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IRS Tips About The Extended First-Time Homebuyer Credit

December 17th, 2009 9:35 AM

IRS Tips About The Extended First-Time Homebuyer Credit

Chesterfield, MO - Whenever you get a notice from the Internal Revenue Service (IRS), most people tend to pay very close attention. For first-time and repeat homebuyers, what the IRS has to say about the Extended First-Time Homebuyer Credit could mean money in their pockets and make the process easier for claiming the tax credit.

Our local St. Louis regional IRS Stakeholder Liaison, Nancy S. Outlaw, in Chesterfield, Missouri has distributed helpful information to aid new and repeat homebuyers. According to Lawson, the IRS wants you to "feel free to use these tips" in obtaining the extended homebuyer credit included in the recently passed legislation titled Worker, Homeownership and Business Assistance Act of 2009.

Here are the top 10 facts the IRS wants you to know about the expanded credit and the qualifications homebuyers must meet.

You must buy - or enter into a binding contract to buy a principal residence - on or before April 30, 2010.
If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.
For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.
A long-time resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you've lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.
The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.
People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.
The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after November 6, 2009 - whether the credit is claimed for 2008 or for 2009 - and for all home purchases that are claimed on 2009 returns.
No credit is available if the purchase price of the home exceeds $800,000.
The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
A dependent is not eligible to claim the credit.

The IRS has joined the YouTube generation. If you like your tax credit information delivered via online video, check out the IRS tips in a one minute video on YouTube. And if you want the thrill of seeing the letters "IRS" showing up in your email mailbox periodically, sign up for a free IRS Tax Tips Newsletter here. This service is provided to you at no charge by the Internal Revenue Service (IRS).

Posted by Customer Service on December 17th, 2009 9:35 AMPost a Comment (0)

Are Free Credit Reports Really Free?

December 31st, 2009 9:17 AM

Are Free Credit Reports Really Free?

Reported by Bottom Line Personal Newsletter

Bottom Line on the News reported in their publication last week that consumers are being duped into ordering free credit reports online that aren't really free.

Unwary consumers that visited www.FreeCreditReport.com for example, and subsequently signed up for a free credit report, found themselves enrolled in a $14.95 per month credit monitoring service. The company's web site and TV ads all proclaim that your credit report is free, but smaller, easy-to-miss print on the site states that if you click to order your free report you are enrolled in the company's monthly pay-as-you-go credit monitoring service.

The Better Business Bureau has received more than 10,000 complaints about this practice. Greg McBride, CFA and a senior financial analyst from Bankrate.com states "unless you cancel your subscription within seven days" you'll be stuck with the monthly service charge.

There is a better way to order a free credit report. Go to www.AnnualCreditReport.com for a really free credit report.

New Rules Prohibit Deceptive Advertisements

Consumers are faced with myriad decisions about securing a home mortgage. Their task is much more difficult when advertisements they use to select a mortgage product are misleading. New rules effective October 1, 2009 prohibit seven common deceptive ad practices.

The new rules are Federal Reserve Board amendments to Regulation Z of the Truth In Lending Act (TILA) Section 129 (I)(2), 15 U.S.C. 1639(I)(2) and apply to closed-end mortgage loans. Here is a synopsis of the new rules:

Advertisements cannot claim that the loan has a "fixed" rate or payment if the rate or payment will vary over the life of the loan. The advertisement must disclose with equal prominence all of the rates or payments that will apply over the entire term of the loan and include the APR for the loan.
Advertisements cannot compare an actual or hypothetical rate to the one the consumer will obtain unless the advertisement states the rates or payments will apply over the full term of the loan.
Advertisements cannot characterize products offered as "government loan programs," "government-supported loans," or otherwise endorsed or sponsored by a federal or state government entity if the advertised products are not government supported or sponsored loans.
Advertisements, such as solicitation letters, from companies not associated with the borrower that display the name of the current borrower's mortgage lender must disclose that their advertisement is from a lender not affiliated with the consumer's current lender.
Advertisements cannot make claims of debt elimination if the product advertised would merely replace one debt obligation with another.
Advertisements cannot create a false impression that the mortgage broker or lender is a "counselor" for the consumer.
Foreign-language advertisements which promote "teaser" rates or provide information about trigger terms in a foreign language cannot provide disclosure information about those trigger terms or required disclosures only in English.

Link: New Rules

Posted by Customer Service on December 31st, 2009 9:17 AMPost a Comment (0)

Giving the Gift of a Down Payment

December 24th, 2009 9:10 AM

Giving the Gift of a Down Payment

Tips from SmartMoney.com. If you're thinking big for junior's holiday gift - as in down-payment-on-a-home big - there's good news. Along with the warm and fuzzy feelings parents will get, there's also a tax advantage.

The IRS allows parents to give up to $13,000 annually to their child, or other recipient, without incurring a gift tax, says Troy Von Haefen, a certified financial planner in Nashville, Tenn. The cap increased $1,000 in 2009 from last year's $12,000 cap in tax year 2008.

Conceivably, a married couple could give four times that - up to $52,000 to their child and their married child's spouse, tax free. Giving more than $13,000 to one person would eat into your lifetime gift-tax exclusion, which is $1 million for individuals.

The newly extended and expanded home buyer tax credit is an additional incentive for parents to help their children buy a house now with their gift. The deadline - both for the first-time home buyer credit of up to $8,000 and the existing homeowner credit of up to $6,500 - is April 30, 2010. With a signed contract, you'll be able to close through June 30, 2010. The tax credit only applies to homes purchased for $800,000 or less.

