Before you start touring homes for sale, it’s important to start off with a budget so you know how much you can afford to spend. Knowing what mortgage payment you can handle will also help you narrow the field so you don’t waste precious time touring homes that are out of your reach.

Where to begin

The key factor in figuring how much home you can afford is your debt-to-income ratio. This is the figure lenders use to determine how much mortgage debt you can handle, and thus the maximum loan amount you will be offered. The ratio is based on how much personal debt you are carrying in relation to how much you earn, and it’s expressed as a percentage.

The ideal ratio

Mortgage lenders generally use a ratio of 36 percent as the guideline for how high your debt-to-income ratio should be. A ratio above 36 percent is seen as risky, and the lender will likely either deny the loan or charge a higher interest rate. Another good guideline is that no more than 28 percent of your gross monthly income goes to housing expenses.

Doing the math

First, figure out how much total debt you (and your spouse, if applicable) can carry with a 36 percent ratio. To do this, multiply your monthly gross income (your total income before taxes and other expenses such as health care) by .36. For example, if your gross income is $6,500:

$6,500 (Gross monthly income)
x .36 (Debt-to-income ratio)
= $2,340 (Total allowable monthly debt payments)

Next, add up all your family’s fixed monthly debt expenses, such as car payments, your minimum credit card payments, student loans and any other regular debt payments. (Include monthly child support, but not bills such as groceries or utilities.)

Minimum monthly credit card payments*: ____________
+ Monthly car loan payments: ____________
+ Other monthly debt payments: ____________
= Total monthly debt payments: ____________

*Your minimum credit card payment is not your total balance every month. It is your required minimum payment — usually between two and three percent of the outstanding balance.

To continue with the above example, let’s assume your total monthly debt payments come to $750. You would then subtract $750 from your total allowable monthly debt payments to calculate your maximum monthly mortgage payment:

$2,340 (Total allowable monthly debt payments)
- $750 (Total monthly debt payments other than mortgage)
= $1,590 (Maximum mortgage payment)

In this example, the most you could afford for a home would be $1,590 per month. And keep in mind that this number includes private mortgage insurance, homeowner’s insurance and property taxes. To determine the price of home you can afford based on this amount, use a home affordability calculator.

Exceptions to the 36 percent rule

In regions with higher home prices, it may be hard to stay within the 36 percent guideline. There are lenders that allow a debt-to-income ratio as high as 45 percent. In addition, some mortgage programs, such as Federal Housing Authority mortgages and Veterans Administration mortgages, allow a ratio higher than 36 percent. But keep in mind that a higher ratio may increase your interest rate, so you may be better off in the long run with a less expensive home. It’s also important to try to pay down as much debt as possible before you begin looking for a mortgage, as that can help lower your debt-to-income ratio.

Some tips to achieve a positive impact on value are:

1. Perceived size impacts value, even more so than actual square footage. Open floor plans make a room feel bigger than larger spaces with smaller rooms. Showing property that is furniture free, or at reduced clutter, helps to make the space feel bigger.

2. Vacancy increases sale-ability. Property is easier to show and easier to sell, and quicker to take possession of when it is vacant at the time it is offered for sale. Evidence of problems to take possession of the property — such as encroachments, or tenants who wont allow buyer tours — negatively impact value. Vacancy also helps the buyer walk through the property imagining ownership. Sellers should remove personal trinkets and family pictures as well as being conveniently absent during a buyer tour.

3. Cosmetics are important.

•Fresh paint will always add more value than it costs.
•Clean or new carpet/flooring adds more value than it costs.
•Landscaping adds more value than it costs. At the very minimum, make the entrance area neat.
•If you can, add some colorful flowers and new sod.

4.Take care of the obvious! The spot on the ceiling from the roof leak takes thousands of dollars from the perceived value and the offer price.

5. Condition affects value. Do a seller’s home inspection to identify and fix the problem BEFORE closing. No point holding up your check a few extra days; plus a failed buyer’s inspection could cost you the sale. Buyers will often bargain down your asking price to accomodate for property condition and repairs.

6. If you can, remodel/update the kitchen and master bathroom. These two areas have a big impact on home buying decisions.

