FHA Loans and the Stimulus Tax Credit
*******************************************************************Today's guest post is by Brandon Laughridge of Mortgage Loan Place. MLP specializes in providing high quality mortgage content and has recently embarked on creating the web's best mortgage calculator with a $10,000 programming contest.
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The government is trying to re-energize the stagnant housing market - and that's making FHA loans more attractive than ever.Headlines have pulsed these last weeks with news that the federal stimulus package will include an $8,000 tax credit for people who haven't owned a home in at least three years, if ever. The Federal Housing Administration has sweetened the deal: Buyers can use that money to pay for closing costs or even offset the 3.5 percent minimum down payment requirements for FHA loans.
But it's only with an FHA loan that buyers can use the tax credit for closing costs. Some housing experts expect the stimulus provision to help boost home sales in coming months. The National Association of Home Builders estimates that 40,000 more homes will be purchased because of the FHA initiative, in addition to the 160,000 sales already expected as a result of the tax credit.
Home buyers also have some flexibility in claiming the credit on their tax returns. They can choose to claim the credit for 2009 or file an amended 2008 return to receive the credit this year.
The new FHA initiative stipulates that home buyers can use the tax credit to offset the down payment only if a state housing agency is handling the loan. In all other cases, the tax credit can be used for closing costs, boosting a down payment or to pare down the interest rate.
There are a couple of other points of note for potential buyers:
- Income limits are a part of the process. The threshold for individuals is $75,000 and $150,000 for those filing jointly.
- So far, close to a dozen states are providing buyers with bridge loans to spur purchases immediately, well in advance of the next tax filing. These loans come with little or no interest and are to be repaid when the tax credit is applied the following year. The list of states includes Colorado, Kentucky, Missouri and Tennessee.
- The FHA is offering advances on the tax credit so home buyers don't have to wait.
Editor's Note: As always, consult with a professional before jumping in and getting a loan ;) What works for one person won't always work for another...
Labels: guest post, home ownership, mortgages, taxes
posted by J. Money at
9:09 AM
2 Comments:
I'm glad you posted this because I meant to ask your opinion on it last time I saw you on facebook (you logged off the chat!! :D).
I'm 24 and have saved up the 3.5% downpayment for FHA based loan and I don't plan on borrowing more than 2.5x my salary. What really makes me think twice is the damn property taxes (which in Miami, FL. can range up to $6k a year for newer condos because of the crazy assessed value) and the condo association fees (between $250-$500 a month, depending on location, amenities etc). So even with a monthly mortage payment of $500 on a $115,000 property (shortsale!) can end up costing me around $1200-$1500 a month when factoring in taxes, insurance & HOA! Ridiculous I think, but if I don't make a move now, when will prices ever be this low again? Maybe never in my lifetime. Why a condo you ask? Lifestyle and convinience. Plus, most single family homes in Miami were built back in the 50's so they probably need major repairs and maintenence.
Decisions, decisions...any advice??
Ooooooh, well you're definitely right - prices are looking better than ever these days! If I didn't own already (*tear*) I'd be all over real estate right now.
But you're right, the costs really add up. In fact, I literally JUST got an email asking about what to expect in picking up a home and I basically advised to meet w/ a local realtor to get a great handle on it all. You're already way ahead than the average person (congrats!! at 24 even? awesome bro, for real), but if you can find a good one out there you'll get a LOT of good answers for your specific situation :)
When it comes down to it, you really just have to go with your gut. I know that's lame/cheesy, but YOU are the only one who knows what's good for ya. If you def. want to own in the near future, and you've done your homework, there's not much else stopping ya. just a matter of pulling that trigger while it's hot. Althought i'll admit it's scary ;) keep us updated my man!
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