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$8,000 First Time Homebuyer Tax Credit - Will it be going to $15,000???

By Jeff Belonger

Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

June 12, 2009 04:00 AM

$8,000 tax credit

Tax Credit Alert - $8,000 to $15,000??

Will the flood gates open for home sales? Through some news reports such as Bloomberg and other media outlets, those lawmakers in Congress are looking to change up the current $8,000 first time homebuyers tax credit that ends on November 31st, 2009. The new bill was introduced on June 10th, 2009, but pending. This could be some good news for more than just first time homebuyers. But I have a different opinion on just the basics, from raising the tax credit from $8,000 to $15,000. But what are the changes that are being talked about?

New proposed Tax Credit changes ....

The tax credit of $8,000 would be raised to $15,000
They would take away the income restrictions. The current income caps are : Single - $75,000 and Joint return - $150,000.
Making this available to anyone, even if you aren't a first time homebuyer.
Extending this for 1 year after the new bill becomes active.

printing money

Let's talk about this now..... I will agree that this could even help those that aren't first time homebuyers. It would help those that owned a home, that are upside down, who sell their home, yet have no money now.

Now, here is my problem about the current first time homebuyers tax credit or even if this is revived shortly. Yes, we will be printing more money then ever before, even from the last stimulus bill. Want I would like to see is the government and HUD put their heads together to come up with a plan to allow the homebuyer to use this money even for their initial 3.5% down payment. If you aren't sure what I am talking about, please read this. First time homebuyer tax credit approved by HUD to get the monies before settlement.

Conclusion: There are some that have argued with me that this new change, that HUD will allow you to get the monies before closing, to be used for part of your down payment and closing costs, will help a lot. I have been arguing this point 2 months after the $7,500 tax credit was approved in early 2008. My argument is that this will help some, a few, but not as many as the government projects or hopes that it will help. My argument? You need some of your own money first to be able to buy. Yes, you still would need 3.5% of your own money and in this economy, not everyone can save this in a timely manner. And many of these people that can't save adequately would still be good to excellent buyers... at least in my opinion, from 16 + years of lending.

Overall, if we could come up with a comprimise to allow all buyers to use this money even for their initial down payment, then that would open up the flood gates. People, keep in mind that we have the USDA loans and VA loans that allow 100% financing. This shouldn't be about having skin in the game, because these 2 programs have a good success rate. I will be writing about this over the weekend, my thoughts on what we can do, so please stay tuned for this. Thoughts? Opinions? thanks

PS..... UPDATE.... Per Lenn Harley's comment & Pat Kennedy's, don't get me wrong, I am not a big fan of printing all of this money. I have talked about this in such blogs as :

I need my quick fix now, please pass me that 4.5% rate now. - why we can't afford to keep lowering the interest rates, thinking that this will help now. This kind of thinking is just for consumer confidence, but will bury us in the very near future, which is mentioned in the next link below, inflation vs deflation.

Inflation vs deflation - Is it criminal? -

My Series on the First time homebuyers $8,000 tax credit - Everything you need to now, from start to finish - What's allowed and what's not allowed :

- The $8,000 tax credit for first time home buyers - The basics - What to know about it - Understanding what the tax credit is all about.

- Use a 6 month gift from a relative to buy a home, thanks to the Tax Credit - How to get creative in using the tax credit and some FHA mortgage guidelines in helping you use this tax credit to your advantage.

- Using First-Time Homebuyer Tax Credits for the Downpayment - It's GONE !!!! - The story of the $8,000 tax credit - The bottom line, you can't use the actual tax credit as your downpayment.. for your downpayment, unless you get it from other sources prior to buying the house and receiving the tax credit.

- FRAUD ALERT - Advice on the $8,000 first time homebuyers Tax Credit - Do you chance it??? - This explains to you that it's fraud if you directly obtain the money from the IRS before you actually purchase the house. Even HUD and many lenders/investors acknowledge this also.

- The $8,000 tax credit for First Time Homebuyers - How & when to get it legally - So how can the tax credit be received legally for your downpayment? Just be careful of those that promise other ways not mentioned. I talk about what is illegal in the previous blog above. Please click the link.

