NAMB Legislative and Regulatory Conference coming to Capitol Hill
CMPS Institute: Four ways the stimulus plan benefits homeowners and buyersGibran NicholasCMPS Institute, Gibran Nicholas, stimulus plan, tax credit, homebuyer tax credit, reverse mortgage "There are four primary sections of the economic stimulus plan that will benefit home owners and buyers," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. Benefit I: Expansion of home improvement tax credit "The tax credit for making energy efficient home improvements is now 30 percent of the cost of the improvements up to a maximum of $1,500," Nicholas said. "This means that if the improvements cost you $4,500, you would receive a tax refund of $1,500 when you file your tax returns." Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters. "Generally, most modern improvements like windows, furnaces, and air conditioners meet the necessary standards for energy efficiency," Nicholas said. "If you've been holding off on making some of these improvements, now is a great time to get a move on it--especially with all the great deals being offered." Benefit II: Expansion of first-time homebuyer tax credit The tax credit available to first time home buyers was increased from $7,500 to $8,000 for homes purchased between Jan. 1, 2009, and Dec. 1, 2009. Also, the credit no longer needs to be paid back as long as the buyers live in the home without selling it for at least three years. "The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame," Nicholas said. The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. "This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns, and the IRS will write them a check for the difference between $8,000 and their actual tax bill," Nicholas said. "In fact, the credit can be claimed on your 2008 tax returns that you file by April 15 of this year, even if you buy the home in 2009." There is one catch, however: If you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15-year timeframe beginning in 2011 when you file your 2010 returns. Benefit III: Higher reverse mortgage loan limits The loan limits for FHA-insured reverse mortgages have been increased to $625,500 across the entire country not just the higher cost areas. The previous limit was $417,000 across the country. "This is especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated," Nicholas said. This coincides with another little-known change in the reverse mortgage arena: the availability of reverse mortgages on home purchase transactions. "This is a fantastic opportunity for senior citizens to buy a new home and live mortgage payment-free without having to wait for their old home to sell," Nicholas said. "Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home." Benefit IV: $729,750 FHA and conforming loan limits restored in high-cost areas "The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009," Nicholas said. "The economic stimulus plan restores the $729,750 maximum. This makes higher cost homes more affordable--especially in the coastal housing markets that tend to have higher than average home values." For related information on how U.S. debt levels are affected by the latest stimulus plan, please visit Gibran Nicholas' blog at gibrannicholas.com. For more information, visit www.CMPSInstitute.org.