We have been receiving so many questions, I thought it might be a good time to weigh in on the First-Time Homebuyer issues, including the IRS tax credit and financing information.
IRS Tax Credit
It is always best to refer clients to the website www.irs.gov for information regarding their tax situation. If they use the search box, and type in "Form 5405" they will get the most current and correct information for filing. There is a "Ten Facts" page that can be printed and handed out, and I have been using that to answer questions as they come up. As we all know, the deadline to close and record is November 30. Borrowers should be under contract by October 20 to be sure they can close on time. We have no information right now to indicate the desire of Congress to modify or extend this program, although hope remains high.
Financing
MassHousing has simplified their first-time homebuyer loan, with expanded income limits, lower rates and cheaper PMI. They offer 30-year fixed-rate financing for first-time buyers with annual incomes up to $90,315 per household. They will, in limited cases with excellent credit (720 score or higher), go to 100% financing, but the buyer must still have 3% of the purchase price of their own money - even if they are not putting it into the purchase. For this reason, it is best to assume 97% when calculating your loan amount.
We continue to be a preferred MassHousing lender, and can provide additional information to buyers as needed.
PMI - Private Mortgage Insurance
As a credit union, we enjoy preferred rates from all PMI companies - up to 25% less than banks for the same loans. We can often save buyers the equivalent of .25% in rate with lower PMI premiums.
We offer Job Loss Protection as an added benefit on all loans insured through MassHousing or Genworth PMI. This coverage pays the borrower's monthly payment for up to six months if they become unemployed and qualify for state unemployment insurance. If you are a borrower who is afraid to buy due to the current job environment, we can help you. Ask us for more information.
This is still a historic time in our industry: LOW RATES, LOW PRICES, and AVAILABLE FUNDS TO LEND.
Maureen A. Phillips Assistant Vice President Greylock Federal Credit Union mphillips@greylock.org