Tax Credit for First Time Home Buyers AND Repeat Buyers

UPDATED: July 2, 2010

The $8000 first time home buyer and $6500 repeat buyers federal tax credits have officially been extended. H.R. 5623 the Homebuyer Assistance and Improvement Act of 2010 was signed by the President, extending the deadline to close escrow on a qualified purchase from June 30, 2010 to September 30, 2010. The April 30, 2010 deadline to get "in to contract" remains the same. Buyers who will find this extension helpful include those with fully executed contracts dated prior to May 1st on short sale properties who are still waiting for the seller's bank to approve the contract.

UPDATED: June 28, 2010

The blogisphere is buzzing with claims the FTHB tax credit has been extended through September 30, 2010. Sorry to burst the bubble but it's not true ... at least for now. The Senate voted AND passed an extension of the FTHB tax credit but this provision is part of that HUGE Dodd/Frank financial reform and jobs bill that is all over the news these days. Congress still needs to vote on the entire package and it's not looking good for a vote before June 30th. Then the President has to sign it. So as things stand today, there is no extension. June 30, 2010 remains the last day to fund and close escrow on a qualifing purchase.


ORIGINAL POST

It’s official. The home buyer tax credit has been extended. Breathe in … breathe out … you now have until April 30, 2010 to get a purchase contract executed and qualify for the $8000 first time home buyer tax credit. If you’re already a homeowner (with some equity) and planning to buy up or downsize, you may qualify for the new $6500 tax credit. In either case, your escrow must close no later than June 30, 2010. Since Congress didn’t stretch this out for all of 2010, I wouldn’t plan on another extension. One more thing … the qualifying income limits have been raised significantly.

No need for me to reinvent the wheel. For all the details about both programs you have to check out this website. It has an awesome Q & A section.

An Extension of the $8,000 Home Buyer Tax Credit is Closer

As we approach the November 30th deadline, we have some encouraging news on the extension of the $8,000 home buyer tax credit. It’s not a done deal but the news is looking pretty good. Wednesday the Senate reached an agreement to extend the tax credit for first time home buyers. In a new twist, they are including a $6,500 tax credit for buyers who are not first timers. They also raised the qualifying income limits in a very meaningful way... singles were increased from $75,000 to $125,000 and joint taxpayers from $150,000 to $250,000. The Senate wants the qualifying period to be extended to purchase agreements executed by April 30, 2010 and allow buyers until June 30, 2010 to close their escrow.

The House and Senate now have to reconcile their versions of the tax credit and create a final bill to be voted on before the legislation will take affect. Both Houses have different ideas of what the home buyer tax credit should include so it will be interesting to see what they decide on.

Here's my take away from this news. Regardless of the provisions in the final bill, those of you who are actively making offers on homes now have some breathing room. If you’re motivated by the tax credit and have put off your home buying plans until next year, you’ll want to keep the April 30th deadline in mind. I’ll be back with another update once a final bill has been voted on and the details become available.

A Nasty Rumor Aimed at First Time Home Buyers

The rumor is home buyers who qualify for the $8,000 tax credit can use it as a down payment on the purchase of a home. SOUNDS FANTASTIC! So who is stepping up and loaning this future tax credit to the borrower? NOBODY! At least not in California. Being a mortgage broker associated with over 100 banks around the country and part of a vast group of fellow mortgage professionals (over 1,000) none of us has found anyone who is willing to monetize the tax credit. Nor have we found a mortgage bank allowing the tax credit to be used as a down payment.

This all began in May when HUS announced the $8,000 tax credit could be used for the down payment. The problem is, HUD brought this option to the table but didn't work with the lending industry to see it through implementation. Another example of our federal government in-action.

So if you hear a mortgage person or realtor tell you it can be done, be very very suspicious. Find out who is offering the loan, how much it will cost you and get it in writing. Then get a second opinion.