7.Strategic renovations impact value and your bottom line. Don’t spend more money to renovate the place than you can recapture in value on the sales price.

The free event includes a panel discussion about industry trends featuring MCAR CEO Walt Baczkowski and experts from Bank of America, the Michigan State Housing Development Authority, Southwest Housing Solutions Corporation and Freddie Mac.

Attendees will also learn about flexible solutions for homebuyers, including homebuyer education and counseling programs, down payment assistance and bond programs. Home financing and the local economy will also be addressed.

Click the link below for more details:

http://www.mcaronline.com/default.asp?id=1

The measure would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.

If they become law, the new provisions won’t take effect for a year, except for a requirement that customers get 45 days’ notice before their interest rates are increased. That would take effect in 90 days.

Similar legislation is before the Senate, where its prospects appear promising.

Consumer advocates and some Democrats have unsuccessfully sought for years to bring new rules to the industry.

“A big vote in the House will create an even bigger momentum as it goes to the Senate,” House Speaker Nancy Pelosi told reporters.

Supporters want to put a final congressional package under Obama’s eager pen by the Memorial Day holiday. They acknowledged, though, that House passage of the measure was an opening salvo and a lengthy legislative slog lies ahead, in which industry interests could prevail in getting restrictions weakened.

“The administration supports Congress’ efforts to … provide additional strong and reliable protections for consumers that ban unfair and abusive practices,” the White House said in a statement following the House vote. “The nation’s credit card system must have more accountability, including more effective oversight and more effective enforcement of credit card issuers who violate the law.”

Obama’s engagement in the issue diverged sharply from his handling of a plan to spare hundreds of thousands of homeowners from foreclosure through bankruptcy, which met defeat in the Democratic-controlled Senate Thursday on a 45-51 vote. Obama had embraced the plan, but facing stiff opposition from the banking industry, he did little to pressure lawmakers who worried it would encourage bankruptcy filings and catapult interest rates higher.

Before approving the credit card bill, the House adopted a series of amendments — some of which were pushed by the White House — that amplified the restrictions on industry practices.

The House measure incorporates Federal Reserve regulations due to take effect in July 2010 but goes further by adding restrictions for credit cards for college students as well as other changes. Payments made by card holders that exceed the minimum monthly level would have to be applied first to the portion of the remaining balance with the highest interest rate, and then to any other balances in descending order.

Consumers would have to be notified 30 days before their accounts are closed.

Double-cycle billing eliminates the interest-free period for consumers who move from paying the full balance monthly to carrying a balance.

Opponents tried vainly on the House floor to temper a fast-moving bill with amendments that would have given credit card issuers some openings to raise rates within the proposed restraints.

“We shouldn’t take credit opportunities away,” said Rep. Jeb Hensarling, R-Texas. “I just want consumers to have choices. I want there to be a competitive marketplace.”

Hensarling and other Republican opponents endorsed the bill’s requirements for clearer disclosure in the fine print of credit card agreements. But they said the legislation overall could prompt lenders to restrict credit in an already tight market to compensate for the new requirements.

That’s the leading argument made by banking industry executives against the legislation.

Edward Yingling, president and CEO of the American Bankers Association, said the group “strongly believes that any additional legislative efforts should strive to achieve the right balance between enhancing consumer protection, and ensuring that credit remains available to consumers and small businesses at a reasonable cost.”

“We continue to believe that more work needs to be done to achieve that balance,” he said.

Supporters of the bill also drew on the economic crisis to make their case.

“Americans deserve a fair shake,” said Ed Perlmutter, D-Colo. The credit card industry “has taken advantage of millions of vulnerable Americans.”

Rep. Carolyn Maloney, D-N.Y., the bill’s chief sponsor, said the changes were needed because “many people are turning to their credit cards because they have lost their jobs.”

Boosters of the bill are tapping into rising public anger over corporate excesses and the conduct of banks and other companies receiving billions of dollars in taxpayer money.

“At a time when millions of families continue to struggle to make ends meet, additional safeguards are needed to ensure consumers are not being saddled by questionable industry practices,” the powerful AARP, the lobbying group representing seniors, said in a statement supporting the bill.

