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.
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.
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 !!!!
Copyright © 2009 by Jeff Belonger