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For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

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Anonymous

Robert Ott

How many times must we read the $8,000.00 tax credit can you be used on the front end of a home purchase?

I have received e-mails from REALTORs who have read or heard some government official declaring the $8,000.00 can be used. As of this date it CANNOT! Wishful thinking does not make it so.

Jun 13, 2009 06:06 AM

#62

Gene Riemenschneider

Home Point Real Estate - Brentwood, CA

Turning Houses into Homes

I am so far to the right that I make Rush look a little pink, but this is a far better solution than dumping of Billions into the banks and other financial industries. Has one dime of TARP been spent on toxic assets? This solution is cheaper than anything else they have tried and it is directed at common people. Most of them taxpayers. Now would it be better for the government to stop spending all this money and cut taxes like crazy, you bet it would. This is the closet thing to a tax cut we are going to get. Are all you that are against this also willing to do away with the mortgage interest deduction?

Jun 13, 2009 07:28 AM

Mark Velasco

West Shores Realty - Whittier, CA

Top Producing Broker Associate

Jeff. Where did you hear about this? Is it speculation or a true possibility?

Jun 13, 2009 08:17 AM

Anonymous

Tom

Great, just another rip off of the hard working taxpayers out there to bail out the fat cats that can't sell their underwater homes. What a bunch of jerks! It wasn't bad enough that congress is just giving $8000 to people that did not earn it, that seems like a good use of PUBLIC resources! So, the people that already own a home, worked hard and struggled for years and payed their taxes get hosed again. Sounds like business as usual. Gene, you are right on. We should get rid of all those money robbing mortgage interest deductions, subsidies, and tax policies that distort the market. Don't see it happening anytime soon unfortunately, look at this mess they are proposing! Of course you realors should be happy, the rest of the country will be putting money in your pockets, have fun with it while you can, it can't last forever.

Jun 13, 2009 09:11 AM

#65

The Somers Team

The Somers Team at KW Philadelphia - Philadelphia, PA

Delivering Real Estate Happiness

I would be surprised if the tax credit gets extended at all. And even more surprised if it gets raised to $15K and be available to all. When it came out originally, it should have been available to all ! I think now with the economy showing signs of life that I do not know if the Govt can do more stimulus. The stock market is already up dramatically off the lows and Bernanke is talking about "recession is over" . It may be risky to have additional stimulus. The better approach would have been to have more serious stimulus towards the housing market in the beginning. ~ Chris

Jun 13, 2009 01:08 PM

Jo Olson

HOMEFRONT Realty - Kettle Falls, WA

Retired - HOMEFRONT Realty @ LAKE Roosevelt

Jeff, the State of Washington passed in its last budget a provision to come up with a bridge loan type of product for this tax credit - I was so excited! I even went and purchase a domain name and started a specail blog for information. taxcreditadvantageloanprogram.com to assist those wanting more information. Well, on June 10th because of all the rigamaroll with HUD the State of Washington Housing Commission has now pulled plans to continue. I am so tired of all the political mumbojumbo! So much for trying to work this program. I am just fed up!

Jun 13, 2009 02:36 PM

Mark Watterson

Salt Lake City, UT

Utah Real Estate

Tax credits have been a motivational force in the past. Use in the right way can be productive.

I'm still waiting for sound productive responses to the financial crisis. Tax credits would get some buyers of the fence by it not the solution.

Bailouts are Cancer and Bankruptcy is the cure. To big to fail is a destructive myth. I'm hopeful we will have some sound rational responses based in what's in the best interest of the country as a whole.

Jun 14, 2009 01:29 AM

Paula Burt

REALTOR , SFR, RECS

Jeff, Thanks for the information and the interesting conversation about this! I will definitely be reading whatever you write to keep updated and informed.

I think some combination of the ideas of Missy & Scott would be the most sensible, but hey! it is government, isn't it? ...so I don't expect a really sensible solution to just about anything, especially from this administration. We are soooo in trouble for a while to come.