Obama met at the White House last week with executives of the credit card industry and made clear he wants to sign a bill into law. He reaffirmed it as a priority at his prime-time news conference Wednesday evening, saying legislation was a must to protect consumers from “abusive fees and penalties.”

The administration is advocating stricter practices that could crimp banks’ revenue at the same time the government is shoring up the financial institutions with hundreds of billions of dollars in bailout aid.

The credit card changes could cost the banking industry more than $10 billion a year in interest payments, according to a study by the law firm Morrison & Foerster.

Amid the recession and rising job losses, consumers — even those with strong credit records — have been defaulting at high levels on their credit cards. Banks already battered by the mortgage and credit crises have been bleeding tens of billions in red ink from the losses.

U.S. credit card debt has jumped 25 percent in the past 10 years, reaching $963 billion in January, according to figures from the White House. The average outstanding credit card debt for households that have a card was $10,679 at the end of 2008, according to CreditCard.com, an online market.

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House bill: H.R.627

Senate bill: S.235

___

On the Net:

http://thomas.loc.gov/

News Article from http://news.yahoo.com/s/ap/20090430/ap_on_go_co/us_congress_credit_cards

The loan, commonly known as Home Equity Conversion Mortgage or HECM, is originated by a lending institution such as a mortgage lender, bank, credit union or savings and loan association. Senior homeowners age 62 and older can use FHA-insured reverse mortgages to convert the equity in their homes into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the homes. Homeowners are required to receive consumer education and counseling by a HUD-Approved counselor so they can be sure this program meets their needs.

HECM counselors will discuss program eligibility, financial implications and alternatives to obtaining a HECM plus provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you should be able to make an independent, informed decision of whether this product will meet your needs.

You can use a reverse Mortgage Calculator to help you see if you qualify. Homeowners who meet the eligibility criteria can complete a reverse mortgage application.

Borrower Requirements:

Must be age 62 years or older,
Own the property outright or have a small mortage balance,
Live in the property as primary residence,
Not be delinquent on any federal debt, and
Participate in a consumer information session with a HUD-approved HECM counselor.

Mortgage Amount Based On:

Age of the youngest borrower.
Current interest rate.
Lesser of the appraised value or the HECM FHA mortgage limit.

Financial Requirements:

No income or credit qualifications are required of the borrower.
No repayment as long as the property is the primary residence.
Closing costs may be financed into the mortgage.

Property Requirements:

Single family or 2-to 4-unit home with one unit occupied by the borrower (which can also be FHA-approved condominiums or manufactured homes and leased land).
Meet FHA property standards and flood requirements.
How FHA’s Reverse Mortgage Program Works
Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining, and are currently living in the home, are eligible to participate in FHA’s reverse mortgage program. The program allows homeowners to borrow against the equity in their homes.

Homeowners can select from five payment plans:

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or in installments, at times and amounts of borrower’s choosing until the line of credit is exhausted.
Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose circumstances change may be able to restructure their payment options for a nominal fee of $20. Please consult your lender for more information.

Unlike ordinary home equity loans, an FHA-insured reverse mortgage does not require repayment as long as the home is the borrower’s principal residence. Lenders recover principal, plus interest, when the home is sold. If any home equity remains after sale, the remaining value of the home goes to the homeowner, estate or heirs. You can never owe more than your home’s value when sold.

If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage.

The amount you can borrow depends on your age, the current interest rate, other loan fees, and the appraised value of your home or FHA’s HECM mortgage limit for your area, whichever is less. Generally, the more valuable your home is, the older you are, and the lower the interest, the more you can borrow. If there is more than one owner, the age of the youngest owner is used to determine the amount you can borrow. For an estimate of HECM cash benefits based on your age, home value, and current interest rate, go to the online calculator.

For example, based on a loan with interest rates of approximately 9%, and a home qualifying for $100,000, a 65-year-old could borrow up to 34% of the home’s value; a 75-year-old could borrow up to 47% of the home’s value; and, an 85-year-old could borrow up to 64% of the home’s value. The percentages do not include closing costs because these charges vary.

