CT Mortgage Blog

Well, after much deliberation, as well as anticipation, I have decided to move on to greener pastures. It is no secret the industry has imposed significant changes to our environment, some I honestly believe over time will be insurmountable. That, along with the necessity to find the ability to continue doing what I love, in the manner I prefer, has attributed to my decision to move on from Scholastic Mortgage.

I have mixed emotions on SM, kind of like sending your child off to college - glad they are gone but they will be missed. The difference - There will be no moving back in after graduation because they can not find a job in this economy. :-)

I will have some fond memories.

I am also pleased to announce that I have accepted a position with Primary Residential Mortgage as a Division President. It affords me to do what I liked most about the business - helping improve the quality of life for homeowners, present and future, as well as the people I work with. It is truely an impressive organization with a management, benefit, product and interest rate infrastructure unlike anything I could have imagined. PRMI is a refreshing change to what I have witnessed in the industry and what I could have only hoped to one day build with Scholastic Mortgage.   

I look forward to what the future holds and stand ready to assist anyone looking for a mortgage or potential employment opportunity within an outstanding organization. My contact information within this site remains the same and all inquiries will be passed on accordingly.

I hope this message finds everyone happy, healthy and well.

The $8,000 First-Time Home Buyer Tax Credit will expire on December 1, 2009.

If you're planning to claim use the credit and haven't started looking for a home, your clock is officially ticking.  You must be closed on your new home on or before December 1.

Our typical turn time on a closing is 30-45 days, so, your $8,000 is in jeopardy unless you go under contract by mid October. 

The First-Time Home Buyer Tax Credit is part of the American Recovery and Reinvestment Act of 2009. Congress authorized a first-time homebuyer tax credit of up to $8,000 for home buyers meeting certain qualifying criteria.  The plan was to stimulate home purchases and, by most measures, the plan has been successful.

Typically, for tax purposes, a first-time home buyer is anyone who has not owned a "Main Home" in the last 3 years. The term "Main Home" is defined as a home in which a person has lived "for most of the time". 

For couples - both home buyers must be first-timers to be tax credit-eligible.

Moreover, not every first-time home buyer is eligible for the $8,000 First Time Home Buyer Tax Credit.  Some notable exclusionary cases include first-time home buyers who:

• File taxes separately and whose adjusted gross income exceeds $95,000
• File taxes jointly and whose adjusted gross income exeeeds $170,000
• Acquire property from a mother, father, sibling or child
• Acquire property from an entity in which they're a majority owner
• Acquire the home by gift or inheritance

The tax credit is limited to 10 percent of the home's purchase price the it also diminishes as home buyer income rises.  Tax credit phase-outs start at $75,000 for homebuyers filing separately and $150,000 on joint returns.

Assuming you qualify -

1. Buy and close on a new, "main" home before December 1, 2009.
2. Submit IRS Form 5405 with your 2009 tax returns in April 2010.

That's pretty much it.

There is a bit more to it, so make sure to speak with a tax consultant for all the details on the credit.

There has been a lot of fence sitters out there not pulling the trigger.  There really should be an effort publicly educating everyone that rates will never hit the 4% mark and are surely going up. 

Regardless of what you are hoping for...this is true. It may be abrupt if the Fed cant act fast enough or aggressively enough.  If we get a rebound, it will be short lived and probably one of the last save the FED is capable of making.  Equities are rising to a unsupported peak with core values as strong as paper mache.  This is the only light ahead and bitter sweet to consider a huge market loss is really a good thing.

Purchase transaction closing prior to December 1, 2009

FHA Approved Lenders, FHA Approved nonprofit organizations, Local government housing agencies

HUD continues to be proactive in their response to consumer needs and identifying ways to increase home ownership, especially for first-time home buyers. HUD has approved the use of the $8,000 first-time home buyer tax credit towards the purchase of a home using FHA financing. FHA approved lenders, FHA approved nonprofit organizations, and local government housing agencies may provide tax credit advances in the form of secondary financing or the purchase of the anticipated tax credit.

