As part of its plan to stimulate the U.S. housing

Congress has passed new legislation that:

• Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
  
• Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010. Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.
  

 Latest news: Tax Credit Extension a Positive Step Toward Real Estate Recovery (Nov.5) President's Podcast: Tax Credit Extended (Nov. 5) Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
  

To qualify as a “first-time home buyer”

the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit. Which Properties Are Eligible?

The Extended Home Buyer Tax Credit

may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops. How Much Is Available? The maximum allowable credit for first-time home buyers is $8,000. The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer's tax credit is determined by tow additional factors: 1. The price of the home. 2. The buyer's income. Price Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less. Buyer Income Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit. These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits.

If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit. If the Buyer's Income Exceeds These Limits, Can He/She Still Get a Credit? Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income's over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close. Will the Tax Credit Need to Be Repaid? No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

Debt-to-Income Ratios

To determine your maximum mortgage amount, lenders use guidelines called debt-to-income ratios.  This is simply the percentage of your monthly gross income (before taxes) that is used to pay your monthly debts.  Because there are two calculations, there is a "front" ratio and a "back" ratio and they are generally written in the following format:  33/38.

The front ratio is the percentage of your monthly gross income (before taxes) that is used to pay your housing costs, including principal, interest, taxes, insurance, mortgage insurance (when applicable) and homeowners association fees (when applicable).  The back ratio is the same thing, only it also includes your monthly consumer debt.  Consumer debt can be car payments, credit card debt, installment loans, and similar related expenses.  Auto or life insurance is not considered a debt.

A common guideline for debt-to-income ratios is 33/38.  A borrower's housing costs consume thirty-three percent of their monthly income.  Add their monthly consumer debt to the housing costs, and it should take no more than thirty-eight percent of their monthly income to meet those obligations.

The guidelines are just guidelines and they are flexible.  If you make a small down payment, the guidelines are more rigid.  If you have marginal credit, the guidelines are more rigid.  If you make a larger down payment or have sterling credit, the guidelines are less rigid.  The guidelines also vary according to loan program.  FHA guidelines state that a 29/41 qualifying ratio is acceptable.  VA guidelines do not have a front ratio at all, but the guideline for the back ratio is 41.

Example: If you make $5000 a month, with 33/38 qualifying ratio guidelines, your maximum monthly housing cost should be around $1650.  Including your consumer debt, your monthly housing and credit expenditures should be around $1900 as a maximum.

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The National Association of REALTORS® has learned

In this scam, rental property is offered to consumers, who are led to believe that NAR is functioning as an intermediary to receive rental deposits from prospective tenants and, upon receipt of the deposit, to deliver the keys to the property to the tenant.

The tenant is instructed to send money via Western Union to NAR's purported agent. NAR is not involved in this business and believes it is a scam. NAR has contacted law enforcement officials to request that the matter be investigated. If you have encountered this scam, be advised you may file a complaint with the Internet Crime Complaint Center, sponsored by the Federal Bureau of Investigation and the National White Collar Crime Center