There are stipulations to keep in mind with this kind of transaction.

Documentation is required - Make sure any transfer of funds to your child happens before they apply for a mortgage loan. Documentation must be provided to show the down payment money is, in fact, a gift and not a loan. The donor must show the source of their funds - usually providing a bank or other account statement. If the donor isn't comfortable with this, they could get a letter from their financial institution verifying that the donor is an account holder and they have the money to donate.

The gift letter should be signed by both the donor and mortgage applicant stating that the funds are a gift and no repayment is required. The letter also has to specify the dollar amount that will be given, the donor's relationship to the applicant and assert that the funds are not coming from anyone who has an interest in the sale of the property. You'll want to make a copy of the gift check and the deposit receipt. Paramount Mortgage Bankers can provide you with an example of a gift letter and any help you'll need.

Borrower might still have to contribute to the down payment - The rules for gifting money for a down payment depend on whether the mortgage is a conventional loan or an FHA loan. For a conventional mortgage where the buyer has less than a 20% down payment, they'll need a minimum of 5% from their own funds in the transaction. But if a parent gifts his or her child 20% or more of the home's purchase price, there's no need for the borrower to put in their own money because the loan-to-value (LTV) ratio will fall within acceptable limits. For an FHA loan, however, the down payment can be 100% from a gift.

Don't stretch it - advice for the gift recipients: This is not the time to stretch for a minimal down payment, so if the gift isn't enough for a substantial down payment, reconsider the purchase or wait. Susan Brown, of Back Bay Financial, advises buyers to have a 20% down payment or 10% at a minimum. With a smaller down payment, you're more exposed to further declines in home values while having little equity in the home, she says.

Posted by Customer Service on December 24th, 2009 9:10 AMPost a Comment (0)

Nine Consecutive Gains for Pending Home Sales

December 18th, 2009 11:27 AM

Nine Consecutive Gains for Pending Home Sales

Washington - Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October increased to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. "Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually".

"We were well below the 5-million mark before the home buyer tax credit stimulus," Yun said. "This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future."

Yun cautioned that home sales could dip in the months ahead. "The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months."

In the local St. Louis Market, Trulia.com, the Real Estate Search web site has ranked a field of forty four area zip codes by homebuyer popularity. Analysis shows the average median sales price is $129,833 for September/November.

St. Louis homes under a median sales price of $150,000 represent the hottest area of this market. Average sales price, price per square ft., median sales price and listing price are tracked each month.

Here are the top ten St. Louis zip codes

Zip Codes

Median Sales Price

Year to Year Gain/Loss

63109

$125,000

13.00%

63129

$133,100

-25.30%

63128

$143,016

-27.20%

63116

$76,773

10.80%

63108

$135,538

-31.00%

63124

$214,631

-61.00%

63139

$102,487

-12.10%

63118

$78,573

12.40%

63119

$143,944

-22.20%

63146

$146,397

-16.00%

Yun predicted "as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families."

Posted by Customer Service on December 18th, 2009 11:27 AMPost a Comment (0)

Proposed Missouri Program to Pay First-Year Property Taxes

December 3rd, 2009 9:49 AM

Proposed Missouri Program to Pay First-Year Property Taxes

Reported by Marshall Griffin, St. Louis Public Radio

Jefferson City, MO - St. Louis Public Radio reported on air this week Missouri's Governor Jay Nixon and State Treasurer Clint Zweifel are backing a proposal to pay the first year's property taxes for some Missouri homebuyers.

The proposed plan targets families making less than $98,000 a year, who buy a new or existing home after January 1st.

Up to $1,750 in first-year property taxes would be paid by the state when a homebuyer purchases an energy efficient new home, or makes energy-efficient improvements to an existing home purchase.

Up to $1,250 in first-year property taxes would be paid if you purchase a new or existing home that falls outside of energy efficiency guidelines.

The program's cost would be covered by a $15 million reserve fund held by the Missouri Housing Development Commission (MHDC).

State Treasurer Zweifel, who is also the Chairman of the MHDC, says the proposal would help the state's housing market and spur job growth. "We do know the important role that home ownership plays in creation of jobs, and housing and jobs are very connected at every level, so this is a way to reinvest that money in a way that helps ensure that we not only help achieve home ownership for some families, but we also help reinvest that money back into the economy," Zweifel said.

The commission includes the governor, lieutenant governor, attorney general, state treasurer and six persons appointed by the governor with the advice and consent of the Senate. MHDC will meet on December 18th to consider the proposal.

Once adopted, Missouri homebuyers will have one more bit of good news. Purchases of new homes in the U.S. rebounded more than anticipated in October as buyers across the nation and in the St. Louis metro area rushed to take advantage of a government tax credit before it expired, according to a news story this week from Bloomberg.com.

Now that tax credits have been extended and expanded, new home sales are expected to continue their climb nationwide from October's 6.2 percent increase and 430,000-unit annual pace throughout 2010.

While accounting for less than 10 percent of the housing market, new-home purchases are considered a good indicator of housing health because they are based on contract signings. The number of unsold homes has reached a four-decade low.

Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, was quoted, "Even though the surge is policy-induced, it shows buyers have enough confidence to undertake a major purchase if conditions are right."

Link: Property Tax

Posted by Customer Service on December 3rd, 2009 9:49 AMPost a Comment (0)