Congress Expands And Extends The First-Time Home Buyer Tax Credit

Congress Expands And Extends The First-Time Home Buyer Tax Credit

Congress both extended and expanded the First-Time Home Buyer Tax Credit program Thursday.

The White House says the President will sign it into law today.

The up-to-$8000 tax credit's expiration date has been pushed forward to spring, requiring homebuyers to be under contract by April 30, 2010, and to be closed by June 30, 2010.

The program's basic eligibility requirements remain the same:

Buyers can't purchase the home from a parent, spouse, or child
Buyers can't purchase the home from an entity in which they're a majority owner
Buyers can't acquire the home by gift or inheritance
All parties to the purchase must meet eligibility requirements
The new law includes some notable updates, however.

For one, the definition of "first-time home buyer" has been expanded to include most homeowners with at least 5 years in their current home. "Move-up" buyers like these are now eligible for IRS tax credits, but with a cap at $6,500.

This means that you don't have to be a true first-time home buyer to claim the "first-time home buyer tax credit".

Other eligibility changes include:

The subject property's sales price may not exceed $800,000
The subject property must be a primary residence
Income thresholds raised to $125,000 for single-filers and $225,500 for joint-filer
And remember, the First-Time Home Buyer program grants a tax credit as opposed to a deduction. This means that a tax filer would receive a cash payment of $2,000 from the U.S. Treasury if his "normal" tax liability totals $6,000 and he was eligible for all $8,000 available under the new law.

The complete list of qualifying criteria is posted on the IRS website. Be sure to review it with a tax professional to determine your eligibility. Then mark your calendar for April 30, 2010.

It's 5 months away.

A Simple Explanation Of The Federal Reserve Statement (November 4, 2009 Edition)

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy "has continued to pick up" since the September FOMC meeting and that housing market activity has increased.

It's the third consecutive post-FOMC statement in which the Fed speaks optimistically about the U.S. economy -- a signal that the recession is likely over.

The economy isn't without threats, however, and the Fed identified several in its announcement, including:

Ongoing job losses for American workers
Reduced fixed investment by businesses
Ongoing challenges for the financial markets
The overall tone remained positive, however, as inflation appears to be held in check.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market.

The Fed plans to wind down its mortgage market support over the next 5 months, reaffirming its March 2010 exit date. For now, Fed support helps hold mortgage rates down.

Mortgage market reaction to the Fed's press release is negative overall. Mortgage rates are rising.

The FOMC's next scheduled meeting is December 15-16, 2009.

How To Test A Home Smoke Alarm

According to the United States Fire Administration, there were an estimated 1.5 million domestic fires last year, resulting in more than 3,400 deaths.

Many of these deaths occurred in homes with no smoke detectors or no working smoke detectors.

When detectors fail, it's often because its batteries are dead or missing. Therefore, make a point to test your smoke detectors annually.

Here's how to do it:

Have somebody go to the farther point of the house from the detector
Push and hold the testing button for 5 seconds to activate the alarm
Confirm the alarm is audible by all parties
You should also buy smoke detector aerosol and spray it directly into the device. This will simulate a real fire. If the alarm doesn't sound, the smoke detector will fail when it's needed most. Replace the device immediately -- even if it beeps when you push the Test button.

Smoke detectors are inexpensive and essential. Make sure the devices in your home are working properly. Test them at least once per year.

What The Media Missed In September's New Home Sales Report

Some days, newspaper headlines are a terrible place to get your real estate news.

Today is one of those days.

After the September New Home Sales report showed sales volume down from August, the mainstream media jumped on the story:

New Home Sales fall a surprising 3.6%
Surprise Drop In New Home Sales
Stocks slide as New Home Sales fall
But the headlines miss the point, somewhat. Yes, home sales volume is important to housing, but it's not as important as home supply.

