting from the first-time home buyer tax credit.

    What type of home can be used to qualify for the first-time home buyer tax credit?
    Regardless of the number of units in the home, as long as the buyer uses the property as a primary residence, they are eligible for the first time home buyer tax credit. A primary residence can be a single-family detached home, or an attached home such as a condominium, townhouse, manufactured home (mobile home) or houseboat.

    Buyers are not eligible for the first-time home buyer tax credit if the primary residence is part of a non-arms length transaction. A non-arms length transaction is one that involves a seller and a buyer who are related.

    Who is eligible for the first-time home buyer tax credit?
    As long as a buyer is considered a first-time home buyer (see definition above), they are eligible for the first-time home buyer tax credit. The regulations regarding the first-time home buyer tax credit indicate the purchase transaction must occur no earlier than January 1, 2009 and no later than June 30, 2010. Also, a purchase agreement must be signed no later than April 30, 2010 in order to qualify for the first time home buyer tax credit.

    What documentation is required to claim the first-time home buyer tax credit?
    In order to claim the first time home buyer tax credit, IRS Form 5405 must be completed when filing your income tax returns. If you’ve already filed your tax returns, but have not yet closed on your new home, you can simply amend your 2009 returns to claim the first-time home buyer tax credit. Buyers cannot claim the first time home buyer tax credit on an intended purchase. The purchase must be completed in order to claim the credit. A copy of the HUD-1 settlement form must accompany the IRS From 5405 as proof the home purchase has been completed.

    Can a home buyer access the tax credit sooner than having to wait to file their tax returns?
    If a prospective home buyer believes he/she qualifies for the first-time home buyer tax credit, then yes, he/she is permitted to reduce their income tax withholding. This will enable the home buyer to accumulate cash by increasing take home pay. The money can then be used to put toward the down payment.  However, because the purchase agreement must be signed by April 30, 2010 and the closing completed by June 30, 2010, it is more than likely too late in the process to accumulate enough money through reducing income tax withholdings to make a significant difference.

    Potential home buyers who adjust their withholdings on their W-4 in an attempt to accumulate a down payment should note that if the purchase of the home does not occur, repayment of the additional withholdings, plus potential interest charges and penalties, may be assessed. It is highly recommended that home buyers discuss this option with an accountant prior to implementing this course of action.

    If I bought my first home in 2008, do I still qualify for the first-time home buyer tax credit?
    Unfortunately, you cannot benefit from this first-time home buyer tax credit. However, all is not lost. If you purchased your first home between April 9, 208 and January 1, 2009, there is a separate tax credit that you may be eligible for.  Contact a tax advisor for more information.

    Will the first-time home buyer tax credit be extended again?
    Although it is very unlikely, there are rumors that President Obama is considering extending the first-time home buyer tax credit for a second time. The popular tax credit has certainly helped rejuvenate the housing industry, and another extension would only solidify further growth. If current mortgage rates can remain at or near historic lows, the better the likelihood of another extension to the first time home buyer tax credit.

    Robert Hyder

    Follow Total Mortgage on Twitter

    Category: First Time Home Buyer

  4. Home Buyer Tax Credit 2010: What First-Time Home Buyers Need To Know?

    By on March 10, 2010

    The home buyer tax credit deadline is almost up. If you’re a home buyer interested in taking advantage of the tax credit you may find some useful answers to your questions here.

    If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
    Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year 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 prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.

    For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, 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 the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount

    How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
    The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home-buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.

    If a single person (Taxpayer A) qualifies as a first-time home buyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time home buyer and then later that year they marry each other, is the credit still allowed?
    A. Eligibility for the first-time home buyer tax credit is determined on the date of purchase. If Taxpayer A, a first-time home buyer, buys a house and then later that year marries Taxpayer B, not a first-time home buyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit.

    Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?
    A. Yes. Taxpayer B is not a first-time home buyer and cannot claim any portion of the credit, but A may claim the entire credit, if the home was purchased as Taxpayer A’s primary residence

    It is not often in life we find ourselves afforded with a second-chance opportunity, considering the massive costs involved with this legislation, this is the last chance to take advantage of this tax credit if you qualify. The Senate, The House of Representatives nor the President of The United States of America may not allow any further extensions to this program once it expires in after April 30, 2010.