There are no asset or income limitations in order for you to be eligible for a HECM. In addition, there is no limit on the value of homes qualifying for a HECM. The value of your home will be determined by an appraisal. However, the amount that you may borrow is derived from the lower of the appraised value or the FHA HECM mortgage limit for your area. Under the American Recovery and Reinvestment Act of 2009 (ARRA), the national FHA loan limit for HECM increased from $417,000 to $625,500 (from 100 percent to 150 percent of the conforming limit). The change in loan limits is applicable to all FHA-insured mortgage loans originated until December 31, 2009. You are charged an upfront insurance premium of 2 percent of the maximum claim amount that may be borrowed plus a 0.5 percent annual premium.

HECM Costs

You can pay for most of the costs of a HECM by financing them and having them paid from the proceeds of the loan. Financing the costs means that you do not have to pay for them out of your pocket. On the other hand, financing the costs reduces the net loan amount available to you.

The HECM loan includes several fees, including an origination fee, closing costs, mortgage insurance premium, interest and servicing fees.

Origination Fee

You will pay an origination fee to compensate the lender for processing your HECM loan. A lender can charge a HECM origination fee up to $2,500 if your home is valued at less than $125,000. If your home is valued at more than $125,000 lenders can charge 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.

Closing Costs

Closing costs from third parties can include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks and other fees.

Mortgage Insurance Premium (MIP)

You will incur a cost for HECM insurance. You can finance the mortgage insurance premium (MIP) as part of your loan. You will be charged an upfront MIP at closing which will be 2% of the lesser of your home’s value or the FHA HECM mortgage limit for your area. You will also be charged a monthly MIP that equals 0.5% of the mortgage balance.

The HECM insurance guarantees that you will receive expected loan advances and that you will not have to repay the loan for as long as you live in your home. The insurance also guarantees that, if you or your heirs sell your home to repay the loan, your total debt can never be greater than the value of your home.

Servicing Fee

Lenders or their agents provide servicing throughout the life of the HECM. Servicing includes sending you account statements, disbursing loan proceeds and making certain that you keep up with loan requirements such as paying taxes and insurance. HECM lenders may charge a monthly servicing fee of no more than $30 if the loan has an annually adjusting interest rate and $35 if the interest rate adjusts monthly. At loan origination, HECM lenders set aside the servicing fee and deduct the fee from your available funds. Each month the monthly servicing fee is added to your loan balance.

Interest Rate

HECM borrowers can choose an adjustable interest rate or a fixed rate. If you choose an adjustable interest rate, you may choose to have the interest rate adjust monthly or annually. Lenders may not adjust annually adjusted HECMs by more than 2 percentage points per year and not by more than 5 total percentage points over the life of the loan. FHA does not require interest rate caps on monthly adjusted HECMs.

Repaying a HECM

A HECM loan must be repaid in full when you die or sell the home. The loan also becomes due and payable if:

You do not pay property taxes or hazard insurance or violate other obligations.
You permanently move to a new principal residence.
You, or the last borrower, fail to live in the home for 12 months in a row. An example of this situation would be if you (or the last borrower) were to have a 12-month or longer stay in a nursing home.
You allow the property to deteriorate and do not make necessary repairs.

You’re a first-time homebuyer.
You don’t have a lot of money to put down on a house.
You want to keep your monthly payments as low as possible.
You’re worried about your monthly payments going up.
You’re worried about qualifying for a loan.
You don’t have perfect credit.

If any of these things describe you, then an FHA-insured loan may be right for you. Why? FHA-insured loans offer many benefits and a level of security that you won’t find in other loans including:

Low cost: FHA-insured loans have competitive interest rates because the federal government insures the loans for lenders.

Smaller downpayment: FHA-insured loans have a low 3.5% downpayment and the money can come from a family member, employer or charitable organization as a gift.

Easier qualification: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

Less than perfect credit: You don’t have to have perfect credit to get an FHA-insured mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for an FHA-insured loan than a conventional loan.

More protection to keep your home: The FHA has been helping people since 1934. Should you encounter hard times after buying your home, the FHA has many options to keep you in your home and avoid foreclosure.

FHA insures loans for lenders against defaults - it does not lend money or set interest rates. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. An FHA-approved lender can help you start the loan application process.

You may use an FHA-insured mortgage to purchase or refinance a new or existing 1- to 4-unit home, a condominium or a manufactured or mobile home (provided it is on a permanent foundation).