A deeper look at the New Home Sales data reveals an interesting comparison point:

New home sales volume fell 3.6%
The number of new homes available for sale fell 3.8%
In other words, sales outpaced supply -- a running theme this year and a positive signal for housing.

Since peaking in January 2009, the supply of newly-built homes has now dropped by 40 percent. The average sale price is up 15% over the same period.

This is why you can't get your real estate news from the headlines. You have to dig a little bit deeper to get the real story.

September's New Home Sales report was plenty strong. The housing market recovery continues.

Foreclosures Concentrate In Just 4 States

For the seventh consecutive month, foreclosure activity in the U.S. was dominated by a tiny subset of states.

As reported by RealtyTrac.com, more than half of September's foreclosure-related activity occurred in just 4 states:

California
Florida
Nevada
Michigan
These states represent just 22.05 percent of the total U.S. population.

Overall, foreclosures are up 29 percent from September 2008 and, while, the data seems negative, defaults are creating some interesting buying opportunities.

Foreclosed homes often sell at a discount as compared to non-foreclosed homes. Cheap prices, low mortgage rates and willing buyers have helped to spur home sales in many U.S. markets. In August, "distressed homes" accounted for one-third of all existing home sales.

That said, buying foreclosures isn't for everyone.

First off, foreclosed homes are often sold "as-is" and may be in perfect condition, or may be inhabitable. If the property falls into the latter category, it's important to get estimates for the work needed to make the home livable. Suddenly, the home may not seem like such a "steal".

And, secondly, buying a home in foreclosure can be a 3-month process or more. For some people, this is just too long.

Buying a home in foreclosure is fundamentally the same as buying a "regular" home -- there's a contract and a closing. But most of the steps in between are different.

Read the complete foreclosure report, plus take a peek at foreclosure heat maps on the RealtyTrac website. If you like what you see, talk to your real estate agent about what to do next

Powermat : The Wireless Battery Charger For Cell Phones

Tired of "wire clutter" where your mobile phones, MP3 players and gaming devices compete for outlet space?

The Powermat may be your solution.

The Powermat is a 12-inch long wireless battery charger that's conspicuously missing "plugs". Instead, it uses magnetic induction to safely recharge up to 3 devices at once.

Just place your phone(s) on the pad and they charge automatically.

The Powermat debuted at the 2009 Consumer Electronic Show and was reviewed in video. The reviewers had many positive comments on the Powermat, but highlighted some negatives aspects, too. Give a look and see what you think.

Powermat retails for $99 on Amazon.com and is usually shipped for free.

As Gas Prices Rise, Home Affordability Wanes

With crude oil at its highest levels since October 2008, retail gas is up 8 cents per gallon this week.

It's bad news for home buyers and mortgage rate shoppers. The same force that's driving oil higher is linked to rising mortgage rates.

We're talking about the weakening U.S. Dollar which is now at its worst levels versus the Euro in 15 months.

Crude oil is priced in U.S. dollars, by the barrel. When the dollar loses value, more of them are needed to buy the same barrel of oil. As a result, predictably, the price of crude oil goes up.

Now, there are other reasons why crude oil is rising, but the fading U.S. dollar is one of the major ones and it's why we're addressing it.

The dollar has a similar impact on mortgage rates.

Mortgage rates are based on the price of mortgage bonds that -- like crude oil -- are also denominated in dollars. As the dollar loses value, so do mortgage bonds. This causes demand for bonds to drop and prices on bonds to fall.

Because bond prices and bond rates move in opposite directions, mortgage rates rise and this is precisely what's happening on Wall Street today.

Since touching a 5-month low in early-October, mortgage rates have tacked on as much as 1/2 percent, depending on the product. Moreover, with the dollar showing no signs of a rebound, the upward pressure on rates should continue.

If you're trying to time the market bottom, you may have already missed it. Consider locking your mortgage rate before rates increase even more.

And your everyday signal that rates are rising? Just check your price at the pump. If gas prices are up, it's likely that mortgage rates are, too.