Orlando Florida Real Estate Blog

When do I need to purchase to qualify?
If you buy a home between Jan. 1 and Dec. 1 this year and close escrow during these dates, you will qualify for an $8,000 tax credit - as long as it is your primary residence and you meet the simple requirements.

How does the law define "first-time homebuyer"?
The law defines "first-time homebuyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase.

What are other requirements to qualify?
All U.S. citizens who file taxes are eligible to participate. An income limit of $75,000 a year for individuals and $150,000 a year for joint filers also applies.

How do I apply for the credit?
Taxpayers should use IRS Tax Form 5450 to claim the first-time homebuyer tax credit.

Does the credit have to be repaid?
No. Unlike a similar tax credit passed in 2008, this $8,000 tax credit does not have to be repaid to the IRS.

Can I use the tax credit toward a down payment or other closing costs?
Yes. An announcement made May 29 allows the tax credit to be used toward purchase costs of a home, including down payment in some cases. This can be done one of two ways. First, buyers using an FHA-approved lender can sell their anticipated tax credit to the lender and use the proceeds to immediately apply the tax credit to any down payment above the minimum down payment of 3.5 percent required with FHA-insured mortgages. Second, buyers who receive financing through state housing finance agencies and certain non-profits will be able to use the tax credit for their down payments via a tax credit advance loan that does not result in any cash back to the buyer.

Orlando Real Estate Expert Testimonial

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Breaking news: HUD: Home Buyer Tax Credit Loans Still on Track (REALTOR® Magazine)

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

First Time Homebuyers

It is an historic time for first time homebuyers. The government, in an effort to stimulate our economy, is giving away money to first time homebuyers.  It sounds to good to be true, but I assure you it's not.  I have provided a quick link to the Federal Housing Tax Credit for First-Time Home Buyers website, as well as a quick video that explains the credit.  If you have any questions about this great stimulus, don't hesitate to contact us directly.  Don't wait too long, this will only last through the end of the year.

Federal Housing Tax Credit Explained

OK, I'm going out on a limb here!

After more than a year of free-falling sales and prices, Orlando’s battered housing market is getting support from both first-time home buyers and investors taking advantage of record foreclosures and distress sales across the region.Sales and how they work.Orlando area sales.Orlando market, and bankers are saying yes more often to short sales, which spare them the expense of a full-blown foreclosure.

With mortgage-interest rates at record lows and an $8,000 tax credit for buyers who haven't owned a home for at least the past three years, existing-home sales in the region have started rising again compared with a year ago. And half the deals involve bank-owned foreclosures or "short sales" — properties for which the bank has agreed to take less than the amount owed on the mortgage. Throughout this blog you can find much more information on Short

Who's buying them? Anecdotal reports and a few surveys indicate that first-time home buyers, who don't have to worry about selling an existing property, and investors venturing into the second-home market for the first time or searching for bargains to add to their inventory, are responsible for most of the

Bulk auctions of both homes and condominiums are creating buzz in the local

Lenders are becoming more responsive. However, the short-sale process still remains slower and more cumbersome than a regular, open-market sale between a willing seller and a qualified buyer. The timing even though is better still encompasses a 4-6 month time frame in general. Therefore, Now is the time to buy. We are at or near the bottom of this cycle and there is little room for prices to continue to drop. Yes, prices in some area may continue to fall but as a general market I feel prices are ready to start stabilizing. Now, that doesn’t mean they’re headed up any time soon. I feel that we are at or near the bottom and we’ll drag along the bottom here possibly for several months before we start showing a modest increase. When price start to grow, I feel that the new growth will be at a 2-5% rate in general. Some areas more, some area less. So, Orlando buyers let’s BUY some property.

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs.  Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden,  or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

Borrowers who are 'underwater' and current will be able to refinance -- as will those whose payments are unaffordably high. And there are incentives for lenders and borrowers.

What's in President Barack Obama's housing rescue plan for you?

Maybe lower house payments, and not just for those already in default.

"All of us are paying a price for this home mortgage crisis," Obama said in remarks at a ceremony announcing the program at a Phoenix-area high school.