What kinds of insured loans does FHA offer?
Fixed-rate loans - Most FHA-insured loans are fixed-rate mortgages (loans). The advantage of a fixed-rate mortgage is that your interest rate stays the same during the loan period, so you know exactly how much your monthly payment will be.

Adjustable rate loans - First-time homebuyers can be a little stretched financially. With FHA’s adjustable rate mortgage (ARM), the initial interest rate and monthly payments are low, but these may change during the life of the loan. FHA uses the 1-Year Constant Maturity Treasury Index (CMT) to calculate the changes in interest rates. An index is a measure of interest rate changes that determine how much the interest rate on an ARM will change over time.

The maximum amount that the interest rate on your loan may increase or decrease in any one year is 1 or 2 percentage points, depending upon the type of ARM you choose. Over the life of the loan, the maximum interest rate change is 5 or 6 percentage points from the initial rate. The advantage of selecting an ARM is that you may be able to expand your house-hunting value range because your initial interest rate will be low, as will your payment. Click for a more in-depth explanation…

Purchase/Rehabilitation loans - Sometimes you might see a home you’d like to buy, but it needs a lot of work. FHA has a loan for rehabilitating and repairing single-family properties called the SF Rehabilitation Loan program (203k). You can get one loan which combines the mortgage and the cost of repairs. The mortgage amount is based on the projected value of the property with the work completed. The advantage of this loan is that you can buy a home that needs a lot of work, but have only one mortgage payment, and you can complete the repairs after buying the home.

Indian Reservations and Other Restricted Lands - A family who purchases a home under this program can apply for financing through an FHA-approved lending institution such as a bank, savings and loan, or a mortgage company. To qualify, the borrower must meet standard FHA credit qualifications. An eligible borrower can receive approximately 97% financing and use a gift for the downpayment. Closing cost can be financed; covered by a gift, grant or secondary financing; or paid by the seller without reduction in value.

How do FHA-insured loans compare to subprime loans?
Subprime loans are loans designed for homebuyers who don’t have a strong credit history or can’t qualify for a regular or prime loan. Lenders charge a high interest rate on subprime loans because the risk that a homebuyer may not make their payments is high. Because FHA insures the lender against this risk, the interest rates on FHA-insured loans are generally among the lowest in the market. Most subprime loans carry interest rates at least 3 percentage points higher than an FHA-insured loan. On a $100,000 mortgage, the monthly payment for a subprime loan would be over $200 a month higher than an FHA-insured loan.

The majority of subprime loans are also ARMs, where the interest rate can change a lot and greatly increase your monthly payments. Most FHA-insured loans are fixed-rate loans where the mortgage payment always stays the same. If you have an FHA-insured ARM loan, the rate can’t go up by more than one or two points in a year. The fees that lenders charge their borrowers for processing a subprime loan are also generally higher than on an FHA-insured loan.

Most subprime loans carry a heavy prepayment penalty that you must pay if you want to refinance your loan to a lower interest rate. These penalties can cost you hundreds or even thousands of dollars. There is never a prepayment penalty on an FHA-insured loan. You can refinance at any time and not worry about paying any penalties.

Unfortunately, because they don’t know these facts, many homebuyers who could qualify to buy a home with a fixed-rate FHA-insured loan only apply for subprime loans. Check out an FHA-insured loan before settling for a subprime loan!

How do FHA-insured loans compare to conventional loans?
Conventional loans usually require a larger downpayment than FHA and if you have less than perfect credit you may not qualify for an affordable mortgage with a low interest rate . The best thing to do is compare the cost of the conventional loan to an FHA-insured loan line-by-line. What are the fees for each? What is the interest rate? How much is the mortgage insurance? How much downpayment is required? For some borrowers, a conventional loan may be less expensive. For many others, getting an FHA-insured loan is the way to go.

Do you have to buy mortgage insurance on an FHA-insured loan?
Yes - as you will with most loans.

