NJ First-Time Home Buyers

My good friend Richard DeGrace e-mailed me an article today that created one of those "WOW" occasions. At one time or another, we have heard every single party out there as being the cause for the "bubble" that we are experiencing in real estate.

All I am going to say is read this - maybe you'll feel the same way I did.

Steve Kappre is a Certified Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group, serving all 50 states, focusing on Gloucester, Camden, and Salem County, NJ. Steve specializes in;

• All areas concerning First-Time buyers; First-Time Buyer mortgages, grants, down payment assistance, tax credits, police and fire loans, rehab loans for first time buyers, and more.

• Reverse Mortgages for seniors age 62 or older.

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre

It is 2009 and we are in the middle of what is the best home buying market in years. Prices have dropped to their lowest levels in 6-12 years, (depending on where you are located).  Interest rates are near the lowest levels in history. And thirdly the reason for this article; the first-time home buyer tax credit. 

Many people will be looking for the guidelines regarding the updated and expanded first-time home buyer tax credit. Below is a copy of the text directly from the IRS website.  At the bottom of this post is my contact information if you sould need additional assistance. Regards ~ Steve Kappre

IR-2009-14, Feb. 25, 2009

WASHINGTON - The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

"For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit," said IRS Commissioner Doug Shulman. "This important change gives qualifying homebuyers cash they do not have to pay back."

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

IRS Link for First Time Buyer's Tax Credit

Steve Kappre, Mortgage Planner

856-419-3561

www.stevekappre.com

Steve Kappre is a Certified Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group, serving all 50 states, focusing on Gloucester, Camden, and Salem County, NJ. Steve specializes in;

• All areas concerning First-Time buyers; First-Time Buyer mortgages, grants, down payment assistance, tax credits, police and fire loans, rehab loans for first time buyers, and more.

• Reverse Mortgages for seniors age 62 or older.

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

It seems that every time I turn around Fannie, Freddie, or even FHA are either raising credit score requirements, or tacking on higher fees - OR BOTH.  Several years ago, you could find 100% financing for people two years out of foreclosure. In a rapidly appreciating market a loan product like that still might be safe for the investor, because someone that is months behind in mortgage payments could list their home and sell it in 30-45 days, and net a profit even though they bought just 6 months prior.  Many people "won"!

However, it seems like we all are losing today.  If you hang around the office nowadays, you'll hear things like, "Sir, you need a 740 or better FICO score, and will have to put 30% down or more." Even FHA, the savior to us all in this market, is hitting back hard. Rumor has it that after this Friday, February 20th, lenders such as Wells, Chase, and Citi will no longer accept FHA loans with a FICO score less then 620. (You better lock them in now!) Even if other lenders are initially going to accept FHA loans below 620, there is a good chance that they will follow suit.

This will again cut a HUGE segment of today's buyer out of the picture.

Mr. President and staff, everyone is glad you are making efforts to beef things up and get first-time buyers out and buying, but don't forget, a very large percentage of these buyers have credit scores at or below 620. What can be done about that? Our first time buyers will never realize the $8,000 tax credit.

Fannie, Freddie, and many portfolio lenders would finance anyone with a pulse a few years ago. And now our nation is really hurting because of such lending practices.  And yet here again, another tidal wave is coming against the "average" buyer. Except this time, lenders are going overboard restricting good, solid buyers.

It is hard to stimulate a housing market when the lenders are increasingly working against it.

In case you do not know, it is not hard to have a 620 score. You can pay EVERY bill you ever had, on time, and have a 620 or lower score just by carrying high balances on you credit cards. The reality is lenders see scores in the 570's with NO late payments.

No one is suggesting that there is no additional risk with such a borrower that heavily utilizes credit cards. However if such a borrower can fully service this debt along with their new housing debt, and have a good debt ratio around 41%, then they should have a loan available to them. We used to love FHA for their "common-sense" underwriting. Now even FHA is getting credit score requirements tacked on. Even if FHA themselves aren't restricting, the end result is the same.

Isn't this the very reason FHA was initiated?

Who's to say the future doesn't hold even higher FICO requirements for the home buyer?  One would hope FHA will step in and try and regulate investors from getting out of hand. There is such a thing as good regulation, after all.

Steve Kappre is a Certified Mortgage Planner with Treasury Mortgage, a subsidiary of Aurora Financial Group, serving all 50 states, focusing on Gloucester, Camden, and Salem County, NJ. Steve specializes in;

• All areas concerning First-Time buyers; First-Time Buyer mortgages, grants, down payment assistance, tax credits, police and fire loans, rehab loans for first time buyers, and more.

• Reverse Mortgages for seniors age 62 or older.

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Great posting from one of my favorite peers. If you need some umph or motivation spend a few minutes to read (and hopefully change for the better). Conact me, maybe we can make a change together and hold each other accountable! Enjoy.