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 There’s just 30 days remaining to use the federal home buyer tax credit.
The credit ranges up to $8,000 for first-time homebuyers, and up to $6,500 for existing homeworkers who have lived in their main home for 5 of the last 8 years.
Claiming the federal tax credit is a two-step process. First, you must be under contract for a new home on or before April 30, 2010. Then, you must close on said home on or before June 30, 2010.
There are no exceptions on the dates (except for certain members of the military).
Timeline aside, homebuyers and the subject property must also meet minimum requirements in order to be tax credit-eligible:
- You can’t purchase the home from a parent, spouse, or child
- You can’t purchase the home from an entity in which the seller is a majority owner
- You can’t acquire the home by gift or inheritance
- Each buyer in the purchase must meet eligibility requirements
- The home sale price may not exceed $800,000
- Buyers may not earn more than $125,000 as single-filers; $225,000 as joint-filers
The complete eligibility checklist is published on the IRS website. Or, if you find IRS-speak too difficult, make a phone call to your accountant. Asking a tax professional’s advice on a tax-related matter is never a time-waster.
And lastly, don’t forget that if you’re claiming to federal tax credit for home buyers, it’s a tax credit and not a deduction. This means that a tax filer who qualifies for the full $8,000 and for whom the “normal” federal tax liability is $8,000, will owe no federal taxes in 2010 to the IRS.
If you’re an active buyer in San Francisco, or anywhere else in the country , mark your calendar for April 30, 2010. It’s 30 days from now and, as the date gets closer, buyer traffic will increase. The likely result is higher home prices and more difficult negotiations. The best time to act may be today.
If your mortgage is set to adjust this year, the smart move may be to let it. Today’s conforming mortgages are adjusting lower than ever before — as low as 3 percent. It may not be what you expected when you signed for your ARM several years ago.
The reason why ARMs are adjusting lower is because of how they’re made.
When conforming adjustable-rate mortgages adjust, they adjust according to a pre-determined formula. The formula is the sum of a constant and a variable. The constant is usually 2.25 percent and the variable is a daily-changing interest rate called LIBOR.
The formula looks like this:
New Mortgage Rate = LIBOR + 2.250 percent
LIBOR is an acronym for London Interbank Offered Rate. It’s an interest rate at which banks borrow money from each other. In Fall 2008, when Lehman Brothers fell and sparked a global banking fear, LIBOR spiked as the risk of inter-bank borrowing jumped.
Since then, however, LIBOR is down.
Normalcy is returning to banking and the timing couldn’t be better for Los Angeles homeowners with ARMs. 15 months ago, a homeowner’s ARM may have adjusted to 6 1/2 percent. Today, that same ARM falls to just above 3.
As a strategy play, it might make sense to let your ARM adjust. Or, because fixed rates are still near 5 percent, converting that ARM to a long-term fixed-rate product might make sense, too. The decision is a balance between how low do you want your payment, and how long might you live in your home.
The longer you stay, the more it might make sense to switch to fixed-rate, even though ARM rates are so low.
If you’ve got an adjusting ARM, talk to your loan officer about your choices. Once March ends and the Fed withdraws its mortgage market support, mortgage rates may rise and the fixed-rate option may be gone.
 If you are thinking about purchasing a new home, don’t wait until you find the perfect home to get prequalified! Make sure your credit is healthy and find out how much you can qualify for before you find the home of your dreams. This helps insure that you not only choose a home in the right price range, but help avoid falling in love with a home that you can’t afford!
Another great reason to get quaified as early in the process as possible is to insure the fastest closing possible. If there are multiple offers going in on a home, you may be at a disadvantage if you are not able to secure financing quickly. Don’t wait until the last minute!
We have home purchase specialists standing by that can give you FREE home purchase finance advice. Feel free to request a FREE Rate Quote or to Contact Us directly.
