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Non-Jumbo Loan Amounts Extended for Pasadena Home Buyers
For those who are considering taking advantage of the $8,000 tax incentive for first-time homebuyers which is included in the president’s economic stimulus bill, there is some more good news that could make doing so easier and more accessible.
An extension is now officially in place on the higher loan limits for mortgages in the tier that lies just below what is considered a “jumbo” loan.
First established last year, and now extended through the end of 2009, limits on this additional tier provide opportunities for many who are looking to either refinance or, better yet, take the plunge into first time home ownership and grab a piece of the highly publicized $8,000 tax incentive.
Here are some key points about this higher loan limit extension, announced by the Fair Housing Finance Agency this past week:
The non-jumbo, middle tier of home loans begins at loan amounts greater than $417,000 for single-unit homes.
The top end for this tier is $729,750 for single-unit homes.
The rates for these loans will again be slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.
This higher limit on the non-jumbo tier is available in Los Angeles and 249 other counties across the United States.
If you are not sure if you if you can take advantage of the $8,000 tax incentive, here are some examples to help you better understand the income limits and phase-out structure.
The $8,000 incentive starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000 and is phased out completely at incomes of $170,000 for couples and $95,000 for single filers.
To break down what this phase-out means, the National Association of Homebuilders (NAHB) offers the following examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase-out threshold 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 homebuyer incentive to this couple, multiply $8,000 by 0.5. The result is $4,000.
Example 2: 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 to reduce the tax liability by $2,800. Remember, these are general examples. Borrows should consult a tax advisor to provide guidance relevant to their specific circumstances.
Posted by: Irina Netchaev
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