On Friday, November 6, 2009, President Barack Obama signed a law that extended the First Time Home Buyer Tax Credit, which was set to expire on November 30th. This law not only extends the first time home buyer tax credit, but it will also add a new tax credit for qualified repeat home buyers.

Though there is much debate whether this was a good thing for the country, the fact is, it’s a done deal and you need to understand the facts of this new law.

With this new law in effect we realize that there are many questions being asked. Well, we have the answers for you.

Q: What has stayed the same in the new law?

1) First-time home buyers still get a credit of as much as 10% of the purchase price, up to a maximum $8,000. “First-time” means people, including both partners of a married couple, who haven’t owned a principal residence for three years before the purchase.

2) All taxpayers who claim a credit must use the home as a principal residence for the next three consecutive years.

3) The credits offer dollar-for-dollar reductions of tax and are refundable. This means that a taxpayer who doesn’t pay enough tax to offset the credit can get a refund. For example, if you qualify for an $8,000 credit but only owe $5,000 in tax, you could receive a $3,000 check from the Internal Revenue Service.

4) Under the new law, as under the old, 2009 home buyers may claim the credit on either their 2008 or 2009 returns, and 2010 buyers may claim the credit on either their 2009 or 2010 returns.

5) Taxpayers do not qualify for a credit if they buy from a lineal ancestor or descendent, including parents or grandparents and children or grandchildren.

Source

Q: What has changed?

Several important features took effect as of Nov. 6:

1) To take advantage of the tax credits, a buyer must have a contract in place before May 1, 2010, and the deal must close before July 1, 2010. No further extension is expected.

2) The price of the house is now capped. For purchases made after Nov. 6, no credit is available for any home costing more than $800,000.

3) There is now a tax credit for repeat buyers as well as for first-time buyers. Taxpayers who have lived in one residence for five consecutive years of the past eight can now qualify for a tax credit of as much as 10% of the purchase price, up to a maximum $6,500, of a new principal residence. The new home does not have to cost more than the old one.

4) Income limits for people who qualify for a tax credit are far more generous than under the previous law. For single filers, the credits now phase out between $125,000 and $145,000 of modified adjusted gross income; for married couples, the range is $225,000 to $245,000. For most people, modified adjusted gross income will be the same as adjusted gross income.

5) The new law contains anti-abuse measures designed to stem fraud, which became a problem with the previous home-buyer tax credit. Most buyers must be 18 or older, and no taxpayer may take a credit if he or she is claimed as a dependent on someone else’s return. Taxpayers taking the credit will also have to furnish proof of purchase. According to Robert Dietz of the National Association of Home Builders, this will usually be a HUD-1 form.

6) People taking the tax credit, as under the old law, aren’t allowed to buy a home from a lineal ancestor or descendent. The new law, applying to purchases made after Nov. 6, also says a person may not take a credit if the home is purchased from a spouse or the spouse’s lineal relatives.

Source

For more details or to answer any questions you may have regarding the home buyer tax credit please contact Don @ (417) 844-5370 or fill out our contact form to be contacted by email.

All the news on this bill shows that it will probably happen very soon.  Not only will this bill be an extension to first time home buyers, but they are looking to extend up to a $6,500 tax credit to move-up buyers.  For those who have lived in their home for at least 5 years and are ready to move up, now might be the perfect time.

With the real estate market still struggling to pick up and average home prices still low, this could be a great time to find some great bargains and take advantage of the tax credit extension.

We hope to know the outcome of this bill by the end of the week.  Stay posted as we will let you know as soon as they officially announce the outcome and the details of this tax credit extension.

We would love to hear your feedback on the first time home buyer tax credit extension.  Are you for this?  Why or why not?  Leave your comments below.

Over the past 14 years Liberty Bank has grown to 271 associates, just under $1 Billion in assets and 18 locations in 11 communities throughout southwest Missouri. Of those six original employees, four are still employed with Liberty Bank today.

My team joined Liberty Bank a little over two months ago and in those two months we have been able to accomplish more than we did in the previous five plus years. We are excited to be a part of their team and look forward to celebrating many more birthdays with them.

If you are in southwest Missouri, please stop by one of our 18 branches and wish them a Happy Birthday! Tell them Don in the mortgage department sent you!

In this episode of “Its Not Rocket Science,” Don will walk you through debt to income ratio.  He will answer the question, “How do you figure your debt to income ratio?”  And he will show you that it truly isn’t rocket science to figure it out on your own, so you are prepared and educated when it comes time to sit down with your mortgage consultant.

Grab a pen and a pad of paper and join Don as he answers the question, “What is mortgage debt to income ratio?”

As you have heard from the media, the entire country is still going through the pains of a mortgage crisis. It is difficult enough for those that work in the business to keep up with all the changes, let alone customers and Realtors trying to know all the changes that occur almost daily!

So What’s The Big Deal?

Well, the big deal is that everyone wants to have the home buying process a pleasant one, but if a buyer begins the process by looking for their home before getting pre-qualified, then they run the risk of making the home buying process much more difficult and potentially frustrating for the buyer, the Realtors, the sellers and even your loan officer.

