Snapshot: Housing and Economic Recovery Act of 2008 - 1st Time Homebuyer Tax Credit Info

Let's start with the basics. The who, when, & what!

Who's Eligible?

1st-time Home-buyers only. This means that neither the purchaser nor the purchaser's spouse may have owned a principal residence in three years prior to the purchase.

When Is It Effective?

Purchases on or after April 9, 2008 until the feature terminates before July 1, 2009. Thus, it doesn't matter if you signed the offer to purchase in February as long as the closing(simply put the transfer of title) occurs on or after 4/9/08 you'd be eligible to take the credit.

What Does the Refund Do?

Refund reduces income tax liability for the year of the home purchase and will be claimed on the tax return for that year.

What Properties are Eligible?

Eligible property includes any single-family residence that will be used as a principal residnence. No condos or co-ops allowed.

How Much of a Credit Can I Get?

Ten percent of the cost of the home, not to exceed $7500.

Are There Income Limits?

You are eligible for the full amount of credit as long as your adjusted gross income is $75000 or less ($150000 if filing joint return). Their are credit phase outs above those caps and individual with incomes at $95000 for individuals and $170000 for those filing jointly will not be eligible for any tax credit.

Now let's get down to business and look at the fine print. The government is not simply giving you a $7500 tax break!

Do I Have To Pay This Credit Back?

Recapture! Yes, that's what I said. A portion of the credit - 6.67% - is to be repaid each year for 15 years. If you sell your home before you've reached 15 years the remainder of the credit will be recaptured upon the sale. This feature is why you may have heard this tax credit referred to as an interest free loan. Home-buyer pays 6.67% of whatever credit they receive($7500 or less) for the next 15 years with no interest. So, if you qualify for the full $7500 credit you will repay $502.50 each year for 15 years.

One caveat here is that if you sell your house before the 15 years and there isn't enough proceeds to pay back the loan the remainder will be forgiven. You will not owe the IRS if the proceeds fail to cover the full repayment amount.

What About The Alternative Minimum Tax?

The credit can be used against the AMT so that it will not push individual into the AMT.

Item of note:

There's no application. Just claim the credit on the appropriate tax form if you wish to take it.

Disclaimer: Nothing in this article shall constitute either legal or tax advice. Consult with your tax advisor regarding the use of this provision.

Shannon Luscher VP Elite Mortgage Solutions, Inc. Visit the Elite Mortgage Daily Blog for Mortgage News & Insights at http://elitemortgagesolutionsdailyblog.com/ Wisconsin borrowers can find more information about rates and products by visiting my comprehensive website - http://www.elitemortgagesolutions.com/

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A Glance At Local Sheriff Sales

I recently took a random look at the current sheriff sales listed for Brown and Outagamie County. My sample included 10 from each county. I kind of wanted to see what the average value of a foreclosure was. In Brown County the average was roughly $132,436 and in Outagamie the average was roughly $119,640. OK, now both of these averages are under $135000 so I would guess that a good number of these foreclosures were 1st-time home-buyers (not a scientific conclusion)but not that far of a stretch based on the values.

I think it's good to look at these types of numbers though. It helps in pinpointing where there may have been product failures.

Draw your own conclusions, but as far as the fox valley area it's not the big dollar homes that are being foreclosed upon.

Brown County Median Sale Price
	Q1	Q2	Q3	Q4	Total
2008	$136,700
2007	$144,000	$150,800	$150,800	$150,000	$149,200
2006	$150,800	$153,300	$151,400	$146,200	$150,700
2005	$149,300	$151,700	$153,700	$147,700	$151,400
Outagamie County Median Sale Price
	Q1	Q2	Q3	Q4	Total
2008	$131,400
2007	$128,600	$138,600	$147,700	$137,300	$138,600
2006	$140,000	$137,300	$140,000	$140,000	$138,700
2005	$138,600	$138,500	$140,000	$130,800	$ $138,300

Source WRA

Wisconsin's median price in the 1st quarter of 2008 was $154,000, according to the Wisconsin Realtors Association. The foreclosures I looked at, are on average, quite a bit below the WI median price. Thus these are generally below average valued homes being foreclosed on. The very price range that oftentimes attracts 1st-time buyers.

Love to know how many of these were 1st-timers?ARMS?

Spotlight Green Bay - It's a Great Time to Buy

In yesterday's USA today there was an interesting article about the Green Bay housing market. For the most part it reiterated what we've been seeing in the Fox Valley area.
The median home price in Brown County is actually up 2.6% to $150000 while the state average is the same as last year at $160000.

As for the foreclosure crisis, Brown County has not had a huge number of home foreclosures. In the first nine months of 2007, there were 277 foreclosures in Brown County, up from 240 a year earlier, according to the Green Bay Press-Gazette.

Rates are still great and there are plenty of houses to choose from. If you are a first-time homebuyer it's a great time to be in the market. There are some really good deals out there!

WHEDA Loans - A Unique Opportunity for 1st-time Homebuyers in Wisconsin

By Shannon Luscher

History of Why WHEDA was Created

The Wisconsin State Legislature created the Wisconsin Housing and Economic Development Authority (WHEDA) in 1972 to meet a vital need for affordable housing for low and moderate income residents. Further legislation in 1983 broadened WHEDA's mission to include both small business & farming financing options.

Who they are & What they do!

WHEDA is an independent authority, they are not a state agency. WHEDA is a lender, they are not a granting Agency. WHEDA issues bonds and notes for sale to finance housing development for homebuyers at attractive rates and terms.

WHEDA Programs

HOME Loan

Offers low cost, fixed interest rate financing to low-to-moderate income first-time homebuyers.

HOME Loan for Veterans

Offers low cost, fixed interest rate financing to military veterans purchasing a home.

