My New Blog

Nov. 6 (Bloomberg) -- President Barack Obama is set to sign into law a bill that extends $8,000 tax credits for first- time homebuyers and unemployment benefits.

(CLICK HERE TO SEE MORE)

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2008 or 2009. The credit:

• Applies to purchases that close after April 8, 2008, and before Dec. 1, 2009.
• Applies only to homes used as a taxpayer's principal residence.
• Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
• Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The credit is claimed using Form 5405.

For 2008 Home Purchases

The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.

The new temporary FHA limits established for 2009 under the American Recovery and Reinvestment Act of 2009 (ARRA) are available. These new limits are calculated at the higher of the previous 2008 limits or the 2009 limits implemented by the Housing and Economic Recovery Act (HERA).

The new maximum loan limits are as follows:

*Loan limits vary by county. To look up FHA mortgage limits for all areas go to: https://entp.hud.gov/idapp/html/hicostlook.cfm

• The FHA Streamline Refinance program is designed to lower the monthly principal and interest payments on a current FHA-insured mortgage.

• Cash-back to the borrower is not allowed with the exception of minor adjustments at closing provided the amount does not exceed $500.

• Allowed with or without an appraisal.

• Must result in an immediate payment reduction to the borrower.

• Generally, do not require documentation for verifying income, assets, credit rating, appraisal, or source of funds. In some cases, however, an appraisal or credit report may be necessary.

• Non-owner-occupied ARM or fixed-period ARM loans are not eligible for the Streamline Refinance program.

• Loans closed prior to July 1, 1991, with or without an appraisal is exempt from annual MIP; however, UFMIP is required. Refer to MIP for MIP Premium Based on Term tables list for the MIP amounts based on the term of the loan.

• Must include documentation attached to the Loan Purchase Voucher (LPV) at the time of delivery to indicate that the mortgage being refinanced was closed on or before July 1, 1991.

Note: This documentation may be in the form of a photocopy of the Note, HUD-1, MIC, copy of the recorded mortgage, or other credible evidence.

2009 FHA Refinance Loan-to-Value Limits

Effective for case numbers assigned on or after January 1, 2009, the maximum loan-to-value for most FHA refinance transactions will be 97.75%. A summary of maximum loan-to-value on refinances is shown in the chart below.

	Maximum LTV
Rate-and-Term	97.75%
FHA-to-FHA Streamline w/Appraisal	97.75%
FHA-to-FHA Streamline w/o Appraisal	n/a
Cash-Out Refinances	95% or 85%

FHA Second Appraisal Requirements for Cash-Out Refinances

Effective for all case number assignments on or after January 1, 2009, FHA will require a second appraisal for all cash-out refinances where the loan-to-value, exclusive of UFMIP, exceeds 85% of the appraised value. This second appraisal requirement applies regardless of the loan amount or the location of the property.

If owned less than 12 months: 85% LTV, determined by using the lesser of either the

If owned 12 months or more: up to 95% LTV based on current appraised value, subject

FHA High Balance Loan Definition

FHA loans with loan amounts greater than the standard loan amounts are considered to be FHA High Balance loans. Refer to the table below for an outline of the maximum loan amounts available on FHA High Balance loans.

Property Type	Contiguous States Maximum High Balance Loan Amount	Alaska & Hawaii Maximum High Balance Loan Amount
1 Unit	$625,500	$938,250
2 Unit	$800,775	$1,201,150
3 Unit	$967,950	$1,451,925
4 Unit	$1,202,925	$1,804,375

FHA Standard Loan Definition

FHA loans within the below-referenced loan amounts are considered to be standard FHA loans.

Property Type	Contiguous States Maximum Standard Loan Amount	Alaska & Hawaii Maximum Standard Loan Amount
1 Unit	$417,000	$625,500
2 Unit	$533,850	$800,775
3 Unit	$645,300	$967,950
4 Unit	$801,950	$1,202,925