2009 Stimulus Plan Update

Revised February 20, 2009

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Higher Loan Amounts

More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Getting Ready to Move Checklist

Getting Ready to Move? Here is a Checklist! 4 WEEKS PRIOR TO MOVE: __ Set up a "move" file or folder __ Set up a "move" calendar. __ Have a garage sale. __ Collect financial, tax and employment documentation needed for your loan. __ Donate un-needed furniture to charity. __ Contact insurance company to transfer policies (life, auto, homeowners). __ Contact doctors, dentists for copies of medical records. __ Contact schools for copies of student records. 3 WEEKS PRIOR TO MOVE: __ Review tax deductions on moving expenses. __ Arrange cut-off date for telephone, gas,electricity, water, garbage, cable television. __ Call friends and relatives to let them know you are moving. __ Request change of address kit from post office. __ Check out voter registration information for the new area. 2 WEEKS PRIOR TO MOVE: __ Transfer stocks, bonds, bank accounts and contents of safe deposit boxes. __ Prepare a list of clothing that will not be packed with household goods. __ Take time to check off previous listed items while you still have time! 1 WEEK PRIOR TO MOVE: __Label items you will need to access easily and place them in separate room or closet. __ Clean out your refrigerator and let it air out at least 24 hours before moving. __ Drain outdoor equipment: Water hoses, propane tank from BBQ grill, gas and oil from lawnmowers. __ Discard all aerosols, paint, oils, and other flammable or toxic chemicals. __ Schedule with utility companies to have utilities turned on at your new home. MOVING OUT DAY: __ RELAX!!! __ Remember, items packed last will be unloaded first. __ Last Walk through Check: attic, stairwells, closets, cupboards, storage, garage and behind doors MOVE IN DAY: __ Have the house ready for delivery prior to the truck's arrival. __ Take a break, sit back, relax and ENJOY YOUR NEW HOME!! Take the stress out of your moving day! Call me if there is anything I can help you with!

2009 Economic Stimulus Plan Benefits

Economic Stimulus Plan Benefits

the Housing and Mortgage

Industries

Revised February 17, 2009

Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

Home owners and potential home buyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...

---

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

---

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

---

More Help for Homeowners in the Future

Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

American Recovery and Reinvestment Act of 2009

Updated 2/17/09

The $789-billion, 1100-page stimulus bill has benefits
for almost everyone.

The Fed will buy mortgage-backed loans
for as long as it takes to keep interest rates low.

Housing is a top priority for all. Up to $100 billion
will be spent to help.  Under the Treasury’s plan, delinquent
homeowners will be able to redo their mortgages to avoid
foreclosure. The stimulus tries to spur buying with more
tax credits.  And the Fed will buy T-bonds as needed to
keep fixed rate mortgages around 5%.

A boost for home buyers...and the housing industry:
An $8000 tax credit for first-time home buyers who buy a
home between January 1st and November 30, 2009 will need to
be repaid if they sell the home within 3 years (the previous
credit needed to be paid back eventually).

The credit begins to phase out for couples who make more
than $150,000 income per year, and for single filers making
more than $75,000 per year.   

(More on home buyer benefits as details become available!)

Throwing billions at the problems means soaring deficits
and inflation later.
But policymakers see those as the least of the evils they
face. And it will help efforts to keep deflation from getting
out of control. That would lead to a downward spiral that
could get vicious and certainly would result in a much longer,
deeper recession.

About 65% of the money will go to spending,including
general and specific aid to the states, energy investments,
health and infrastructure.  
Much of the spending will help businesses. 

Infrastructure. States will get $29 billion to divvy
up for roads and bridges, $8.4 billion for mass transit,
$9.3 billion for rail and $6 billion in clean water projects.

How will Utah spend their State portion?  
Utah, Nev., Wyo. and Idaho all get $200 million.
Widening roads is a priority for each: U.S. 6, I-15 &
I-70 plus Rte. 108 in the Ogden area, and fixing old
Bridges and Roads for Utah...

Tax cuts in the stimulus will help businesses and
individuals get a leg up.  Smaller firms with losses
get a big break. They can carry back a 2008 tax loss
to offset income in the five prior tax years, instead
of two years, for a quick cash infusion.  But this
relief is limited to firms with average gross receipts
of $15 million a year or less.

Workers will see more in their paychecks, thanks to
a payroll tax credit for 2009 and 2010: 6.2% of income
capped at $400 for singles and $800 for couples.
It will be phased out, however, starting at incomes
of $75,000 for single people and $150,000 for married
couples.

I will continue to update details of the final bill as
it is passed into law (Tuesday February 17, 2009 is the
anticipated signing of the bill into law by President Obama).

         

Where Is The Bond Market Taking Mortgage Rates?

If you are still wrestling with "when is the best time to purchase or refinance", here is a great article to let you know what direction the bond market and the resulting direction it is taking rates.

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.

Read on...

Inside Story: False Illusions and What You Need to Know
Last Updated February 4, 2009

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 - http://www.newyorkfed.org/markets/mbs/index.html.

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.

$7500 Tax Credit for First-Time Homebuyer's!

Taking the First-Time Homebuyer Credit
Updated: 1/24/2009

Homebuyers could be eligible for a tax break, essentially an interest-free loan worth as much as $7,500, under The Housing Assistance Tax Act of 2008.
Known as the first-time homebuyer credit, the tax break is available if you purchase a home on or after April 9, 2008 and before July 1, 2009, and meet certain income and other requirements.
The credit is equal to 10 percent of the home purchase price, up to a limit of $7,500.
Unlike other tax credits, this one must be paid back to the government, over a 15-year period.

