Houston Real Estate and Mortgage Blog

In previous posts we have referenced the "existing" homebuyer tax credit that was created with the expansion of the First Time Homebuyer Tax Credit late in 2009. We thought we would provide some additional details on how move up buyers can properly utilize this credit when using mortgage loans for their home purchase.

Current homeowners who have lived in the same home for five of the past eight years may be able to claim the credit upon the purchase of another home to be used as a primary residence. The amount of the tax credit is equal to 10% of the purchase price of the new home, with a cap of $6,500. The purchase contract on the new home must be dated between November 7, 2009 and April 30, 2010, and you must close by June 30th.Here are some details you may not know about the new credit:

• Purchasers are not required to sell their existing home to qualify for the credit, though they must show that the new home will be their primary residence. Declaring this new property as their homestead should do the trick.
• The maximum purchase price on homes eligible for the credit is $800,000.
• To claim the credit, buyers should complete the revised IRS Form 5405 available on the IRS web site http://irs.gov. They should also be prepared to provide a signed copy of their HUD-1 Settlement Statement, evidence of ownership of their current home for the required five-year period.
• The tax credit can be maximized as long as your Modified Adjustable Gross Income is less than $125,000 if you are single, and $225,000 if you are married filing jointly. The tax credit is phased out completely at $145,000 and $245,000 respectively.
• If you sell the new property within 36 months of purchase, convert it to rental property, or lose the house to foreclosure, you will have to repay the tax credit received.

With low mortgage rates still hanging around, just 14 weeks left to sign a contract, and five months to close on the home, get your sneakers on and start searching!

Looks like CNN shares our views on the mortgage markets. On January 7th, they published an article that shared a mortgage rate outlook that was remarkably similar to the one we shared on December 31st.  

http://money.cnn.com/2010/01/07/real_estate/last_chance_refinance/index.htm

While we would love to take credit for our "unique" perspective, the truth is that many economists and mortgage professionals see the same troubles on the horizon that we do. Rates will rise due to a shortage of demand for mortgage backed securities and credit qualifying will continue to get more difficult, so refinance your mortgage now or get pre-qualified quickly before you become a victim of the invisible rising mortgage rate monster!

According to the FBI, there will be 60,000 reports related to home mortgage fraud filed this year. Most fraud cases are related to foreclosure prevention and mortgage modification scams. Here are a few tips to protect yourself or a loved one from becoming a victim:

1. Start with Your Lender - Before seeking assistance from an outside source, try reaching out to your current lender. Tell them about the problems you are having and ask them if they have a solution. Lenders are now more willing to help distressed homeowners than they were even a few months ago. Remember, however, that your lender represents their own interests, so there are times a third party can negotiate a more beneficial solution. 
2. Avoid Large Upfront Fees - If your lender appears indifferent, or offers a solution that does not benefit you. There are other options. No upfront fee modifications are available through a number of mortgage providers, Home Loan Specialists included. You should avoid any high upfront fees as this is a warning sign of a scam.
3. Don't Make Mortgage Payment to Anyone Except Your Lender - Most mortgage scams involve a third party collecting your payments with the promise to pay on your behalf, often with you unwillingly signing your house over to them. There's a good chance your payments will never make it to your lender.
4. Do Your Homework - When dealing with any financial provider, you should do research. You can check with the Better Business Bureau and the Texas Dept. of Savings and Mortgage Lending to check the service and regulatory track record of any lending entity in the state. If you can't find them, that should represent a warning sign.

Scam artists prey on good people when they are most vulnerable, so make sure you're not their next victim.