Real Estate News

Washington, May 20, 2010

The National Association of Realtors® offered some suggestions to Congress today toward making a good Veterans Affairs Home Loan Guaranty Program even better.

Testifying before the House Subcommittee on Economic Opportunity, NAR First Vice President Moe Veissi, broker-owner of Veissi & Associates Inc., Miami, praised the VA program that encourages private lenders to offer favorable home loan terms to qualified veterans.

“The program is most effective when it provides veterans who are unable to qualify for a conventional loan with favorable loan terms,” Veissi said. “VA’s strong, yet flexible, underwriting helps veterans purchase a home of their own without depleting their savings.” Veissi’s son is a soldier who is on active duty with the army in Iraq.

To date, VA has guaranteed almost 19 million loans to American veterans, with a total value of more than $1 trillion in guaranteed loans. Eighty percent of veterans are homeowners, which is significantly higher than the national average at 67.2 percent. More than 90 percent of VA home loan borrowers have used the zero-downpayment option, Veissi said.

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Local market reports in the Twin Cities are showing increases in Pending Sales and Closings over a year ago.  This may be a sign the tax credit is motivating a lot of new and move up buyers.  Here’s just a snippet of details regarding the timeline of things:

You’ve decided to purchase a home and take advantage of the Extended Home Buyer Tax Credit. Here’s what you have to do to get your benefit:

1. Close on your home purchase between November 7, 2009 and April 30, 2010, or have a binding written contract in place by April 30, 2010 with a closing date no later than June 30, 2010.
2.  Decide whether to: 
   • apply the credit to your 2009 tax return, filed on or before April 15, 2010;
   •  file an amended 2009 return; or, 
   • apply the credit on your 2010 return, filed on or before April 15, 2011.
3. Attach documentation of purchase

The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.

While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.

The IRS clarification says: “In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”

For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.

Source: Washington Post (02/20/2010)