Not all first-time homebuyers will receive the full $8,000. The eligibility amount depends on the amount of the mortgage, and the purchase transaction must close by December 1, 2009. In order to calculate the eligible tax credit amount, the borrower must complete IRS Form 5405. Guidelines for secondary financing from approved entities follow:

• The amount of the second mortgage may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses
  
• The borrower may not receive any cash back at closing other than reimbursement for closing fees such as the credit report or appraisal fees paid outside of closing
  
• The secondary financing may or may not require monthly payments; if monthly payments are required, they must be included in the borrower’s qualification ratios unless the payments are deferred for at least 36 months
  

Guidelines for approved entities to purchase the anticipated tax credit follow:

• The proceeds from the sale of the tax credit may not exceed the anticipated amount as documented in the IRS 5405 form
  
• The sale of the tax credit may not be used for the required 3.5 percent down payment but may be used for closing costs, prepaid expenses, and additional down payment over and above the required down payment
  
• The purchaser of the tax credit may not charge administrative fees in excess of 2.5 percent of the tax credit amount
  
• Additional data must be input into the FHA Connection:
  • Name and EIN of the tax credit purchaser
    
  • The amount of the anticipated credit
    
  • The amount the homebuyer paid for the tax credit purchase service
    

Lenders and their DE Underwriters must ensure case binders are appropriately documented and underwritten. Requirements include:

• Compliance with the guidelines outlined above
  
• Copy of the draft IRS 5405 form completed by the homebuyer and computed correctly
  
• Evidence the borrower(s) meets first-time home buyer eligibility requirements
  (Tax returns for the last three years, or tax transcripts obtained with an IRS 4506T form will document the borrower(s) did not own a main home within the last three years)
  
• If secondary financing, a copy of the executed note and security instrument for the second lien
  
• If a tax credit purchase, a signed certification from the borrower that the tax credit is not subject to being offset by other federal indebtedness
  
• If a tax credit purchase, the pay stubs and tax returns confirm there are no outstanding garnishments or outstanding IRS indebtedness
  
• If a tax credit purchase, the credit report does not indicate unpaid student loans, or other obligations that would offset the tax credit
  

This recent change is a great opportunity for lenders to renew their marketing campaigns that target first-time home buyers as well as being a knowledge source for Real Estate agents and builders. Now is the time to put together information brochures and conduct seminars for your Realtors and builders on how to utilize the tax credit to help consumers become first-time home buyers

Now is a great time to start looking at ways that you can afford a Connecticut mortgage loan. Many people fear that now is a bad time to begin thinking about buying a home in Connecticut because of the fact that the economy has created such a decline in income in the area. However, you have to remember that a home is an investment and the decreasing costs of Connecticut homes make now a smart time to make that investment if you can figure out a way to do so. The good news is that there are a lot of smart things that you can do to be able to afford a CT mortgage even though the recession has hit people hard in the state.

The primary thing that you need to do to be able to afford mortgage rates in CT today is to make sure that you are working with a lender who is capable of offering you the best deal despite the problems with the economy. Many people have seen the declining cost of CT real estate and have gone to their local bank to apply for a mortgage only to discover that the banks aren’t giving out loans like they used to. In today’s economy, it is crucial that you get your Connecticut mortgage from a qualified lending program which can offer more options to you than may be available through a local bank. By carefully selecting the CT mortgage lender that you work with, you’ll be able to find the type of mortgage that you can afford even today.

Once you have chosen the right type of lender, you will want to begin comparing the different Connecticut mortgage rates that are available to you through this lender. In the past people often tried to keep the length of their mortgage as short as possible. Because of today’s economy, however, you probably want to work harder to keep your immediate costs down. This means that you should consider 30-year mortgage rates in CT more carefully than you consider shorter-term mortgage loans. Work with your lender to minimize the costs of your down payment and initial monthly payments so that you can afford this purchase despite the problems in today’s economy.

After you have figured out what type of figures you are working with, you can begin looking at the specific properties that are worth investing in at this time. The great news here is that home prices in Connecticut have been falling steadily for the past year. Many other states have seen a leveling off of prices because what has happened is that homes have foreclosed and then been re-sold at low prices to new buyers which has re-stimulated the housing economy. That’s not the case in Connecticut where foreclosure rates are relatively low and bank-owned sales are not as common. What this means for you is that homes across the state are more affordable than in the past and prices keep dropping because the properties aren’t being bought out by the banks. This fact opens up the options that you have for using your CT mortgage to get a home that you’ll like to live in.

Use smart real estate purchase tips for making the most of your Connecticut mortgage. Buy in neighborhoods that are up-and-coming, consider purchasing a condo instead of a house and make sure to negotiate the final sale price since it’s a buyer’s market. If you look around and find that you’re still having trouble affording Connecticut mortgage rates because of your own financial situation, consider purchasing the home and renting it out to cut the cost of paying the mortgage. This would allow you to make a smart investment in CT real estate today in spite of the tough economy and then you can reap the benefits when the economy finally turns around for the better.