From the IRS, PR release #IR-2009-014:

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.

Please contact Cambridge Mortgage for more information.

The following Q&A is provided courtesy of the U.S. Department of the Treasury. The original document can be accessed online from the Treasury’s web site at this link - http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf

Borrowers Who Are at Risk of Foreclosure Are Asking:

1.    What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

2.    Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

3.    How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009. read more…

It is a temporary First Time Home Buyer Tax credit to provide a housing stimulus for first-time home purchases that occur between Jan. 1 and Dec. 1, 2009. The best thing about this new Tax Credit versus the previous one, other than the increase from $7500.00 to $8000.00, is that it does NOT have to be repaid. Combine this credit and also other tax benefits of owning a home today, a first time home buyer would actually make money buying a home vs. renting!!

I know this sounds too good to be true, so you ask what is the fine print and what does it mean to me?

So here it is in a nutshell:

• To qualify as a first time home buyer as defined in the program, the purchaser may not have owned a home in the three years prior to the purchase date of the home. Single family homes qualify for the program and the home must be your primary residence.
• To be eligible for the full tax credit, the home buyer’s adjusted gross income can not be more than $75,000 filing single / $150,000 joint. A home buyer with income level of that and up to $95,000 filing single / $170,000 joint is eligible for a reduced tax credit.
• The amount of the credit is the lesser of 10% of the purchase price or $8,000.00.
• No portion of the $8,000.00 will need to be repaid upon the sale of the home if the is owned for more than 3 years.
• The tax credit can be claimed on one’s individual or joint tax return between January 1, 2009 and December 1, 2009. It can be claimed on an amended 2008 tax return, or a 2009 tax return. You should consult a professional tax advisor for exact tax calculations and advice.

I hope this sheds some light on this First Time Home Buyer Tax Credit. After reading this I think it’s safe to say that in today’s real estate market if you are a first time home buyer and have the means necessary to buy a home you will not find a better time than the present to do so.

These are economic times where everyone is looking for ways to save money. If you are a current homeowner, or planning to be one, the link below will show you 12 ways to save money on the cost of home owner’s insurance. In many parts of the country, the cost of home owner’s insurance has skyrocketed for a variety of reasons. Some things we cannot change. However, as a smart consumer, you may want to look at these tips to be sure that you are not paying too much for your insurance. This can actually come into play with mortgage qualifying as well. Lenders look at a borrower’s income capacity to support their total housing expense. Part of that housing expense includes 1/12 of the annual home owner’s insurance premium. The more expensive the insurance is, the higher the total house payment is. This also means less of your total payment can go toward actually paying your mortgage. Shop carefully, & compare quotes from reputable insurance providers. This article is supplied courtesy of the Federal Citizens Information Center.

http://www.pueblo.gsa.gov/cic_text/housing/12ways/12ways.htm

CENTURY 21 Real Estate recently revealed that it is transitioning its television advertising to FrogPond TV online advertising.  “With 84 percent of consumers shopping for a home online, according to the National Association of Realtors, we’re confident that increased online advertising will benefit our brokers, agents and most importantly, the consumer,” says Tom Kunz, president and chief executive officer of Century 21 Real Estate.