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Here is another of the Metro Brokers commercials.  These are very funny!

Metro Brokers - True Love from Chris Rock on Vimeo

I just received a great comment on my last article outlining the 2008 Housing and Economic Recovery Act.

There is one big change that effects Seller’s and the amount of capital Gains Tax they may have to pay. Buried deep on page 690 of the 694 page law is an important change to the Capital Gains Exclusion rule.  This rule is modified from allowing Seller’s to exclude capital gains on their home sale of up to $250k, or $500k for those filing jointly, to a formula that reduces this exclusion.  This is Bad, Very, Very BAD!

As this new law is further digested, I wonder what other “Little Surprises” we will find?

Thanks Brad Nix, for the info!  To check out the formula, and other details check out this article.

http://maxsell.net/housing-and-economic-recovery-act-of-2008/

The Housing and Economic Recovery Act of 2008, includes many positives for homebuyer’s.  None greater than the $7500 in Tax Credits for First Time Buyer’s.

Here’s the Lowdown.

• Any property, including condo’s and co-op’s, that will be used as a principal residence are eligible.
• Tax liability for the year of purchase is reduced by 10% of the cost of the purchase.  Not to exceed $7500.
• Full amount of credit is available to individuals with AGI of no more than $75,000 ($150,000 for joint returns.)  Credit phases out above the caps.
• Must be a FIRST TIME HOMEBUYER.  Meaning, you can not have owned a principle residence in the 3 previous years.
• Tax will be recaptured, at 6.67% per year, for 15 years.  If sold before 15 years,the remainder of credit will be recaptured on sale.  This basically means you need to pay back the credit over 15 years.
• The credit applies to any qualified purchase between April 9, 2008 until July 1, 2009.

There you have it.  A quick breakdown.  Please contact us for more information!

The housing bill that was signed this week included two major changes for FHA lending guidelines.  The changes are scheduled to kick in on October 1, 2008.

The first change is the minimum down payment requirement.  Currently FHA loans require 3% down.  On a $200,000 purchase this would be $6,000.  The housing bill will increase this minimum down to 3.5%.  On that same $200,000 home, the down payment will now be be $7,000.

The second major change is the elimination of seller funded downpayment assistance.  Currently the seller can contribute up to 6% to the buyer to cover their down payment and closing costs on an FHA loan.  These funds are deducted from the sellers equity and credited to the buyer at closing with a non-profit intermediary.  This has allowed buyers to take advantage of 100% financing.

One of the main reasons this is being eliminated is that FHA found the foreclosure rate to be about 80% higher on loans with down payment seller assistance verses FHA loans without.  There was also concern about inflated property values as a result of the seller funded DPA programs.

Moving forward the max the seller can contribute to the buyers closings costs and pre-paid items is 3% of the purchase price which has always been allowed.  The buyer will now be required to contribute the 3.5% for their the down payment.  Down payment assistance from a non-profit, employer, church or family member is still allowable and always has been.

Despite these changes, FHA loans will continue to be a good option for first time home buyers.