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Old 09-01-2008, 01:12 PM
 
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Are lenders considering this inducement to be a concession? For instance, if a loan allows for a 3% IPC, would the $7,500 be counted? If not, why not?
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Old 09-01-2008, 05:47 PM
 
Location: Cary, NC
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No. Because the 3% is in INTERESTED party contributions. The seller, Realtors, builders, loan officers, etc. They have a vested interest in you closing on the loan, so their contributions are limited.

The tax credits are not an IPC, as the tax deduction from MI and interest are not.
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Old 09-02-2008, 07:12 AM
 
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So, why was DPA not considered an inducement or an IPC?
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Old 09-02-2008, 09:52 AM
 
Location: Cary, NC
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Quote:
Originally Posted by scgraham View Post
So, why was DPA not considered an inducement or an IPC?

Becuase it was using a loophole. The seller did not give the money to the buyer according to the DPA programs.

The buyer got money from a non-profit charity. The money came from "a pool fo pre-existing funds". At closing, the seller gave money to a non-profit as per the contract.

So these groups said it was not the same money!! Just a coincidence that the money going in and out was the same exact amount, plus a $250-500 processing fee
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Old 09-02-2008, 12:53 PM
 
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Consistency, thou art a jewel!
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Old 09-02-2008, 04:38 PM
 
Location: Western North Carolina
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What is this? Is this a credit we can get next year on our taxes if we buy a house this year?
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Old 09-02-2008, 06:01 PM
 
Location: Casa Grande, AZ (May 08)
1,490 posts, read 3,341,025 times
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Montana,

Yes, it was part of the recently passed home rescue bill. You must buy a house between April 08 and April 09. (If you buy in 08 you claim credit on this years taxes, if you buy in 09 you have to wait until 09 tax filing).

Also, this is really a NO INTEREST LOAN. You must pay back the amount ($7500.00 is the max...it could be less depending on your situation) over a 15 year period beginning in two years. If you sell the house, this loan must be repaid out of the proceeds (although if you sell at a loss it is forgiven).

It IS however the type of credit that even if you owe NO TAXES AT ALL this year, they will still write you a check for $7500.00 or whatever.

I just by chance got in under the wire as my house closed in May 08! I ll use it....no interest money is always nice.
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Old 09-02-2008, 07:55 PM
 
Location: Charlotte
12,646 posts, read 13,613,620 times
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Quote:
Originally Posted by sh9730 View Post
Montana,

Yes, it was part of the recently passed home rescue bill. You must buy a house between April 08 and April 09. (If you buy in 08 you claim credit on this years taxes, if you buy in 09 you have to wait until 09 tax filing).

Also, this is really a NO INTEREST LOAN. You must pay back the amount ($7500.00 is the max...it could be less depending on your situation) over a 15 year period beginning in two years. If you sell the house, this loan must be repaid out of the proceeds (although if you sell at a loss it is forgiven).

It IS however the type of credit that even if you owe NO TAXES AT ALL this year, they will still write you a check for $7500.00 or whatever.

I just by chance got in under the wire as my house closed in May 08! I ll use it....no interest money is always nice.
Thanks for the info, I was just researching and looking into this. This pretty much my understanding as well.

I'm curious, do you know if the $7500.00 will be prorated after the 2 year period?

Also when is the first payment due after the two years, i.e. does it come due at tax time or after the client files his taxes?

I'm wondering because this would be valuable to explain to clients. If they can take the $7500.00(max) and pay it off once per year ($500.00) and from the refund at tax time this could would certainly make it attractive.
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Old 09-02-2008, 08:15 PM
 
Location: Arizona
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A point to note about the tax credit. It is only applicable to "First Time Homebuyers"....they consider 1st time buyers as people that have not owned a home in at least 3 years.
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Old 09-02-2008, 08:17 PM
 
Location: Arizona
214 posts, read 872,861 times
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The tax credit is given to you all in one lump sum. For example, if you file your taxes and you are due to get $1k tax return...you will be getting $8500 refund back this year (your usual 1k + the 7500 tax credit)

The next tax season, and thereafter until it is all paid back, you will be paying $500 per year interest free. So next year if you are to receive your $1k refund..you will only get back $500.
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