    If you qualify and would like to take advantage of this once in a life time opportunity, check our low current mortgage rates and call us today at 877-868-2503.

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    Category: First Time Home Buyer

  5. FHA Home Buyers Tax Credit: Clock’s Ticking for First-Time Home Buyers

    By on March 10, 2010

    Remember the Good Old Days? These are the Good Old Days!! tick tock… tick tock…

    clock_moneyTime is running out. Hurry before April 30th to take advantage of Federal Governments first-time home buyer tax credit. If you are considering parlaying the home buyer tax credit with an FHA approved mortgage, then you will want to also turn it up a notch and make sure you apply for your mortgage prior to April 5, 2010, when The Department of Housing and Urban Development (HUD), through it’s FHA program, will be raising the amount of the required upfront mortgage insurance by a half-percent, from the current amount of 1.75 percent to the new amount of 2.25 percent. View Today’s FHA Rates.

    • FHA will still allow a borrower to qualify for a FHA mortgage with as little as 3.50 percent down payment.
    • FHA may allow up to a 55 percent debt to income ratio (DTI) to qualify for this 3.50 percent down payment mortgage.
    • FHA will allow a borrower to purchase an owner occupied property and qualify up to a 55 percent DTI while including a non occupant co borrower.
    • FHA will allow maximum financing of 96.5 percent LTV (3.50 down payment) for borrowers related by blood, marriage or law (spouses, parent-child, siblings, stepchildren, aunts-uncles/nieces-nephews, etc.), or for unrelated individuals that can document evidence of a family-type, longstanding, and substantial relationship not arising out of the loan transaction.
    • Conforming loans (Fannie Mae and Freddie Mac) will not allow a loan with a Loan to Value Ratio of greater than 80 percent to qualify fro a mortgage if the debt to income ratio is greater than 45 percent at best. FHA will still allow a seller to contribute up to 6 percent of the Purchase price toward the buyers closing costs.
    • FHA will allow this 6 percent Seller contribution to be used toward the upfront mortgage insurance and/or to buy down the interest rate.
    • FHA will not allow the 6 percent seller concession to be used toward the 3.50 percent down payment FHA will allow the 3.50 down payment to be in the form of a gift from a related to the borrower or with an established “family type relationship”
    • FHA will also allow the buyer to borrower the money from a relative, then when they get this infamous Homebuyer Tax Credit back from the US Federal Government they can pay them back if it was not initially gifted to them.

    President Obama signed into law H.R 3548 The extension and expansion of the home buyer tax credit on Friday November 6, 2009.

    In case you haven’t heard the home buyers tax credit has been extended and expanded to include:

    1. Extension of the current $8,000.00 tax credit for first-time home buyers with a signed purchase contract by April 30, 2010, and closed by June 30, 2010
    2. Raising the income limits for singles to $125,000, and for married couples filing jointly to $225,000
    3. Offering a $6,500 credit for current home owners who have owned their current home as a principle residence far any consecutive five-year period out of the last eight years.
    4. Limiting the purchase price of the home at $800,000
    5. Members of the military, military intelligence, and foreign service who are on qualified extended official duty are not subject to the recapture fee, and individuals who have been deployed overseas for 90 days or more in 2008 or 2009 can claim the credit through April 30, 2011.

    The expansion of this credit for current home owners and/or people making more than $75,000 for single taxpayer, and $150,000 for married couples filing jointly, is effective and shall apply to residences purchased after the date of the enactment of this act.

    I am sure you have either heard someone else remark or possibly say it yourself, “Remember the Good Old Days.”  Well in spite of some of the serious economic challenges we are facing at this time as a nation, in some aspects with regards to home buying and/or refinancing your current mortgage, these ARE the Good Old Days we are currently living in, and we will be referring too these days as the Good Old Days in the future.

    For all home buyer’s tax credits these are the critical times. The clock is ticking for both first-time buyers & FHA home buyers.