Who is considered a "first-time" homebuyer?
Any taxpayer who has never owned a home as a principal residence.
However, you could qualify if you’ve owned a home before, but not as your principal residence during the three years prior to the purchase.

Married couples cannot qualify for the credit unless both spouses meet the three-year rule.
What qualifies as a principal residence?
Your principal residence is where you live for most of the year. That can be a house, a condo, co-op, house trailer or houseboat, within the United States. Vacation and rental homes are not eligible.

What are the income limitations?
For single taxpayers, the credit decreases as modified adjusted gross income rises above $75,000, and it disappears altogether above $95,000. For example, if your income is $85,000, you could receive a credit worth no more than $3,750.
Modified adjusted gross income is your adjusted gross income, or AGI (your gross income minus certain deductions such as IRAs and alimony) with tax-free foreign income counted.

For married couples, the credit starts to decrease at modified adjusted gross of $150,000 and disappears after $170,000.
When would I get the money from the credit?

You get the money only after you claim the credit on either your 2008 or 2009 tax return, NOT when escrow closes on the home.

However, you can speed up the process if you buy a home in 2009, prior to July 1. Instead of waiting until you file your taxes in 2010, you can after Dec. 31, 2008 treat the purchase as if it were completed in 2008. That means you can amend your 2008 return and get the credit in 2009.

How does the credit affect the taxes I owe and the refund I get?
The credit reduces your tax liability, that is, the amount of taxes you are required to pay. Depending on your tax withholdings, you could get a bigger refund or owe less in taxes when you file.

Here's some examples:

If, for example, your taxes owed for one year are $6,000, you’ve had $4,000 withheld from your wages, and you buy a home worth $100,000 (sales price over $75,000, credit is $7500), the housing credit would entitle you to a refund, as shown below.


Tax liability
$6,000
Minus housing credit
-7,500
Minus withholding
-4,000
Refund
$5,500


But if, for example, your tax liability was $10,000, but you had paid no withholding, then the credit would reduce the taxes you owe, as illustrated below.


Tax Liability
$10,000
Minus housing credit
- 7,500
Minus withholding
0
Taxes due
$2,500

How do I repay the credit?

You start repaying the credit in the second year after the tax year that the home was purchased.
So if you took the credit on your 2008 tax return, you begin repayment when you file your 2010 tax return. Your payments are set at $500 per year for 15 years.

They are “paid” as part of your tax liability. Depending on your tax situation, you either get $500 less on your refund each year, or you owe $500 more in taxes.

You might need to increase your withholding or make quarterly estimated payments to cover for the repayment and ensure that you don't get penalized for under-withholding.

What if circumstances change?

-If you sell the house before the end of 15 years, you will have to pay the balance remaining on the credit on the tax return for the year the house was sold.
-If you no longer use the home as your principal residence (say you rent it out), you pay the remaining balance on the tax return for the year the use changed.
-If you die before the 15 years, the balance does not need to be repaid.
-If you get a divorce and the home is transferred to your spouse, your spouse will be responsible for future payments.

Other considerations
The credit is not available if:
-You buy your home from a close relatives, such as your spouse, parents, grandparent, child or grandchild.
-Your home financing comes from tax-exempt mortgage revenue bonds.
-You are, or were, eligible for the District of Columbia first-time homebuyer credit for any year.

Call me with any questions you have about this program!

Utah Mortgage Reverse Mortgage Specialist

Meeting the needs of those over 62 years old, who need a lump sum equity draw or need a monthly income draw against equity in a home that they own and live in, is a loan that I can help with!

The FHA Reverse Mortgage or HECM is a loan with over 200 pages of disclosures required by the Government, and I make the explanation of the loan and answers to questions painless, simple and understandable!

I look forward to helping with all Reverse Utah Mortgage needs that you or someone you know needs help with!

Utah Mortgage Program Update

Buyer's, Seller's and Realtors: Unfortunately, investors are pulling away from FHA Manufactured Housing Financing and as of today, I have 1 investor who will take a loan on Manufactured Housing on a permanent foundation! And this investor has already notified us that they are withdrawing this offering shortly.

Realtors, my Utah Mortgage Blog Post today is to alert you of this and if you have any manufactured housing purchases that need a loan-HURRY- and call me so that we can get an FHA case number and get this taken care of for them! If you have manufactured housing listings, it might be a great time to talk to your client about a price reduction so that the home will sell quickly!

Hope this helps, sorry for the news, but we are living in interesting times, aren't we?! :)

Marty

Utah Mortgage Loan

Please call me for a customized rate quote for Utah Mortgage Rates. As a Utah Mortgage Broker, I look forward to helping you with your Utah Mortgage needs!

Welcome to my Utah Mortgage Blog!

Thanks to the recent U.S. Treasury pledge to purchase $500 Billion in Mortgage Backed Securities beginning the first week in January and to continue until the end of 2009, Utah Mortgage Rates will be at a level not seen during our lifetimes!

During the past 30 days and continuing for the next 60 and beyond, we will see Utah Mortgage Rates at unprecidented levels. We will see volatility, and huge volatility at times, but Utah Mortgage loans will be available to consolidate debt, combine first and 2nd mortgages into one loan, purchase dream homes, or to help first time home buyers get a start!

First Time Homebuyer's are still enjoying the $7500 tax credit for homes purchased before June 30, 2009, Utah Housing is providing 100% financing to qualified buyer's and city and county grant and loans are also avaialble to those who qualify.

I look forward to helping you with your Utah Mortgage Loan needs!

Chris Clark and Megan Dewey Closing

Wade Clark, Real Estate Concepts, 801-645-2218, Megan Dewey and Chris Clark, and Marty Qualls at First American Title, Closing on November 26, 2008.