FIRST TIME HOME BUYER

The news has exploded lately with updates regarding mortgage rates and the 2010 federal tax credit for first time home buyers. The close date deadline on new home purchases has once again been extended. Now you have until September of 2010 to close the sale on your new home in order to claim up to an $8,000 home buyer tax credit, or $6,500 if you bought a bigger house than previously owned.

With the economy still suffering through a bit of a slump, it’s good to be able to celebrate any signs of improvement, including an increase in home prices, which is usually a sign of a healthier market. However, while we saw an increase in prices of 3.8 percent from March to April, experts say don’t pull out the balloons and confetti just yet.

The S&P/Case-Shiller Home Price Index percentage does represent a bit of growth, but it also represents improvement from heavily-subsidized home sales through the home buyer tax credit and could be short lived (CNN Money).

After the Senate and the House passed a bill to extend the home buyer tax credit, it was passed on to President Barack Obama for a final signature, which he was expected to give. The homebuyer tax credit was originally set to expire June 30 for those who took out a mortgage loan and needed to close on their homes originally purchased by April 30.

However, with many foreclosures and short sales — which often take longer to close — being among the homes people purchased, Congress decided to extend the credit to Sept. 30 (CNN Money).

The U.S. Senate voted recently to extend the home buyer tax credit to Sept. 30 rather than allowing it to expire on June 30 as originally planned. This is great news for buyers who were in the process of closing on their homes and because of the purchase of foreclosed homes or short sales were seeing the process take longer than usual.

The Senate passed the credit extension with a vote of 60-37 and will now only allow those who signed their contracts by April 30 to quality for this extension. Those who qualify will be eligible for an $8,000 credit if buying a first home in three years and $6,500 if upgrading to a new home. (Reuters)

If you’ve been shopping mortgage rates or recently purchased a new home, you have probably heard about the first time home buyer tax credit. It was planned to expire November 30, 2009 but was extended to April 2010. Whether or not you claimed this credit, there are some important facts you may need to know.

Did I Qualify for the Home Buyer Tax Credit?

The IRS has reported that prisoners are among the highest population of individuals who managed to defraud the system by getting their hands on the home buyer tax credit.

The agency reported on Wednesday that 1,295 prisoners, including 241 who were serving life sentences, were able to claim the $9.1 million in credits even though they were in prison at the time they claimed to have purchased their homes.

They weren’t the only ones scamming the system. Over 2,500 people claimed the tax though they’d purchased homes before the qualifying date. And another 10,282 claimed the tax when they’d already claimed other taxes for their homes. (USA Today)

The real-estate lobby is asking Congress to provide an extension to home buyers who are looking to close on homes to qualify for the home buyer tax credit.

Currently, the deadline to complete transactions (close on the home) and qualify for the $8,000 or $6,500 credit is June 30. Unfortunately, the National Association of Realtors says that many of those signed contracts are for short sales and foreclosures and they take longer to close. To avoid having homeowners lose out on the tax credit at no fault of their own, realtors are asking Congress to move the deadline.

There is no word from Congress as to whether this extension will occur. (Wall Street Journal)

If you have not closed on the home yet that you signed for before April, you don’t have much time left to get this done if you want to qualify for the first time home buyer tax credit. Depending on whether you’re taking on a mortgage loan for the first time in at least three years or upgrading to a new home, you may be able to take advantage of between $6,500 and $8,000 in the form of a tax credit for the 2010 tax season. However, if you’re not able to close on the home by the June 30 deadline, you won’t be able to enjoy the credit. (Market Watch)

In addition to the good news that Congress may consider extending the final deadline to close on a home if you’re trying to take advantage of the Home Buyer tax credit, mortgage interest rates continue to drop and last week dropped to a near record low.

According to Freddie Mac, the average 30-year fixed rate was at 4.72 percent, which is skimming the record of 4.71 percent. The 15-year fixed loan also set a record low, resting at 4.17 percent after dropping from 4.2 percent.

The First Time Home Buyer tax credit may have fueled a considerable jump in home sales for the month of April, auto dealers may slide past rules that would require them to be watched over by consumer financial protection regulators and parents may be able to take advantage of a new private student loan option to help pay for their kids’ college.

New Home Sales Increase Due to Tax Credit