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UPDATE: Homebuyer Tax Credit Passes!

One-Page Explanation of Changes to the Tax Credit

HOMEBUYER TAX CREDIT EXPANDED; EXTENDED TO APRIL 2010

The deadline for buyers to take advantage of the first-time homebuyer tax credit has been extended to April 30, 2010 and new provisions have been added to include a credit for existing homeowners.

An $8,000 tax credit is available to first-time homebuyers. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years prior to purchase to meet first-time homebuyer definition.  A $6,500 credit is available to homebuyers who have owned and lived in a home for 5 consecutive years of the last 8 years.

Any single family residence (including condos, co-ops and townhouses) that will be used as the principal residence and has a purchase price of less than $800,000.

The full amount of credit is available for individuals with adjusted gross income of no more than $125,000 or joint gross income of no more than $225,000.  The credit is phased out to lower amounts for individuals and joint filers with higher gross incomes.

 

Tax Credit Extension FAQ's

Buyers must have a ratified contract on or before April 30, 2010 and close within 60 days of that deadline.

The previous agreement required that buyers close on their home by November 30 to qualify for the credit.  The expanded agreement gives buyers until April 30, 2010 to ratify a contract and requires that the closing take place within 60 days.

“The Charleston market has maintained a strong momentum coming out of the summer season—due in large part to the tax credit—and we cannot let this momentum lag.  This crucial expansion allows all homebuyers to make an investment in a market that is more affordable than it’s been in years” said Ralph Wetherell, President of the Charleston Trident Association of REALTORS®. 

The tax credit, in its original form, helped to establish more than one million families as new homeowners. 

“The homebuyer tax credit has been a critical component to restoring the health of the Charleston real estate market.  We’ve been showing signs of a recovering market since this summer—inventory is decreasing and prices continue to stabilize.  Extending this credit, not just in timeframe, but to a new group of homeowners will certainly support the continued re-growth of our area” said Wetherell.

 

Congress Enacts Bigger and Better
Home Buyer Tax Credit

A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid.

Learn how you can take advantage of this $8,000 tax credit to buy the home of your dreams.

First-time home buyers who purchased a principal residence on or after April 9, 2008 and before January 1, 2009 may qualify for a $7,500 tax credit. Click here for more information.

 

• GSE Reform - including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500.  The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008)
   
• FHA Reform - including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program.  The down payment requirement of FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008)
   
• Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 9, 2008 and June 30, 2009.  The credit is repayable over 15 years (making it, in effect, an interest free loan).
   
• FHA foreclosure rescue - development of a refinance program for homebuyers with problematic subprime loans.  Lenders would writ down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value.  Borrowers would have to share 50% of all future appreciation with FHA.  The loan limit for this program is $500,440 nationwide.  Program is effective on October 1, 2008.
   
• Seller-funded down payment assistance programs - codifies existing FHA proposal to prohibit the use of down payment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members.  This prohibition does not go into effect until October 1, 2008.
   
• VA loan limits - temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008
   
• Risk-based pricing - puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
   
• GSE Stabilization - includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
   
• Mortgage Revenue Bond Authority - authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
   
• National Affordable Housing Trust Fund - develops a Trust Fund funded by a percentage of profits from the GSEs.  In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program.  In out years, the Trust Fund would be used for the development of affordable housing.
   
• CDBG Funding - Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
   
• LIHTC -Modernizes the Low Income Housing Tax Credit program to make it more efficient.
   
• Loan Originator Requirements - Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate.)  Federal bank regulators will establish a parallel registration system for FDIC-insured banks.  The purpose is to prevent fraud and require minimum licensing and education requirements.  The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.