And to Gene: I'm right there with you! You said it so well!

Jun 14, 2009 07:33 AM

Barbara Tretola

RAC Real Estate Associates, Inc. - Massapequa Park, NY

NY is looking to add $7000 to the deal. It is still in the talking stage. I do see buyers out looking because of it.

Jun 14, 2009 11:36 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

TAMMY..... I would like to see a few things, but in all honesty, all it does in regards to opening this up to second homes is puts more money in realtors pockets. Sure, it gives someone a chance to acquire a 2ndproperty.... but I know many that try to buy an investment property as a second home. In my opinion, there is not need to give a tax credit to 2nd homes. Possibly to those buying investment properties though, which I will talk about this later. thanks

BRENDA..... I would agree, that $8,000 is enough. And they do allow it at closing, that's if you can get it from a source. I do agree that the gov't should allow for it to be used for your down payment. But that final call is a combination of FHA or Fannie Mae & the gov't approving this. thanks

RICHARD.... . I would this would help some, keeping families in a property. But you know how many people that I have talked to that just won't to leave their current home just because they are underwater? Many... I think we would need to screen these people a lot harder. But again, wouldn't this take more time & money?

RYAN.... you make some great points. AndI agree, people would just buy a new home, rent their current one, just so they could get $15,000. If they could spend 3.5% for the down payment, get the seller to pay 6% of the closing costs, that buyer could then pocket $15,000 2 months after closing. So, on a $250,000, the buyer could possibly get into the house initially with $8,750 and then pocket $6,250. Depending on where andhow they spend it, how would it stimulate us? Many would argue against this thought. thanks

DARIN.... . agree or disagree, what irks me are those that think low rates and these major tax credits are just okay, that it will stimulate the economy... but that so many forget that we will pay for a lot of this down the road, sooner than later. I hope to have my call to action blog out by tomorrow, explaining some more of this and what we can do.

Overall, yes, there were many different variations and different answers. Maybe there is no right or wrong answers, but I think some of these commenter's answers aren't properly thought out. Meaning, are we just like the gov't? brain washing ourselves, telling everyone that it will work. Isn't that called HOPE? I am tired of hope. We need to actually make a change by using common sense, not by hope or by crossing our fingers. And thanks for the polite compliments...

SVETLANA..... I think it would help some more, but not a lot. Define a lot... Seriously, in my opinion, is 2 a lot? Or is 2,000 a lot? The gov't throws numbers out there and the biggest number is that it will help a lot of people. To me, that is misinformation. Not saying that you are saying this... just the gov't. Why won't it help as much? You need your own money for the down payment first, before you can use the other money. Those upside down? Won't have that much money in many cases also. Just my opinion. thanks

JENNIFER.... . I agree with most or your statement and I think so many people commenting, miss this point and don't truly understand... that you can't get this money, now or later, not until you have at least 3.5% of your own money. I will be writing about this in my call to action blog tomorrow. Thanks for your input.

Jun 14, 2009 03:42 PM

Joyce Windschitl Hercules

Prime Mortgage - Chanhassen, MN

MN, FL, WI & CO Mortgage Consultant

Hold the money! $8,000 for first time homebuyers is great. It HAS motivated people to buy. Let's just keep that going beyond November. $15,000 for FTHB or $5,000 for investors will be an unnecessary burdon on our country that Steve Kappre is correct in saying is heading toward BK. We cannot bail out everyone that has failed or give them money to see if they can succeed.

What would be nice is to see common sense and logic back in the industry. This back pedaling and trying to re-invent the system is creating havoc and paranoia.

I just want to get the deals done without a blood test to make sure the borrower is who they say they are and they are the person earning the money the pay stub is made out to.

Jun 15, 2009 03:50 AM

Dan Hartman

Province Mortgage Associates - NMLS #2861 - Providence, RI

Good stuff on this, Jeff. I guess the real question is what is the desired effect of the tax credit? The current credit rewards those who are in the right place at the right time; this proposal would go beyond that, but it would likely push homeownership to a level that may not be sustainable. Let's see what happens!

