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Some ways to cut your tax bill with a home

The government has given homeowners, and potential homeowners some ways to save on their taxes this year.  Here are just a few of them:

Buy a new home

If you are a first-time home buyer you are eligible for up to an $8,000 tax credit when you file your taxes for 2009.  This credit only has to be paid-back to the government if you sell your home within 3 years of buying it.

P.S. If you haven’t owned a home in the past 36 months you are a considered a “first-time home buyer”.

Even if you are not a first-time home buyer, but are buying a new home this year, you can write-off any points you pay to a broker or to buy-down your interest rate.*

Refinance

Again, you can write-off any points you pay to a broker or to buy-down your interest rate while enjoying a lower payment through current low interest rates (the lowest they’ve been since World War II).*

Home Improvements

The government is offering tax breaks for sprucing-up your home.  Congress issued a credit up to 30% of the cost of installing a geothermal heat pump system in your home.  Also, the purchase and installation of a solar water system is eligible for a 30% tax credit.

Homeowners buying foam sealants, caulk and weather stripping are eligible for up to $1,500 in credits for improving the energy efficiency of their home.

Install fuel cells in your home and the government will kick you back 30% of your costs up to $1,500 per 0.5 kilowatts of power capacity.  The more power you produce, the more you get back.

Add new, energy efficient window and doors to your home.  The government will cover 30% of purchase and installation costs up to $5,000 for windows, doors and roofs that improve energy efficiency.

Looking beyond the obvious mortgage interest write-off could save you lots of money come next April.

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Salt Lake City Mortgage Market Update for January 13, 2009

Stocks are trading a bit higher today, particularly the NASDAQ which historically has been a good indicator of what mortgage rates will do: when the NASDAQ is down rates are down; when the NASDAQ is up, rates are up.  This is because of the inverse actions of Stocks and Bonds.  When Stocks look bad investors move their money to lower yield, yet safer Bonds thus adding strength to them and lowering interest rates also on Mortgage Bonds.  When  Stocks look good investors transfer their money from safer, lower return Bonds to riskier but higher earning Stocks.

So far this morning the +0.49% uptick in the NASDAQ hasn’t had any real effect on Mortage Interest Rates though with rates at the same point they were at closing yesterday.

The Senate votes on the Stimulus Plan today and we’ll see what effect that has on the Stock Market.  One modification from Obama’s plan that I’m not happy about is changing the original plan’s tax credit for homebuyers from $15,000 for all home buyers this year  that does not have to be paid back to an $8,000 tax credit for first-time home buyers that only has to be repaid if the home is resold within 36-months of purchase.  This isn’t much different than the current $7,500 tax credit, and as many real estate industry advisors have stated isn’t helping much anyway because many first-time home buyers don’t have the initial downpayment to buy a home in the first place to take advantage of the tax credit 10 months from now.

If the government really wants to do something to stimulate home sales they need a credit that can be used at the closing table for down payment purposes or to pay closing costs, and they need to make it available to all home buyers for the next 12 months, or so.

But what do Realtors and loan officers know?  We’re just the one’s in the trenches dealing with home buyers everyday, so we must be way more out of touch with the market than some congressman that has never represented a home buyer in a purchase transaction.

With mortgage bonds facing resistance and stocks on the cusp of a rally today the market favors locking if you have a loan closing soon that isn’t locked yet.

For Salt Lake City, UT today’s average mortgage rates are as follows:

30-year fixed: 5.125%

15-year fixed: 4.625%

Conforming Jumbo 30-year fixed: 5.625%

FHA 30-year fixed: 5.50%

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