The Housing and Economic Recovery Act of 2008 provides for a one-year moratorium on the implementation of FHA’s risk-based premiums beginning October 1, 2008. Consequently, effective with new FHA case number assignments on or after that date, FHA will no longer base its mortgage insurance premiums on a combination of credit bureau score and loan-to-value ratio. The new premiums (upfront and annual) to be implemented for all loans for which a case number is assigned on or after October 1, 2008, are described below. Mortgagee Letter 2008-16 is rescinded in its entirety. Please note that certain parts of that mortgagee letter are retained and reiterated in the guidance that follows.

Upfront Premiums: FHA will charge an upfront premium in an amount equal to the following percentages of the mortgage:

• Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75 Percent

• Streamline Refinances (all types) = 1.50 Percent

• FHASecure (Delinquent Mortgagors) = 3.00 Percent.

Annual Premiums: An annual premium, shown in Mortgagee Letter 2008-22, to be remitted on a monthly basis, will also be charged based on the initial loan-to-value ratio and length of the mortgage (except for FHASecure delinquent mortgages)

Most loans require mortgage insurance when your downpayment is less than 20% of the sales price. On conventional and subprime loans, mortgage insurance is provided by private companies. Whether private mortgage insurance is less than, equal to, or more than an FHA-insured loan’s insurance will depend upon the loan program and your qualifications.

Compare the cost of FHA to subprime and conventional types of loans over the life of your loan. Then compare how much each one costs monthly. With the protection and value you get from FHA - it’s a very good deal.

In a home inspection, a qualified inspector takes an in-depth, unbiased look at your new home to:
-Evaluate the physical condition: structure, construction, and mechanical systems;
Identify items that need to be repaired or replaced; and Estimate the remaining useful life of the major sytems, equipment, structure, and finishes.

The FHA does not guarantee the value or condition of your future home, and the FHA does not perform home inspections. If you find problems with your new home after closing, FHA cannot give or lend you money for repairs, nor can it buy the home back from you. FHA cannot help you in discussions you may have with the builder or seller.

When you make a written offer on a home, you should insist that the contract states that the offer is contingent (dependent) on a satisfactory (to the buyer) home inspection conducted by a qualified inspector. If you are satisfied with the results of the inspection, then you can proceed with your offer or make a counter offer if the results are not satisfactory.

As the buyer, it is your responsibility to carefully select a qualified inspector. The following sources may help you find a qualified home inspector:

-FHA Inspector locator — find an inspector who is FHA-qualified. http://www.fhaoutreach.gov/lender/inspector.do
-State regulatory authorities — some states require licensing of home inspectors.
-Professional organizations — may require home inspectors to pass tests and meet minimum qualifications before becoming a member.
-Phone book Yellow Pages — look under “Building Inspection Service” or “Home Inspection Service”.
-The Internet — search for “Building Inspection Service” or “Home Inspection Service.”
Your real estate agent — most real estate professionals have a list of home inspectors they recommend.

The FHA requires lenders to obtain appraisals of properties backing FHA-insured loans for three reasons:
-To estimate the market value of the property;
-To make sure that the property meets FHA minimum property requirements/standards (health, safety, soundness and structural integrity); and
-To make sure that the property is marketable.

The appraisal will note readily visible problems with the property and non-compliance with HUD’s minimum property requirements/standards. These problems may or may not be the same as those items noted in a home inspection report.

HEALTH TESTING TO CONSIDER:

Radon gas testing — radon is a natural radioactive gas found in some homes. Strong concentrations (amounts) can cause serious health problems. The U.S. Environmental Protection Agency and the Surgeon General of the United States recommend that all houses should be tested for radon. For more information on radon testing, call the National Radon Information Line at 1-800-SOS-Radon or 1-800-767-7236.

Lead testing — many homes built before 1978 have lead-based paint problems. To protect your family’s health, you should be sure to get a lead-based paint inspection and/or risk assessment. For more information, contact the National Lead Information Clearinghouse at 1-800-424-LEAD or 1-800-424-5323.

The bottom line: As with a home inspection, you may decide to test for radon or lead before or after signing the contract as long as your contract states that your purchase depends on your satisfaction with the test results. Remember—spending hundreds of dollars on inspections now may save you thousands on costly fixes in the future!

fha-max-loan-limits-by-county.pdf

WASHINGTON — The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit,” said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

For more information visit the IRS web site http://www.irs.gov/newsroom/article/0,,id=204672,00.html