    Category: FHA, First Time Home Buyer

  6. FHA 203(k) Mortgages Offer Value, Opportunity

    1 By on February 16, 2010

    203k-mortgages

    While the economic crisis has had a detrimental effect on the lives of many Americans, it has also presented a golden opportunity to those with the means to purchase a home. The confluence of low current interest rates and an oversupply of homes on the market have made many homes available at a bargain rate.

    For those who have the wherewithal, purchasing a foreclosed home offers tremendous value and opportunity. However many foreclosed homes are in need of repair, and for a long time, securing financing through traditional channels for such a property was difficult.

    With a typical mortgage a lender requires that a house be in good enough condition to provide security for the loan. Generally this means that renovations must be finished before the lender issues a long term mortgage. Often this requires the home-buyer to get financing to purchase the home, financing for the renovations, and finally a permanent mortgage to pay off the previous loans.

    This financing arrangement is complicated and unwieldy, and often discourages people from pursuing such properties. In response, the FHA and HUD developed the 203(k) loan program in order to encourage community redevelopment and revitalization and expand home-ownership opportunities.

    With a 203(k) loan, a borrower in compliance with FHA guidelines only needs to get one permanent mortgage to finance acquisition and rehabilitation of the property.

    Recently Total Mortgage Services President John Walsh spoke with the New Haven Register about the increased demand for 203(k) loans “A lot of these home that are foreclosed, they are distressed to some level. It has to be fixed in order to get a loan. Banks just aren’t giving construction loans; this is really the only option for people who want to buy a home that is distressed”.

    Walsh went on to comment that 203(k) mortgages can be more complicated than standard mortgages, and that it is important to seek out advice from a mortgage experts that have experience with 203(k) loans.

    While credit standards have tightened on almost all loans in light of the economic downturn, credit qualifications through the FHA are more lenient than traditional lenders. Additionally, the FHA generally only requires a 3.5 percent down payment for the home.

    Total Mortgage services is a Full-Eagle, FHA approved lender. To explore your options under the 203(k) program, please call one of our mortgage experts at 877-868-2503.

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    Category: Credit Score, FHA, First Time Home Buyer, Purchase

  7. Current Mortgage Rates Remain Low; Tax Credits Still Available

    By on February 9, 2010

    Current Mortgage Rates Remain Low; Tax Credits Still Available

    Prior to the November 30, 2009 deadline, Congress not only extended the $8,000 first-time home buyer tax credit to June 30, 2010 – with a signed purchase agreement dated no later than April 30, 2010 – but they also implemented a new $6,500 move-up home buyer tax credit. However, it has been some time since I’ve read anything about either of the tax credits. It seems as if the enthusiasm and zeal for the programs have been lost, despite current mortgage rates remaining historically low for an unprecedented period of time.

    The vast majority of homeowners who are eligible to refinance their existing mortgage loans are either currently in the process now, or have already done so. Nevertheless, there are still many homeowners who can benefit from refinancing by taking advantage of today’s incredibly low current mortgage rates. In addition, it has been said time and time again that now is the time to buy a home if you’ve been considering homeownership. “The time is now” adage really can’t be overstated at this point as the clock ticks toward the expiration of the tax credits.

    Furthermore, analysts are predicting that current mortgage rates will spike to 6 percent even before the tax credits expire as the Federal Reserve completes its commitment to purchase $1.25 trillion in mortgage-backed securities by March 31, 2010. That’s three full months before the expiration of the tax credits. The tax credits will be of little benefit if rates increase that sharply. Therefore, locking in now will allow you to take advantage of both low current mortgage rates in addition to unparalleled tax credit opportunities.

    For answers to your tax credit questions, click here or call 877-868-2503 and speak to a licensed mortgage professional.

    –Robert Hyder

    Follow Total Mortgage on Twitter

    Category: Current Mortgage Rates, First Time Home Buyer, Mortgage Rate Trends and Analysis, Purchase

  8. What is the Reason for the Decline in Mortgage Applications?

    1 By on November 20, 2009

    What is the Reason for the Decline in Mortgage Applications?

