The Federal government is offering a excellent incentive to home buyers in an effort to stimulate sales activity on residential real estate. (And I have written six contracts this week so it must be working). The economic incentive is in the form of a tax credit (translation: doe snot have to be paid back). Here are the highlights of the plan:

• The tax credit is designed for first-time home buyers exclusively. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid by the buyer
• The federal tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The tax credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
• Frequently asked questions about the Federal Housing Tax Credit
• How To Plan For Home Buyer Tax Credit Before You Buy A Home

The Federal government’s “Making Home Affordable” program is targeted toward this home owners who need financial help. This set of solution is in the form of loan modifications and refinance. There is a new “Making Home Affordable” website which will allow you to see if you meet the eligibility requirements.

Before taking action toward refinancing or modifying your loan, you should prepare yourself with the following items: Information about your first mortgage, such as your monthly mortgage statement.

• The existing balance of your mortgage loan

• Have a copy of your mortgage statement available

• Your most recent tax return

• Information regarding your savings and other assets

• Documentation of your income particularly as it relates to monthly gross income (before taxes)

• Letter describing the circumstances that caused your income to be decreased or your expenses to increase

On Thursday night, the United States Senate unanimously passed an amendment to the economic stimulus bill.

This amendment creates a $15,000 income tax credit to individuals who purchase a home in the next year.

The amendment to the Economic Stimulus Bill, commonly know as the Isakson-Lieberman amendment, to the would provide a  tax credit to any home buyer who purchases any home. The size of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is lower. Purchases of homes must be made within twelve months of the passing of the legislation. Further, tax credit would not have to be repaid by the taxpayer

The amendment would permit taxpayers to claim the credit on their 2008 income tax return. There is a provision in the amendment seeking to guard against abuse. Only purchases of a principle residence would be eligible. Moreover, the tax credit would be recaptured  if the home is sold within two years of it’s original purchase date. The amendment would retire the current $7,500 housing tax credit on the date of enactment.

This amendment represents a significant step forward in efforts to stabilize housing markets around the USA.

The next steps are for it to pass the House Of Representatives and the to be signed by President Obama.

I’ve compiled a short list of housing resource websites, with the list being weighted toward Illinois residents and their residential real estate.

• Affordable Housing Resources (grants, legal assistance, senior services) in Du Page County: http://pfho.org/service_providers/categories.php?c=22
• Affordable Housing Resources (grants, legal assistance, senior services) in Cook County: http://pfho.org/service_providers/categories.php?c=16
• Illinois Association Of Realtors consumer website: http://www.YourIllinoisHome.com
• U.S. Housing & Urban Development website for homeowner counseling: http://www.hud.gov
• Illinois Legal Aid: http://www.IllinoisLegalAid.org
• Federal Housing Administration: http://www.FHA.gov
• Our Own Home, Illinois Treasurer’s Office loan and finance: http://www.OurOwnHome.com
• Neighborhood Works America Center for Foreclosure Solutions: http://www.nw.org