USDA Rural Housing loan is a great 100% option

I am a big fan of the USDA Guaranteed Rural Housing Loan.

If you are not familiar with this loan, it is a program that requires neither a down payment nor mortgage insurance. These loans are backed by the USDA (US Department of Agriculture). This loan is currently one of only two government backed, 100% financed loans, with the other being VA.

There are two requirements in qualifying for the USDA Loan. One is income and the other is the location of the home.

Income is based on the number of household members. The most recent USDA Rural Housing Loan I closed was for a family of four in Sandy OR. The income limitation for this family of 4 in Sandy was $78,050 a year. This first time homebuyer was below that limitation.

The second limitation to qualify for this loan is the location of the home. What is the definition of Rural? Rural by the USDA’s definition is areas that have a community with fewer than 25,000 people. This would include Sandy, Newburg, Estacada and many parts of Clark County in Washington.

Finding out if you may qualify for this program is easy. There is a website which is useful for both determining your income limitations, and if the home you are interested falls into the geographic limits. This website is located at http://tinyurl.com/5mbwg8.

Remember that credit and income limitations apply to qualify for this loan. I would be more than willing to discuss this with you in further detail. Please contact me at Bhusen@sunsetmortgageco.com or call my office direct at 503-594-1131.

My 15 Minutes of Fame...

Marketing is key in any industry if you want your business to grow and
have continued success. I am a believer in Web 2.0 concepts and social marketing, as well as being a sponge when ever something new online comes along.

This week I was fortunate enough to have success in the old time marketing tactics: Magazine Advertising!

Okay, I didn’t actually advertise in this magazine, but I am in it, and I am on almost every kitchen counter in Portland!

The recent PCC non-Credit course catalog just came out and to my surprise, I am on pg.18 holding my guitar. I took the Beginner Guitar class about a year ago. Great class and I’d recommend instructor Steve Adams to anyone wanting to learn how to play.

I remember the PCC photographers took a few pictures for future advertising. I just didn’t know when or how they might use them.

Well its been a year and my 15 minutes of fame is here! Thought I’d bring this to your attention because I think its pretty cool.

There is one lesson I learned with my new found fame… I need to wear a Sunset Mortgage T-shirt more often in case this happens again.

Send all your copies to my office if you want an autograph (just kidding).

Congress Enacts Bigger and Better Home Buyer Tax Credit

I have received many calls regarding the new tax credit of 2009.

In doing my own research and found a great website devoted to just this topic. The site is located at Federalhousingtaxcredit.com.

A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid.

The website has 20 great frequently asked questions and answers listed. I am going to recreate the top 10 here.

I hope you find this as useful as I have in understanding the new Tax Credit for 2009.

1. Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

2. What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

3. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

4. Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

5. What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

9. How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

10. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

If you have any further questions about your possible tax credit, or if have any questions regarding mortgages, please dont hesitate to contact me today at bhusen@sunsetmortgageco.com.

"Part of Your Profits, Not Your Costs"

We believe you should choose your Mortgage Banking Company like you would your friends. Many people have depended on us for their home mortgages, but our greatest source of pride is the customers who now call us friends.

Sunset Mortgage, founded in 1992, prides itself on building lasting relationships with clients and with the community. We enjoy working together with our clients and are committed to honest, up front relations. Our goal is to make the home buying process as pleasant and stress-free as possible.

We believe in the talent of our staff and the strength of teamwork. The hallmark of our business is finding creative financial solutions for clients seeking home loans, helping their dreams to become reality.

Sunset Mortgage is a privately owned Oregon Mortgage Banking Corporation with multiple offices conveniently located throughout the Pacific Northwest. Sunset Mortgage is a Direct Agency Lender. We work directly with Fannie Mae, Freddie Mac and Ginnie Mae (HUD) providing a full range of mortgage products/services. Since we deal direct with the various agencies we cut out the “middle man” thus providing expeditious service as well as the lowest rates/fees.