Let’s play out a scenario so you can see what can happen if you look for a home before knowing if you are qualified to purchase that home:

• You go out and find the perfect home you have always wanted only to find out that the lender can’t prove you can afford it. How does that make you feel? Are you upset? Of course you are!

• So now you are upset! You are upset at the lender because he/she can’t get you the home loan you want to buy that nice home you just fell in love with. You are upset at the Realtor for leading you to this home that you can’t buy. All parties involved are now upset over a situation that could have easily been avoided.

• Now that you have found the perfect home you can’t buy, you can’t get it out of your mind. Nothing else you look at in the price range will compare. Now, instead of having a pleasant buying experience, it has turned into a disgruntled experience for all involved.

• More than anything, you have brought undue stress upon yourself. You have created a situation for yourself that could have been easily avoided if you would have known the best practice when buying a home.

So What Should You Do?

Get Pre-Qualified FIRST! Put the horse in front of the cart where it belongs. Before you ever begin looking at homes and meeting with your Realtor, meet with an experienced mortgage consultant who can get you fully pre-qualified. Make sure you choose a mortgage consultant who is not only willing, but able to educate you so you understand the entire loan process and all the options you have available to you. Once you have met with your mortgage consultant, you should have a much better idea of what you can afford, what kind of loan you qualify for, and feel much more relaxed as you go out shopping for your new home!

By getting pre-qualified first, you will now know how much home you can afford. It will also speed up the loan process, because your mortgage consultant will already have your information when you do find a home. Now, you will be able to meet with your Realtor, tell them what kind of house you are looking for and what your mortgage consultant has pre-qualified you for. This will make their job much easier in finding you the best home for your money.

I can’t stress enough how following this plan will make your home buying experience an easy and effortless process. Just be sure you find a qualified mortgage consultant who has your best interest at heart. Not a salesman, but one that is truly interested in making the home-buying task as painless as possible for you.

Buying a home can be a joy! Just make sure you know what you can afford before you start shopping. You will be much more relaxed and confident and it will allow everyone involved the ability to get you into the home that you want on the budget you have.

I hope that I have helped you understand the importance of getting pre-qualified first and that it will save you much heartache in the future. If you are looking for a home in Missouri, Arkansas, Kansas or Oklahoma and have not found a great mortgage consultant, we would love the opportunity to earn your business. Fill out our Quick Application to begin the process. We look forward to making your home-buying experience a pleasant and exciting memory you will cherish for years to come!

The Fed’s been at it again, offering words that sound encouraging at first blush, confirming that their buying program of Mortgage Backed Securities is in full swing and will continue as needed. Of course, the media will pick this up and offer their own interpretation, saying “Good news, the Fed’s words on continuing their purchasing program mean that rates will continue to drop lower, and remain low into the summer…” But is this really what that means? Not so.

Here’s the truth.

Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds…which won’t have much of an impact on present interest rates. Why? First, see the Fed’s purchases for yourself by hitting this link: Direct Link to View Fed Mortgage Bond Buying.

So why is the Fed buying these Bonds? Well if you think about it, it’s very smart of the Fed…and maybe even a little sneaky…because 5.5% Bonds actually represent outstanding mortgages with rates of 6 – 6.50%, which are precisely the loans being refinanced at today’s great interest rates.

Stay with me here…

With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today’s low rates.

Here’s the most important part.

Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.

The clincher is this:

Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month – think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner – or in the example used, $250 – for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.

I don’t want anyone to miss an opportunity by either waiting, or not understanding what is at stake. Let’s talk further on this – call or email me and let’s discuss what this might mean for you.

Happy Shopping!!

–Don

Don Carriker Interview – Part 1
Don Carriker Interview – Part 2

No news whether it will be renewed.  It may go just as quick as the cash for clunkers did.  In order to qualify for your $8,000 Tax Credit you must be a first time home buyer and close by November 30th, 2009.  If you do not find a home soon, you may not close by then.

Get pre-qualified soon.

In my case, a particular change has been VERY good. I am excited to announce that I recently joined Liberty Mortgage, a division of Liberty Bank. Liberty Bank is one of the fastest growing banks in southwest Missouri with18 locations and just under $1 billion in assets. With this change, I can now offer many great new loan and banking services and l look forward to sharing them with you, your family and friends.

We all know there has been much turmoil in the banking and mortgage industry lately. This is why integrity and excellence remain my top priority! I am proud to be a part of Liberty Mortgage’s exceptional lending team and have dedicated myself to helping you make the best mortgage decisions possible during these difficult times.

I sincerely value your past business and the referrals you send my way. This is why I am still committed to creating a lending experience that is enjoyable, friendly, and consistent. As always, you can reach me on my cell phone anytime at 417.844.5370 or stop in to see me at:

4625 S. National
Springfield, MO 65810
Office: 417.875.6744
dcarriker@therisingstar.com

If you are looking to purchase or refinance your home, get pre-qualified today while rates are still low.