    There’s no question the recent extension to the $8,000 first-time home buyer tax credit will continue to greatly facilitate a rebound in the housing market. However, exactly how much of an impact the newly implemented $6,500 “move up” homebuyer tax credit will have remains to be seen. Although, the bigger question remains: if current mortgage rates are back to near-historic lows, why have mortgage applications declined? Believe it or not, the answer is quite simple.

    For the week ending Friday, November 6, mortgage applications for home purchases plummeted an astounding 11.7 percent from the week prior. This is during a period of time in which homeowners were still awaiting a response from the federal government on whether or not the $8,000 first-time homebuyer tax credit would be extended, leaving little doubt on the reason for the dip in mortgage applications. As it turned out, it was the same week Congress passed the legislation to extend the $8,000 first-time home buyer tax credit and also implement the new $6,500 “move up” tax credit. As a result, the following week ending Friday, November 13, mortgage applications for home purchases decreased by a seasonally adjusted 4.7 percent. Although mortgage applications for purchases were still down, they were down significantly less when compared to the week before. Therefore, it can be safely deduced that the data is already beginning to reflect the influence of the extension of the $8,000 first-time home buyer tax credit, as well as the implementation of the new $6,500 “move up” tax credit.

    Analysts believe this new data will likely reflect an increase, however slight, as we move toward the end of the month. It must also be noted that the Thanksgiving holiday is expected to have an influence on mortgage applications, but once we move into the first week of December, purchase mortgage applications are expected to increase considerably.

    With current mortgage rates still near record lows, the extension of the $8,000 first-time home buyer tax credit and the newly created $6,500 “move up” homebuyer tax credit have generated an extraordinary second chance for borrowers still in the purchase market, but failed to pull the trigger earlier in the year.

    –Robert Hyder

    Follow Total Mortgage on Twitter

    Category: Current Mortgage Rates, First Time Home Buyer, Mortgage Rate Trends and Analysis, Purchase

  9. Current Mortgage Rates and Mortgage Applications: Where Do They Stand?

    By on November 18, 2009

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    It’s no secret the housing market continues to endure tumultuous times. Despite the Federal Reserves best efforts to keep current mortgage rates at or near historic lows, it’s becoming painfully obvious we have yet to see rock bottom. With an excess of available homes amid the existing recession, foreclosures are ongoing and property values continue to decline. Some analysts predict this trend can take another year or two to correct itself.

    The Federal Reserve has recently slowed their pace of purchasing mortgage-backed securities in an effort to prolong low mortgage interest rates. This approach is intended to also buy time for the housing market to help correct itself. The Federal Reserve recently surpassed the $1 trillion mark of the $1.2 trillion they committed to purchasing nearly one year ago. With the slowdown, it is anticipated current mortgage rates will remain relatively low, possibly through the first quarter of 2010 before they begin to rise, with some believing rather sharply.

    In addition, Congress recently extended the $8,000 first-time home buyer tax credit  through April 30, 2010, and has also instituted a new $6,500 “move up” home buyer tax credit for existing homeowners who have lived in their current home for five consecutive years out of the past eight years.

    Despite all of these incentives put into place by the federal government, mortgage applications for both purchases (down approximately 4.7 percent) and refinances (down approximately 1.4 percent) are growing smaller. We are in the midst of unprecedented times in which the combination of such efforts has never been seen before and will likely never be seen again. Yes, property values are still declining, but they will not continue on that path much longer. And neither will the historically low current mortgage rates and the extraordinary federal tax credits. It is my hope that this brief editorial has gotten you to start thinking about potential opportunities. If that is the case, it’s time to at least explore these options before you, before they are gone.

    Total Mortgage Services has avoided committing on problematic or difficult mortgage loans that have forced other mortgage lenders into closing their doors. That said, the time to contact a licensed mortgage professional is now, before it’s too late. The world of mortgages is difficult enough, so it is vital to have an expert who has the experience and knowledge working for you.