Tags: Home Loans, Home Purchase, Mortgages, New Home Purchase, Pre-Qualify
 As the Real Estate and financial markets continue to move up and down, mortgage rates can also be affected. Since mortgage rates are more closely tied to the bond markets, an up or down move in the stock market may not have the result in mortgage rates that one might expects. In fact, many times the resulting mortgage rate changes are counter-intuitive.
More importantly, rates change daily and they can change quickly. Some mortgage professionals have recently noted that their rate quotes have only had shelf lives of three to four hours before market changes have deemed them inaccurate.
How does a consumer navigate fast changing markets in order to refinance their existing loan or purchase a home with the most favorable terms possible?
- Plan – Define your needs ahead of time, do not wait until the last minute. This is especially true of home purchases.
- Consult – Talk to your mortgage professional on a regular basis so they can interpret recent market events to you and communicate how those events can affect you.
- Execute – When you have defined your needs and have determined that now is the best time to move forward, don’t shop yourself out of a good loan! What does this mean? It is easy to get caught up in shopping for the best rate, but it is not uncommon for home owners to miss locking their loan at a great rate because they are in search of better rates that do not exist or that they do not qualify for. It is important to shop to insure you are getting the best rate possible, but set limits to the number of companies you are going to consider doing business with and be careful of having your credit report needlessly and more times than is necessary!
Tags: Economy, FED, Home Purchase, Home Refinance, Mortgage Rates
 With the resurgence of FHA home loans, many home owners are wondering if they can benefits from an FHA loan. The truth is that you may or may not benefit by converting your existing loan into an FHA loan when you refinance.
Some of the factors that can determine if an FHA loan is right for you:
- Loan To Value
- Home Value
- Size of Existing Loan
- Credit Score
- Amount of Cash You Want to Take Out
With the many changes that have occurred with FHA loans, it is possible that even if you didn’t qualify six months ago, there may be a loan program that is right for you.
One of our mortgage professionals can help you determine if an FHA loan is right for you quickly with no costs.
Tags: FHA loans, Home Purchase, Home Refinance
 Our mortgage professionals can give you FREE loan advice to help you understand the mortgage process.
Wondering which loan is right for you? Not a problem! We can help determine which loan will fit your needs for your home purchase, refinance or debt consolidation needs.
If you have any questions, please contact us or call us!
Thanks!
Tags: Home Purchase, Home Refinance, Mortgage Loans, Mortgage Rates, Mortgage Refinance
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Tags: LeadPress, Mortgage Websites
Pop Quiz: Which interest rate is lower? 8.25% or Prime Rate?
If you answered anything other than “they are the same”, then you can understand first-hand why banks refer to Prime Rate by name instead of by number.
It’s a neat little piece of sales psychology that keeps people from recognizing their true cost of credit.
Prime Rate is based on the Fed Funds Rate and is pegged to be 3.000% higher. FFR is currently 5.250% (see chart at right) so Prime Rate is three percentage points higher, or 8.250%.
Since June 2004, Prime Rate has increased by 4.250% from 4.000% to today’s levels (again, see chart at right). During that time span, the interest rate paid on home equity lines of credit have increased by 4.250%, too. For many homeowners, this is surprising (and costly) news.
And it’s also one of the main reasons why Prime Rate is called by its name, and not by its value. Homeowners are less likely to pay attention.
For example, home equity lines of credit are based on Prime Rate and many homeowners know that their rate is “Prime + 0.500%”, or something similar. Many, however, are unaware of the actual number that is their interest rate.
As Prime Rate has increased, homeowners that aren’t paying attention to their mortgage(s) are carrying a household “blended” interest rate that may be much higher than anticipated.
What good is the 5.000% interest rate on the first mortgage if the second mortgage is clocking in at 9.000%? It may make sense to “rebalance” your loans to lower your overall payments because HELOCs are so much more expensive, relative to past years.
If you don’t know your household’s blended mortgage rate, or how changes to Prime Rate have impacted your monthly interest payment, ask your mortgage professional for help.
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