Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.


Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.

In addition, you may be able to benefit from additional housing related provisions, including the following:


Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

As always, if you have any questions about your specific situation or would like to discuss how you may benefit from this program, please call or email me. I’ll be happy to sit down with you.

Thank you,
Curtis Schartz, CMPS
Certified Mortgage Planner
Pulaski Bank Home Lending
(816) 347-1678 ext. 307 – phone
(913) 707-1525 – cell
(913) 234-8609 – fax



Last Week in Review

“BOTH OPTIMISTS AND PESSIMISTS CONTRIBUTE TO OUR SOCIETY. THE OPTIMIST INVENTS THE AIRPLANE, AND THE PESSIMIST – THE PARACHUTE.” G.B. Stern. The media’s recent analysis of the economy has run the gamut of late, some optimism, some pessimism…but also some confusion as they attempt to decipher recent economic reports, particularly relating to the job market. Let’s look at a few of the recent reports, and get behind the headlines to decipher what they really mean.

Last week’s Initial Jobless Claims Report showed that 505,000 people filed for unemployment benefits, which was about what was expected, and represented a ten month low for the report. The Continuing Jobless Claims Report, which indicates the total number of people collecting unemployment benefits, fell by 39,000 to a total of 5.61 Million.

Chart: Continuing Unemployment Claims

The media often spins this data as good news – but the labor market remains in exceptionally tough shape. The Continuing Claims number declining from a record high of 6.82M in June to last week’s 5.61M is the result of only two potential things happening: People are finding jobs and no longer need unemployment benefits, or they have been unemployed for so long that their benefits are running out before they’ve been able to find a job. With a 10.2% Unemployment Rate looking like it will move higher still, it is most likely the latter. Another clear sign of a very troubled labor market was back on November 6th, when President Obama signed a bill that will extend unemployment benefits by an additional 20 weeks…there would be no reason to do this if jobs were being created.

In other news, October Retail Sales were weak overall, which is concerning for several reasons. One somewhat overlooked impact is that tax receipts from retail sales help both the individual states and the country as a whole. If the consumer doesn’t spend – perhaps due to job loss or lower family income – and there are therefore less tax receipts from retailers, the government runs an ever-deeper budget deficit. The only way to get out of a deficit is to either raise other taxes or cut spending – and neither option is very popular. Many states are in poor fiscal shape because of soaring budgets and lower tax receipts.

There aren’t any easy answers – but it’s clear that the labor market needs to see some serious improvement for the economy to recover in a significant way.

Bonds and home loan rates were unable to hang onto improvements made in the earlier part of the week, and ended the week around the same levels as where they began.


Forecast for the Week

It may be a shortened work week due to the Thanksgiving holiday, but there will still be plenty of action in store. Both Monday’s Existing Home Sales Report and Wednesday’s New Home Sales Report will give us a read on the housing market. With many homebuyers jumping into the market to take advantage of the Homebuyer’s Tax Credit – which was recently extended until June 30, 2010 and expanded to include certain qualifying existing homeowners – it will be especially interesting to see what these reports reveal. Let me know if you have any questions on the Tax Credit, or if you’d like to learn how it might benefit you or someone you know.

We’ll also get several reads on the economy this week, first with Tuesday’s Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. Following will be Wednesday’s Durable Goods Report, which gives an update on consumer and business consumption and buying behavior via data on items that are “non-disposable”, like appliances, cars, cameras, etc. Wednesday also brings the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) Index, found within the Personal Income Report.

More auction action…the Treasury will auction $118B in securities this week, starting with a record $44B in 2-Year Notes on Monday, a record $42B in 5-Years on Tuesday, and another record – $32B in 7-Years on Wednesday. This is an enormous amount of supply, and the market’s ability to digest it all will be tested.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and rates recently neared their best levels of the year, but were unable to make further improvements. Rates are likely to be moving higher in the coming months – so give me a call to discuss how the current rate climate might work in your favor, before these great rates slip away.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Nov 20, 2009)

The Mortgage Market View…

A Brief History of Thanksgiving

Thanksgiving Day is now a favorite American holiday…but did you know it took awhile to catch on as an annual tradition?

According to scholars, the first known Thanksgiving took place on September 8, 1565 in Saint Augustine, Florida when Spanish settlers held a Mass of Thanksgiving after arriving safely in the New World. English settlers in the Virginia Colony held a similar day of thanks in 1619. Two years after that, the colonists at Plymouth Plantation celebrated the most famous Thanksgiving, during 1621.

It wasn’t until October 3, 1789, that it actually became a holiday, when then President George Washington proclaimed a day of Thanksgiving…but just for that year. In 1795, Washington again proclaimed a day of Thanksgiving, and President John Adams also declared Thanksgivings in 1798 and 1799.

After a decade and a half without the celebration taking place at all, President James Madison renewed the tradition in 1814, and even went so far as to declare the holiday twice in 1815!

In 1863, President Abraham Lincoln finally proclaimed the last Thursday of November as a national day of Thanksgiving that should take place every year. Years later, President Franklin Roosevelt stated that Thanksgiving should always be celebrated on the fourth Thursday of the month – as opposed to landing on the occasional fifth Thursday.

In observance of the holiday, both the Stock and Bond markets will be closed on Thursday, November 26th, and on Friday the 27th, the Bond market will close early at 2:00 pm ET, while the Stock market will close at 1:00 pm ET.

I wish you and your family a safe and happy Thanksgiving holiday!

The Week’s Economic Indicator Calendar

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of November 23 – November 27
Date ET Economic Report For Estimate Actual Prior Impact
Mon. November 23 10:00 Existing Home Sales Oct 5.70M 5.57M Moderate
Tue. November 24 08:30 Chain Deflator Q3 0.8% 0.8% Moderate
Tue. November 24 10:00 Consumer Confidence Nov 47.5 47.7 Moderate
Tue. November 24 08:30 Gross Domestic Product (GDP) Q3 3.0% 3.5% Moderate
Wed. November 25 08:30 Personal Income Oct 0.2% 0.0% Moderate
Wed. November 25 10:30 Crude Inventories 11/20 NA -0.887K Moderate
Wed. November 25 10:00 New Home Sales Oct 405K 402K Moderate
Wed. November 25 10:00 Consumer Sentiment Index (UoM) Nov 66.5 66.0 Moderate
Wed. November 25 08:30 Durable Goods Orders Oct 0.5% 1.0% Moderate
Wed. November 25 08:30 Jobless Claims (Initial) 11/21 500K 505K Moderate
Wed. November 25 08:30 Personal Consumption Expenditures and Core PCE Oct 0.1% 0.1% HIGH
Wed. November 25 08:30 Personal Spending Oct 0.5% -0.5% Moderate
Wed. November 25 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.3% HIGH

Curtis Schartz
Certified Mortgage Planner
Pulaski Bank Home Loans
Office: 816-347-1678 x-307
Cell: 913-707-1525

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