The Lowdown on Home-Buyer Tax Credits

Last week, President Barack Obama signed a law that extends through next spring a temporary tax credit of up to $8,000 for some first-time home buyers, which was due to expire Nov. 30. The law also adds a new tax credit of up to $6,500 for certain repeat home buyers. The package, which the government estimates will cost a total of $11 billion, is intended to help spur housing sales, a critical part of the economy.

Here are some answers to common questions about the new rules.

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Mortgage Rate Falls Below 5%

Home-mortgage rates fell this week, with the average rate on 30-year fixed-rate mortgages retreating back below the psychologically significant 5% level, according to Freddie Mac's weekly survey of mortgage rates.

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Senate Approves Tax Credit Extension, Expansion

The Senate yesterday passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers and add a $6,500 tax credit for repeat buyers if they've lived in their home for five of the past eight years. Home prices are capped at $800,000.

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Senate Passes Extension Tax Credit for First-Time Homebuyers

Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers. So if you want to still purchase a home, you will receive that credit. The tax credit provides up to $8,000 to first-time homebuyers. This tax credit was set to expire at the end of November.

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Tax Credit Extension Seems Likely

It seems likely that the U.S. Senate will approve a deal to extend the First-Time Homebuyer Tax Credit, but the devil is in the details.

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Long-Term Mortgages Near Record Low

Thirty-year, fixed-rate mortgages moved closer to the all-time low of 4.82 percent reached in May, falling to 4.87 percent this week from 4.94 percent a week ago, according to Freddie Mac.

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Banks Making Short Sales Tougher

Banks are backing away from short sales, forcing sellers to pay extra at closing or demanding a promissory note for the amount due. One-third of borrowers owe more on their mortgages than their properties are worth, according First American CoreLogic.

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One-Third of Home Mortgage Applicants Denied

Nearly one third of people who applied for a mortgage last year were denied, the Federal Reserve reported Wednesday.

The denial rate was up 29 percent from 2006 when approvals were highest. Last year’s denial rate was twice as high for African-Americans and Hispanics as it was for whites.

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Banks Bite Bullet on Loans

Banks and loan investors are starting to bite the bullet and lower the principal due on home mortgages for some struggling borrowers, a new report from bank regulators shows.

That's good news for some homeowners, but may portend more write-offs over the next few years for banks and other lenders now wading through hundreds of thousands of applications for loan modifications. The tradeoff for banks is that by taking the hit now they can boost their chances of being repaid.

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Guess Who's Ditching Their Mortgages?

A study of 24 million credit files by national credit bureau Experian and consulting company Oliver Wyman has shown that home owners with high credit scores are 50 percent more likely to deliberately walk away from a mortgage than lower-scoring borrowers.

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Wha' Happa'?

As we all slog our way through “The Great Recession” one of the recurring questions is, “What happened? How did we get here?”

Most people know the collapse started with banks making mortgage loans to risky borrowers. After that, mortgages were bundled into mortgage-backed securities which were then sold to someone or other (maybe the stock market) and then everything went bad . . . .

Well, that’s sort-of what happened – and the reason I know is because I just listened to a This American Life episode entitled “Return to the Giant Pool of Money”.

In it, they explain exactly what happened and why – interviewing sub-prime borrowers, mortgage brokers, they guys that packed mortgage-backed securities and on up the food chain.

The whole thing was fascinating and they way they put it together was captivating and entertaining.

If you are even slightly interested in “Wha’ Happa’?” I highly recommend you check it out!

$35 Billion Slated for Local Housing

The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials.

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Rates Hold Steady

Home-mortgage rates held the line this week, remaining at three-month lows, with the average rate on 30-year, fixed-rate mortgages remaining just above 5%, according to Freddie Mac's weekly survey.

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Rates Steady on Mortgages

Home-mortgage rates held the line this week, remaining at three-month lows, with the average rate on 30-year, fixed-rate mortgages remaining just above 5%, according to Freddie Mac's weekly survey.

LINK HERE