While many of you have been keeping tabs on our regularly-updated post on the homebuyer tax credits, we wanted to take it a step further by writing another post which provides most of (if not all) the links and information you’ll need to answer any more questions you may have.

There’s an exceptional Q&A in today’s Wall Street Journal that provides the “lowdown” on the tax credits. The Journal’s Laura Saunders goes into some great detail on what has changed, what has stayed the same, and several topics in between: Read the rest of this entry »

Realtors and mortgage brokers are clamoring to get the $8,000 first-time homebuyer tax credit extended. Certain market observers fear that as soon as the tax credit expires, home sales will retract to the lower levels observed prior to the tax credit’s introduction (see our story on how Cash for Clunkers created a false sense of demand).

However, the recent surge in mortgage applications which coincided directly with last week’s drop in mortgage rates suggests that, one, it takes far more than just a tax credit to get borrowers interested in housing, and two, borrowers have and will continue to react to lower mortgage rates more strongly than any other homebuying incentive.

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UPDATE5: IT”S OFFICIAL — for the time being at least. HUD announced the finalized details of their plan to allow FHA borrowers to “monetize” the $8,000 first-time homebuyer’s tax credit provided under the president’s American Recovery and Reinvestment Act of 2009. While the tax credit CANNOT be used to meet the downpayment requirement, it can be used to contribute to either a higher downpayment or to pay for closing costs:

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today’s announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate.

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As our readers know, the recently-passed Economic Recovery and Reinvestment Act (otherwise known as the stimulus package) included an $8,000 tax credit for first-time home buyers. The TaxProf blog has a handy roundup of guidance on new tax credits for home buying and home improvements.