    –Robert Hyder

    Follow Total Mortgage on Twitter

    Category: Current Mortgage Rates, First Time Home Buyer, General, Mortgage Rate Trends and Analysis, Purchase, Refinance

  10. First-Time Home buyer and Move Up Home buyer Tax Credits: Questions and Answers

    By on November 11, 2009

    First-Time Homebuyer and Move Up Tax Credits: Questions and Answers

    By now, first-time homebuyers interested in purchasing a home are aware of the extension of the $8,000 first-time home buyer tax credit to June 30, 2010. However, existing homeowners may not be aware of the new legislation implementing a new $6,500 tax credit for “move up” home buyers. What is a “move up” home buyer? A “move up” home buyer is a homeowner who has lived in their home for five consecutive years out of the past eight, and is now looking to purchase, and “move up,” to a new home.

    Below are some common questions that both first-time homebuyers and “move up” home buyers have concerning the extension and implementation of the tax credits.

    Q: Who qualifies for the home buyer tax credits?

    A: To qualify for the first-time home buyer tax credit of up to $8,000, borrowers may not have owned a home during the three years prior to the closing date. To qualify for the move up homebuyer tax credit of up to $6,500, borrowers must have lived in their home being sold as a primary residence for five consecutive years out of the previous eight years total.

    Q: Do I have to repay the tax credit?

    A: No, unlike the $7,500 tax credit from 2008 that is similar to an interest-free loan and must be repaid over a 15-year period through federal income tax returns, these credits do not require repayment. However, if the beneficiaries of these tax credits do not stay in the home for at least three years, the tax credit must be repaid.

    Q: I closed on my new home on Friday, October 30, 2009, exactly one week prior to the enactment of the new/updated legislation.  Can I still benefit from the new, higher income level requirements or am I tied into the income limits at the time of my closing?

    A: No, the new income levels of $125,000 (filing individually) and $225,000 (filing jointly) apply only to purchases on or after November 6, 2009. Therefore, the old income levels of $75,000 (filing individually) and $150,000 (filing jointly) would apply in your scenario.

    Q: I found a 2-family home I would like to purchase.  I will live in one of the units and I will rent out the other.  Do I qualify for the tax credit?
    A: No, the only properties eligible for the federal tax credits are single-family homes, condos, co-ops and town homes.

    Q: Do the income requirements pertain to a borrower’s gross income or adjusted gross income?

    A: To qualify for either of the home buyer tax credits, a borrower’s income will be determined based on their “modified adjusted gross income,” commonly referred to as MAGI. MAGI is the adjustable gross income, modified by various adjustments. The adjustable gross income is the sum of a borrower’s income before any deductions are subtracted.

    Q: Can I claim my tax credit now or do I have to wait until I file my 2009 tax returns?

    A: Yes, you can claim your 2009 home buyer tax credit immediately by simply amending your 2008 tax returns by using a 1040X form. Otherwise, you can wait to claim the home buyer credit on your 2009 tax returns.

    Q: If I purchase a home with my girlfriend, can we both get up to $8,000 as first-time home buyers?

    A: No, the first-time home buyer tax credit and the move up home buyer tax credit are based on the purchase of a single home. Depending on how you and your girlfriend file your tax returns, you may both be eligible for up to $4,000 each. If you file your tax returns individually, the maximum income level for each of you is $125,000. If you file jointly, the maximum income level is $225,000.

    Q: What is the new deadline for the tax credits?

    A: The deadline to close and still benefit from the federal tax credits is June 30, 2010. However, a signed purchase contract must be agreed upon no later than April 30, 2010.

    Hopefully, you were able to get your questions concerning either the $8,000 first-time home buyer tax credit or the $6,500 “move up” home buyer tax credit answered here.  If not, please call (877) 868-2503 and speak to a licensed mortgage professional who can answer any additional questions you may have. Don’t wait too long, as current mortgage rates are still incredibly low. Once the Treasury Department stops purchasing mortgage-backed securities, it is expected that mortgage rates will begin to rise sharply.

    –Robert Hyder

    Follow Total Mortgage on Twitter

    Category: Current Mortgage Rates, First Time Home Buyer, Mortgage Rate Trends and Analysis, Stimulus

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