Zero Down Loan

Offers first-time homebuyers an affordable, fixed-rate mortgage with no down payment.

HOME Plus Loan

Provides financing of up to $10,000 for down payment and closing costs and, a line of credit for future home repairs.

Partnership for Homeownership

A partnership between WHEDA and the US Department of Agriculture - Rural Development that provides affordable home financing for Wisconsin's rural residents.

Lindsay Heights

A unique homeownership opportunity in the City of Milwaukee.

There are income limit and purchase price limit eligibility requirements for the WHEDA Loan Programs. Furthermore it is easier to qualify for a HOME Loan if the property resides in a designated Target Area.

WHEDA Grant Opportunity

Funding WHEDA grants was made possible through a grant WHEDA received from the Federal Home Loan Bank of Chicago (FHLBC). Grants are available on a first-come, first-served basis and are designated to be used for down payment and closing cost assistance to first-time home-buyers in specific urban and rural markets. Down payment assistance is in the form of a 0% interest, no monthly payment, 5-year forgivable grant of $5,000 per household.

Am I eligible for a grant?

• Available to first-time homebuyers that meet specific income requirements and use a WHEDA HOME Loan

• All borrowers must participate in six to eight hours of face-to-face homebuyer education

• Borrowers must invest a minimum of $500 into the loan transaction

• Borrowers cannot receive cash back at the time of loan closing

• These grant assistance dollars cannot be used with other FHLBC funds, such as Down Payment Plus

• Disbursement of the grant assistance funds will come from a designated FHLBC grant administrator

• WHEDA standard HOME Loan underwriting guidelines apply

For more info on WHEDA's 1st-time Home-buyer programs and for current WHEDA rates - Wisconsin residents can contact Shannon.

Shannon Luscher
VP Elite Mortgage Solutions, Inc.

Visit the Elite Mortgage Daily Blog for Mortgage News & Insights at
http://elitemortgagesolutionsdailyblog.com/
Wisconsin borrowers can find more information about rates and products by visiting my comprehensive website - http://www.elitemortgagesolutions.com/

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Mortgage Basics For The First Time Buyer

By Dan Harris

Understanding the concept

Mortgages are what a lot of people use to buy their home.

Mortgages have been instrumental in helping many people by making that unaffordable house affordable. Some real estate investors make use of Mortgages for buying properties.

However, mortgages are not free money and anyone who buys real estate or plans to buy real estate using a mortgage must understand the concept of mortgages very clearly.

Down Payments and Mortgage Money

A mortgage is the money that you borrow from a financial institution or a mortgage lender for the purpose of buying a property. The mortgage generally covers a part of your purchase price and the remaining portion has to be paid by you upfront in the form of a down payment.

The percentage of total purchase price that you have to pay as down payment is dependent on a number of factors and you may be able to reduce it to as low as 5%.

Many lenders will allow this type of loan based on various factors such as; credit score, documented income, property location and other factors. FHA and VA loans can reduce the down payment requirement on Mortgages even further. Many lenders have special first time buyers programs that offer 3% down payment options.

Whatever you borrow from the mortgage lender needs to be paid back to the mortgage lender over a period of time of course. You will also be paying an appropriate interest on that mortgage. Mortgages and their terms are based on risk to the lender, the higher the risk, the higher the rate. The term and type of mortgage combined with the prevailing market rates will determine the interest rate you pay for your mortgage Generally, you are required to pay back the mortgage in the form of monthly installments which are composed of both interest and principal portions of your mortgage.

Types of Mortgages

There are various types of mortgages such as; fixed interest rate loans and adjustable interest rate loans. There are also mortgages with differing terms, for example you could take out a mortgage for 10 years, 15 years, 20 years, 30 years, 40 years and believe it or not, there are even 50 year mortgages available.

So depending on what type of mortgage you have gone for, your monthly payments might either remain constant (fixed rate) for the full term of the loan or keep getting adjusted periodically (adjustable rate) on the basis of a pre-determined financial index.

Closing Costs & Other Fees

Besides interest rates, there are some other costs that are also associated with mortgages such as closing costs, inspection costs, attorney fees, appraisals, title insurance etc.

If the property needs some repairs, there will be costs associated with that too. Some states have mortgage taxes and transfer taxes, and it varies by state on who is responsible for paying these taxes.

Mortgage Advice

So, now you can see the need to understand the concept of mortgages and the related costs clearly before you actually go forward. Understanding these concepts is really not that difficult if you enlist the help of a good mortgage adviser.

Mortgage advisers come in many shapes and sizes. You can find them every where, a local mortgage broker, at your local bank or credit union, on the internet, in the yellow pages, television advertisements the list is only limited by your imagination. Suffice it to say there is no shortage of places to find mortgage advice some good and some bad.

There is a saying in the mortgage business, if you shop for a mortgage on the phone, you will do business with the best liar, do not let this happen to you. Unfortunately there is no scarcity of mortgage people who will try to get your business lying.

Make sure you find someone you trust, after all this is one of the single largest investments you will ever make in your life. I tend to advise people to choose an adviser who you can visit and look in the eye.

I strongly recommend that you do business with someone who will tell you the absolute truth about what mortgage products are available for your situation, someone who will tell you what you NEED to hear NOT what you WANT to hear, someone who is not afraid to tell you, if you have poor credit, the REAL interest rate available for you etc.

Dan Harris operates Harris Capital Management and Mobil Settlement, LLC in New York and can provide detailed information on New York Mortgages, New York Title Insurance Issues, New York City Mortgage Companies, New York Mortgage Rates and more. Dan is also available for seminars and speaking engagement.

He can be reached at CashDan or at http://www.MobilSettlement.com

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