Thanks,
Dan

Jun 15, 2009 07:03 AM

Darin Osenberg

Funky Quail Vintage - Nashville, TN

Jeff, had to followup.

I met with a new customer today. 10% down, her CREDIT UNION Is offering her a no interest, no payment loan,for the 8000 tax credit. ONLY IF SHE DOES THE LOAN THERE THOUGH! My rate at the same closing costs is .375% better than her credit union! Talk about holding hostage! I told her the 8k is going to do THAT MUCH for her payment anyway...get the credit, take the money, put it in the "rainy day" fund for repairs and improvements on the house!!! She agreed! 15k however, would have gotten rid of her PMI, and def lowerd her payment...That is a HUGE difference maker then!! Most of the time though..I am with you..this is one of them as well!

Just my TAAHC! :)

Darin

Jun 15, 2009 07:33 AM

Paul McFadden

Responsive Pest Control - Seattle, WA

Pest Control, Seattle, WA.

Jeff: Thanks. I don't think the $15,000 credit will stick. In fact, I wouldn't be surprised if they don't come up with something after the $8000 credit expires. Eventually our government needs to stop propping things up and let the market go on its own. It appears the real estate market is slowly recovering and you have to wonder if it would have started without all the artificial incentives. It may have taken longer but I'll bet we'd still get to the same place. Plus, we wouldn't have a lifetime of debt to pay back. We shall see what happens! Thanks again!

Jun 18, 2009 09:13 AM

Anonymous

Jacobs

Just wondering what your thoughts are on if they will extend the tax credit. We are first time home buyers and want to take advantage of the $8,000. However, we don't know if we will be quite ready before Dec. 1st. That bill that you said was introduced on June 10th...do you know if they are even discussing? And when would we know anything on it?

Thanks!

Jul 27, 2009 06:39 PM

#76

Anonymous

Mad as hell!!!

How does this help people like me who purchased in April of 2008? I have to pay back the 7500 tax credit they gave me at that time. Since i purchased my house everything has gone up except my home value. I tried to refinance under your (i did not vote for him) great and fearless leaders proposed stimulus package and was told i don't qualify. I have had a newborn since then and a wife out of work and i am barely holding a roof over our heads. As usual, the middle class in this country suffers. The rich get richer and the poor get help. The middle class is becoming an endangered species. Most all of these politicians who are put in office are crooks and lie to the public everyday. Misappropriating and mismanaging funds and making their wallets fatter on my back is really starting to piss me off. We the American people just sit back and take their crap like the jerks we are. Especially the middle class!

Oct 22, 2009 04:51 AM

#77

Anonymous

gail

I read here (http://www.savingtoinvest.com/2009/09/2010-first-time-homebuyer-credit.html) the credit is being extended to April 2010 (no increase) and will be phased out by year end. This is not the news I was looking for as wanted the 15K increase!

Oct 27, 2009 03:16 AM

#78

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

GAIL.... comment # 79.... first off, it does not say the credit is being extended. The very first sentence up top reads :Senate Likely to Extend and Gradually Reduce Homebuyer Credit in 2010

Sure, it might go through, but you are assuming. And this is how misinformation gets around. thanks PS... why would you want the 15k increase? Can you please explain why $8,000 is just not enough? Did you read this blog post? thanks

First time homebuyers tax credit - Who is frauding who?? - Possible extension?

Oct 27, 2009 03:22 AM

Tom Burris

NMLS# 335055 - Baton Rouge, LA

Texas/Louisiana Mortgage Pro - 13 YRS Experience

Congress is kicking around several ideas and different ways to roll out an extension.

As you can imagine. there are some big hurdles with all of the fraud. Many people took the credit early in anticipation of buying this year. <= Because they didn't have enough money for a down payment in their savings account! <=These people should never have bought a house.

Irresponsible borrowers have cost this industry greatly. Saving for a down payment and living well within your means with a rainy day fund just doesn't happen anymore.

Oct 27, 2009 03:31 AM

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Sep 24, 2011 03:27 AM

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First time homebuyers tax credit - Who is frauding who?? - Possible extension?

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