Great news! The United States Government just extended the previous $8,000 Homebuyer Tax Credit until April 30, 2010 and added another group of people who may qualify for a slightly lesser amount making it easier for both to qualify for a purchase money mortgage loan.
Previously, only first time homebuyers (those who hadn't owned a home in the last 3 years) were eligible for the tax credit of up to $8,000. But now, even those who've owned in the last three years can purchase a new 'primary residence' and get up $6500 if they have owned and lived in the same house for 5 of the last 8 years.
So what this means is that if you haven't owned a home for the last 3 years, you are probably eligible. If you have owned a home in the last 8 years or multiple homes in the last 8 years, you just need to figure out if you have lived in one of those homes for at least 5 years all told. If you bought a home in January of 2006 and have been living in it ever since you don't qualify. But if you bought a home in late 2001 and lived in it for 3 years, rented it for 2, and then moved back into it until now, you probably DO qualify for the tax credit. If you need a mortgage which is probably the case, and you end up qualifying for and getting an FHA mortgage, the credit could end up reimbursing you for the entire downpayment.
There are some income caps which can eliminate eligibility, but the vast majority of buyers will not affected by them. In fact, the caps are so high that you probably won't be too upset if you make too much money to qualify for the tax credit. Contact your mortgage broker for more specific details on the tax credit.
The bottom line is that if you WANT to buy a home, there really isn't a better time than now to do so. Prices are low - so low actually that you can buy a home below what it would cost to build it! Sellers are motivated, financing is available, and the government may reimburse you for the downpayment. So what are you waiting for? Buy, Buy, Buy!
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Congratulations on the great blog!
ReplyDeleteNaturally the first people to notice your blog are the ones who have followed your career, as I have.
I've told many of my clients through the years that if they need a knowledgable mortgage lender, AND one who would not string them along, it would be Jeff Mallas.
Thomas Taylor, Broker
Desert Classic Properties, Inc.
Hey jeff,
ReplyDeleteI am thinking about getting a second mortgage. What is the best homes equity loan I can get?
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ReplyDeleteThanks for the questions Mr. Secret about the best home equity loan. Let me see . . . the short answer is "Any one you can get!" There are generally two types of lenders of home equity loans; banks and conduits (entities that pool loans together creating securities and selling them on Wall Street). Unfortunately the conduits have all but dryed up and most banks have tightened up their guidelines considerably on home equity loans, or ceased doing them altogether. So it's very difficult to obtain them at this point in time.
ReplyDeleteHome equity loans are generally second mortgages that are designed to allow you to tap into the equity you have in your home. So I am going to have to make a couple assumptions. The first is that you live in an area where the banks are still offering home equity loans and second that you have some equity in your home!
If this is the case, there are two main types of home equity loans; fixed closed mortgages and open-ended adjustable mortgages. Yes they are still mortgages, they are just usually in second position behind a larger first. In some instances, if your house is free and clear, people will get an adjustable Home Equity Line of Credit (HELOC) because the adjustable rate might be lower than what they could get on a fixed rate or they may just want to have the money available for an emergency or a big purchase they are expecting to make such as an automobile or a second home.
And that brings us to the difference between an open-ended and closed loan. A closed loan is like a traditional mortgage or installment loan. You take or get the full amount of the note upfront and make fixed monthly payments on the loan until it's paid off completely or it comes due. An open-ended line of credit is just like a credit card.
Continued from above . . . When you first get an Home Equity Line of Credit (HELOC) you may or may not take any money out when you first get it. Let's say you get an HELOC for $50,000 but you don't take any of that money out initially. You will be given some checks and in some cases even a credit card to access the funds. Again like a credit card, you have the money available but you don't have to take it. So then let's say a month down the road, you purchase an automobile for $20,000. You can just write a check from your HELOC and your new balance becomes $20,000 which will cost you interest until it gets paid back. You can make minimum payments on it which in today's market may only cost you $50 a month or you can make any principal payment you want including paying it off in full at any time. Additionally, because it is a second mortgage, the interest MAY BE tax deductible (consult your accountant to find this out).
ReplyDeleteSo to answer your question about what is the BEST Home Equity Loan, I believe it would be an adjustable HELOC with a fixed rate option. I just like the flexibility of being able to borrow and pay it back and borrow again without having to requalify for another loan everytime like it would be with a home equity loan. And the rates are so low right now, the banks are practically giving away the money. But I do expect the rates to go up. So if you have an option to fix in the rate, you can do so when they start rising. Then you can borrower money on the cheap right now and lock it it at a low rate before it gets too expensive!