If you are a homeowner who would like to refinance into a lower interest rate but otherwise couldn’t due to the falling home prices, you will find the the following link very helpful.  It does not matter whether you are or are not behind on your payments.  This plan is targeted to help those that COULD be at risk, due the current market as well as the higher interest rate that your loan may currently have.  I would encourage anyone to contact their own lender after reading this plan to help them stay in their current home.   

 http://www.treasury.gov/initiatives/eesa/homeowner-affordability-plan/FactSheet.pdf

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Money Saved!

Here is some very helpful information from the US Treasury Department regarding the first time homeowner Tax Credit that is now available to First-Time Homebuyers…defined as homeowners who have not owned a home for the three preceding years.  Plus, it is only available to US Citizens. 

As part of the Treasury Department’s consumer outreach effort and with the April 15 individual tax filing deadline approaching, the Internal Revenue Service today began a concerted effort to educate taxpayers about additional options at their disposal to claim the new $8,000 first-time homebuyer credit for 2009 home purchases. For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.

The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.

“The new credit can get money in the pockets of first-time homebuyers quickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.”

First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.

Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

The filing options to consider are:

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  • File an extension — Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
  • File now, amend later — Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.
  • Amend the 2008 tax return — Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.
  • Claim the credit in 2009 rather than 2008 — For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.

The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

IRS.gov provides more information, including guidance for people who bought their first homes in 2008. To learn more about the overall implementation of the Recovery Act, visit www.Recovery.gov.

There are a variety of ways a loan modification can be accomplished.   The interest rate can be reduced, either temporarily or permanently.  Also, what was once an adjustable rate loan, otherwise known as an ARM, could be changed to a fixed rate loan.  Further, an interest only loan (one where the monthly payments are only paying the interest every month, not towards any principle reduction) could be altered to include interest AND principle. The Term of the loan (which means, the length of time the payments are owed, until payoff) can also be changed. i.e. going from a 15 year to a 30 year loan, or from a 30 year to a 40 year loan. Further, the principle balance of the loan can also be reduced in a loan modification. Any of these ways (or a combination thereof) can be used in a “loan modification”.

In the current marketplace i.e. a declining market and an obvious sluggish, struggling economy, loan modifications are becoming commonplace. The quasi-government agencies of Fannie Mae and Freddie Mac (and the financial power players of many conventional loans originated in the U.S.) are now suggesting to banking institutions that loan modifications be performed for the sake of keeping homeowners in their homes. The benefit to the banks is that it will cost them far less in the long run, to loan modify an existing customer than it would cost to foreclose a property. The national average of cost per foreclosure is now running up to $60,000 per property, just for the foreclosure process. That doesn’t even count the losses on the principal/interest on the loan that the lender will have also taken. Obviously a lower monthly payment is the goal sought by the homeowner. In the end, with a loan modification, the homeowner wins with the lower monthly payment, the bank wins (or is less scathed) when it save itself the cost and trouble of foreclosure. Further, the market overall wins, due to less short-sales and foreclosure on the market, which ultimately brings down the comparables in the neighborhood, and therefore home values overall. In order to find out about loan modification specific to the lender/bank that currently controls your loan, click on the following link which will take you to a website I have directed many clients to during these troubled times. From there, you can find your banking institution and further click on the links to begin inquiring about the loan modification.

http://www.homeloanlearningcenter.com/ForeclosurePreventContactInfo.htm

Further, should you have specific questions about the process, I would be happy to answer any questions. My services and advice are free of charge. I currently have several clients, friends and family who are going through this process themselves, so have garnished knowledge from the processes they have been going through.