Mortgage Rates are the Lowest in History

So much is going on in Washington and in our financial markets. “Turmoil” is the word often used by seasoned analysts.

What does this mean for you? A great opportunity to lower your monthly mortgage payment and/or reduce the term remaining on your current mortgage.  

There are many factors to consider, including:

-When the stock market struggles, mortgage interest rates generally drop. This past week the stock market experienced its biggest loss since 1978, and this pushed interest rates to all-time lows.

-Congress is considering the elimination of a tax deduction for home mortgage interest. If the home mortgage deduction is eliminated, home ownership won’t offer the tax write-offs it did in the past.

-Investment options are lean and financial uncertainty demands that you control your fixed expenses.

-The temporary loan limits instituted by our government are expiring on 9/30/2011. In other words, if you have a loan between $417,000 and $729,000 this may be your last opportunity to take advantage of these savings.

All of these factors indicate that this may be the best time to refinance your home. Whatever you do, consider refinancing your home as part of a comprehensive tax and investment plan.

With rates for a 30 year fixed mortgage currently hovering around 4.375% and 15 year fixed mortgages as low as 3.5%, there has never been a better time to refinance your mortgage to lower your monthly payment, or shorten the term of your mortgage, which will save thousands of dollars over the life of the loan.

One of our mortgage specialists is ready to help you reach the best decision applying your facts, the law and market opportunities.  If you are looking to purchase a home or refinance, feel free to contact Steve Rossman from D&S Mortgage Programs, Inc. You may call (267) 765-0223 or email srossman@dsmortgages.com.  Steve will help you think through your options. If financing is needed, he will work to find the best financing structure for your needs.

Mortgage Links:

Mortgage rates plunge, 15-year rate hits new low – http://linkd.in/pogUcs

If you have any questions about how this credit works or if you want to discuss any other home financing needs, please call or e-mail our Director of Mortgage Services, Pete Caldes, at (267) 765-7310 or pcaldes@dsmortgages.com.  We will provide you with a free evaluation of your current and future home financing needs.

These important changes could it make it easier for you or someone in your family to buy a home. In addition, because the changes generally aid buyers and aim to improve residential real estate markets nationwide, they also could make it easier for you or someone in your family to sell a home.

Homebuyer credit basics.  Before the new law was enacted, the homebuyer credit was only available for qualifying first-time home purchases after April 8, 2008, and before December 1, 2009. The top credit for homes bought in 2009 is $8,000 ($4,000 for a married individual filing separately) or 10% of the residence’s purchase price, whichever is less.

Only the purchase of a principal residence located in the United States qualifies for the credit. Vacation homes and rental properties are not eligible.

The homebuyer credit reduces your tax liability on a dollar-for-dollar basis. If the credit is more than the tax you owe, the difference is paid to you as a tax refund.

For homes bought after December 31, 2008, you must pay back the homebuyer credit if you dispose of the home or stop using it as your principal residence within 36 months of purchase.

The credit is subject to a phase-out based on your modified adjusted gross income (AGI) for the year of purchase. Before the new law, the credit was phased out at modified AGI between $75,000 and $95,000 ($150,000 and $170,000 for joint filers).

The new law makes four important changes to the homebuyer credit, the first three of which make the credit easier to claim:

New lease on life for the homebuyer credit.  The homebuyer credit is extended to apply to a principal residence bought before May 1, 2010. The homebuyer credit also applies to a principal residence bought before July 1, 2010 by a person who enters into a written binding contract before May 1, 2010, to close on the purchase of the principal residence before July 1, 2010.

Certain service members on extended duty outside of the United States get an extra year to buy a qualifying home and get the credit; they also can avoid the recapture rules under certain circumstances.

Current homeowners who are “long-time residents” can claim credit of up to $6,500. For purchases after November 6, 2009, you can claim the homebuyer credit if you (and, if married, your spouse) maintained the same principal residence for any period of five consecutive years during the eight years ending on the date that you buy the subsequent principal residence.

You don’t have to sell your current home in order to qualify for a homebuyer credit on the replacement home. You can buy the replacement home to beat the new deadlines (explained above) before you sell the old home. However, the replacement home must be your principal residence.

The maximum allowable homebuyer credit for qualifying existing homeowners is $6,500 ($3,250 for a married individual filing separately), or 10% of the purchase price of the subsequent principal residence, whichever is less.

The homebuyer credit is available to higher-income taxpayers. For purchases after November 6, 2009, the homebuyer credit phases out over higher levels of modified AGI, making the credit available to a bigger pool of buyers. For individuals, the phase out range is between $125,000 and $145,000, and for those filing a joint return, it’s between $225,000 and $245,000.

New home-price limit for the homebuyer credit. For purchases after November 6, 2009, the homebuyer credit cannot be claimed for a home if its purchase price exceeds $800,000. It is important to note that there is no phase out mechanism in this regard. A purchase price that exceeds the $800,000 threshold by even a single dollar will cause the loss of the entire credit.

The new purchase price limitation applies whether you are buying a first-time principal residence or you are a long-time homeowner purchasing a replacement principal residence.

If you would like more information about obtaining a mortgage for a property that may qualify for the Homebuyer Credit please do not hesitate to e-mail our Director of Mortgage Services, Pete Caldes, at pcaldes@dsmortgages.com.