The housing industry has been devastated by the nation's recession. Construction of new homes and applications for future projects both plunged to record lows in January as all parts of the country showed big declines in building activity. Analysts hope that a boost from government programs, including the efforts to stem foreclosures, will help stop the slide.

Headlining Obama's plan was a $75 billion Homeowner Stability Initiative, which would provide a set of incentives to lenders to cut monthly mortgage payments to sustainable levels.

Another key component: a new program aimed at helping homeowners who are "underwater" -- who owe more on their mortgages than their houses are worth. Such mortgages have traditionally been almost impossible to refinance. But the White House said its program will help 4 million to 5 million families do just that.

Here are the changes most likely to affect you.

Refinance, even if you're 'underwater'

Mortgage rates at near-record lows could make payments more manageable for homeowners trapped by falling prices. Though many of these owners are current on their payments, plummeting prices have kept them underwater. Homeowners whose mortgages were bought or guaranteed by Fannie Mae or Freddie Mac typically need equity of at least 20% to refinance. Obama's program would change that requirement, allowing even those who owe up to 105% of their home's value to refinance.

An example of the potential savings: A family has a 30-year fixed rate mortgage of $207,000 at 6.5% on a house worth $260,000 at the time of purchase. Today, that family has about $200,000 remaining on their mortgage, but the value of that home has fallen to $221,000, making the owners ineligible to refinance. Under the Obama program, that family could refinance to a rate near 5.16%, reducing annual payments by more than $2,300.

The administration stresses that homeowners need not be delinquent to qualify. Nearly 27% of U.S. homeowners with a mortgage are underwater, according to Moody's Economy.com. The Obama administration believes as many as 5 million homeowners with Fannie Mae- and Freddie Mac-backed mortgages will qualify.

You’ll probably have to contact the company that services your mortgage to find out whether your loan qualifies. Only conforming loans are included, so buyers who owe more than the jumbo limit of $417,000 -- for most locations -- are out of luck.

Payments could be reduced, not just delayed

Current mortgage-workout plans typically allow more flexibility with payments but rarely reduce the amount owed, a factor most experts cite in their failure to stem the foreclosure crisis. The Obama program concentrates on affordable monthly payments, with taxpayers and lenders sharing the costs of reducing interest rates and principal to an amount that borrowers can actually repay.

• Video: Is Obama's housing plan viable?

An example of the potential savings: The lender would first be responsible for bringing down interest rates so that the borrower's monthly mortgage payment is no more than 38% of pretax income. The Obama program would match further reductions in interest payments dollar for dollar with the lender to bring that ratio down to 31%. If a borrower were spending 43% of his monthly income on a $220,000 mortgage, that could mean a reduction in monthly payments of more than $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with taxpayers sharing that cost, too.

The Obama administration estimates the $75 billion program could reach up to 4 million at-risk homeowners.

Pay borrowers and lenders for success

Mortgage service companies will receive an upfront fee of $1,000 for each eligible modification. They will also receive pay-for-success fees -- awarded monthly as long as the borrower stays current on the loan -- of up to $1,000 each year for three years.

Borrowers who pay on time will receive a monthly balance-reduction payment that goes straight toward reducing the principal of the loan. As long as a borrower stays current, he or she can get up to $1,000 each year for five years.

To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrowers fall behind.

Remove uncertainty around further declines in prices

To encourage lenders to modify more mortgages and enable more families to keep their homes, the administration and the FDIC have developed an insurance fund (of up to $10 billion) that would pay mortgage holders for each modified loan if the home price index declines.

• Analysis: Why your home's value will keep falling

Institute consistent, clear guidelines for loan modifications

The Treasury will develop uniform guidance for loan modifications across the mortgage industry. All financial institutions receiving bailout money going forward will be required to implement loan-modification plans consistent with the guidelines. Fannie Mae and Freddie Mac will use these guidelines for loans that they own or guarantee, and the Obama administration will work with regulators and other federal and state agencies to implement these guidelines across the entire mortgage market.

The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans' Affairs and the Department of Agriculture.