Quint Cobb & Associates Get The Most Out of Your Homebuying Tax Credit

Programs, states offer ways to get $8,000 break to first-time buyers faster

source AP

When it comes to the $8,000 tax credit for first-time homebuyers, it seems there’s a new program every week to help tap that money today.

The credit can be claimed on 2008 or 2009 tax returns. Homebuyers who get a loan backed by the Federal Housing Administration can use the money to cover closing costs and other fees, and at least 10 states offer ways to use the tax credit faster.

“There are some real neat tax planning strategies you can apply now,” said Bob Meighan, vice president of TurboTax.

To be eligible, a buyer cannot have owned a home in the past three years. So if you’re ready to buy, here are some tips:

INCOME CONSIDERATIONS: The tax credit, for home purchases made through end of November, comes with income thresholds, $75,000 for individuals and $150,000 for joint filers. After those limits, the credit begins to phase out. If you bought a home this year and expect your 2008 income to be lower than next year’s, it makes sense to file for the credit this year using a 2008 amended return.

However, if you think your income will decrease, due to job loss, wage cuts or hour reductions, it makes more sense to file for the tax credit on your 2009 tax returns to get the most out of the credit, Meighan said.

TAX WITHHOLDING: Another benefit to waiting until 2009: You can increase your take-home pay. By taking the credit next year, you can change your tax withholding status with your employer now and get more on a paycheck-to-paycheck basis, Meighan said.

You’ll be giving up a “fatter” tax refund next year, but each month you’ll have more change in your pocket.

Also, don’t forget to reduce your federal and state tax withholding to account for the tax deduction you can take on the mortgage interest and property taxes you pay.

BRIDGE LOANS: Ten states (and the list keeps growing) are offering so-called “bridge loans” for the federal tax credit, so homebuyers can take advantage of the $8,000 before the 2010 filing season. Qualified homebuyers in Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania and Tennessee can receive a loan with little to no interest and repay it with the tax credit refund next year.

“I see it as an upside,” Meighan said. “It gives homebuyers more flexibility,” with the money.

Each state program varies and some require a minimum down payment contribution from the buyer.

Some nonprofit organizations like NeighborWorks America are also offering bridge loans for the tax credits.

California also enacted its own one-time home buying credit for newly built homes purchased between Feb. 28 and March 1, 2010. The nonrefundable credit, which is for all buyers, not just first timers, is equal to 5 percent of the purchase price up to $10,000. It can be claimed over a three-year period. The property must be a single-family residence, the principal residence and eligible for the property tax homeowners exception.

A California resident can take both the federal and state tax, according to Kathleen Thies, a state tax analyst at CCH Inc. However, only $100 million has been put aside for the state credit and that money is expected to run out this month or next. And there are no plans to add more funding to the program.

“It’s on a first-come, first-serve basis,” Thies says.

ADVANCE CREDIT: Last month, the FHA said its borrowers can receive advances on the $8,000 first-time homebuyer tax credit from lenders, so they don’t have to wait to get the money next year from the Internal Revenue Service.

Borrowers will still have to come up with the FHA’s required 3.5 percent down payment, but the advance from the tax credit can be applied toward closing costs, fees or to increase the down payment.

John W. Roth, a senior tax analyst at CCH, believes some lenders won’t participate. The process involves more work for lenders, but lenders can only charge an additional 2.5 percent fee for that.

Streamline-Refi Deadline

November 17th

Last day to assign a case number for FHA Streamline refinances under current FHA guidelines. Mortgagee Letter 09-32

IMPORTANT CHANGES

• Defined net tangible benefit for the borrower

• Maximum Combined LTV

• New Maximum Mortgage Amount for Streamline Refinances WITHOUT an Appraisal

• Verification of any assets needed to close

• Certification that borrower is employed and has income

• Must have made at least 6 payments

• With Payment history no lates in the last 12 payments

About Quint Cobb & Associates

• Quint Cobb & Associates specialize in Residential and Commercial Financing, Investment Planning and Mortgage Relief Assistance in all 50 States.

• Our team of mortgage analysts, attorneys, negotiators, processors and underwriters are chosen from the top 1% of their industries.

• We are dedicated to providing our clients with the absolute best financing options by delivering individualized service, unmatched loan approval percentages and unparalleled lending flexibility and speed.

• Quint Cobb & Associates have access to the power and speed of a direct banking line that has not been paralyzed by the losses and toxic loans that crippled the rest of the industry.

• Quint Cobb & Associates also have the flexibility to broker to all remaining lenders (with tier one pricing and FHA backing in all 50 states).

• We pride ourselves in our Underwriters (and the relationships and direct communication we maintain with them) to assure the highest loan approval percentages, loan processing speed and overall loan pull-through ratios possible.

• Quint Cobb & Associates specialize in FHA loans, Short Refinances, Conventional, Jumbo and Commercial Loans, Residential and Commercial Loan-Modification Assistance, Short Sale Guidance and Investment Planning.

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• Quint Cobb & Associates have the unique ability to provide analysis across markets and property types. In addition to their reports and publications, information can be packaged to meet specific needs of investors by property type and submarket.

Clients are informed of the latest market trends and real-time data on buyer demand, pricing and local markets. We assist our clients in measuring the performance of their properties and look for new opportunities to maximize returns.

• Quint Cobb & Associates professional experience and knowledge will enable you to clearly and quickly identify a course of action that delivers maximum value to your company or to your individual portfolio (whether you are a Homeowner or a Realtor or Mortgage Professional looking for a home for your financing needs in all 50 states).

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