Archive for July, 2009

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First Time Home Buyer – Why is it so hard to get a house?

Tuesday, July 21st, 2009

First Time Home Buyers across the country are asking themselves this very question. The short answer is: Everyone else is thinking just like you!

As a result, even though there is a glut of inventory (and more to come if estimates are correct), many First Time Home Buyers spends months making offer after offer, only to get outbid. 

Bidding wars seen in markets for foreclosed homes

Prices of foreclosed homes have taken such a beating that investors are jumping in and bidding up prices. Investors who win bids are often cash buyers who do not need to go through the appraisal process to get a loan. Traditional buyers who are looking for a home to reside in are at a disadvantage. Jerry Lou Davis, a real-estate agent in California, says the activity in the foreclosed housing market is similar to the housing bubble of yesteryears. Jay Butler, director of the Realty Studies program at Arizona State University, concurs with this view. “This market is about as abnormal as the hypermarket that we came out of a few years ago,” said Butler. Experts say that the bidding wars will impede stabilization of the housing market.

In Phoenix, the median home price, which was $265,000 3 years ago, was $125,000 last month, from a low of $115,000 in April. Real estate agents across the country have been observing price wars in the last couple of months, according to Walter Molony, a spokesman for the National Association of Realtors. In states such as Nevada, Arizona, California, and Florida, where home prices are moving to levels well below their peak values, it is not uncommon for sellers to get multiple offers. Jonathan Abbinante, a real estate agent in Las Vegas, says some of his clients are making 3 offers a day on homes they have not seen. “I sell homes right over the Internet,” said Abbinante. “That’s what I did in 2004.”

If you’re a First Time Home Buyer and want to take advantage of the $8000 First Time Home Buyer Tax Credit, the time to act is NOW! I know November seems a long way off but as you can see, the home buying process is much longer now and you have to be closed by November 30, 2009 (This has been extended to June 30, 2010 but you have to be in escrow by April 30).

IT’S TOO IMPORTANT…DO IT RIGHT!

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First Time Home Buyer – Should I buy a Condo?

Monday, July 20th, 2009

I thought I would share this inquiry I received from Zillow.com.

I was asked if it was a good time to buy a new construction condominium. If you’re thinking the same, here’s what I shared with this First Time Home Buyer.

Buying a condo requires a lot more “homework” than does buying a single family home, here are some of the Pros and Cons.

Pros 

  • If you are a qualified First Time Home Buyer, you may be eligible for the $8000 Federal Income Tax Credit, provided you close before November 30,2009 (extended to June 30, 2010 but you have to be in escrow by April 30.)
  • If you are purchasing in Riverside County (CA) you may also be eligible for the special Riverside County Tax credit (check out our posts on the Riverside County programs)
  • The usual benefits of condominium living still apply (little to no maintenance required) and the prices are usuallly lower than single family homes.

Cons

  • If it is new construction, the State of California is no longer taking reservations for the $10,000 stat home buyer tax credit.
  • Unless the project is FHA/VA approved you will be required to make a down payment of 20%. (The salespeople should know this).
  • In order for you to close by November 30, the project will have to have met it’s presale requirements. Right now it’s 51% of sales have to be to owner occupants. That may go to 70% if Fannie Mae gets her way.
  • If it is an existing project be sure to check the percentage of owner occupants vs. tenant occupied. If there are too many tenants, you will in effect be buying an apartment which will be very difficult sell in the future.
  • Be sure to check on the financial health of the Homeowner’s Association. If it is a new project and the builder/developer still controls the HOA, if he goes under so does the HOA and there goes all the amenitites you would have been paying for. If there are a large number of foreclosures in the complex, it means not many HOA dues are being paid which is a recipe for disaster.

If the condo lifestyle is something you’ve dreamed about, now can be a very good time to buy IF do your homework!

 

IT’S TOO IMPORTANT…DO IT RIGHT!

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First Time Home Buyer Program-MCC The Tax Credit that keeps on giving!

Thursday, July 9th, 2009

Riverside County (CA) in its effort to promote homeownership for First Time Home Buyers has rolled out a series of programs designed to assist Low and Moderate Income families achieve their dream of homeownership. This is the fifth in a series of posts about these programs. For more information on the County programs, visit the County website: www.rchomelink.com

First Time Home buyers already have the $8000 Federal Income Tax Credit (Note: You have to be closed on your home by November 30, 2009 to receive the credit) and the $10,000 Tax Credit for New Home buyers in California (If this is you, you better get moving they are almost out of money). WANT MORE?
The Riverside County Mortgage Credit Certificate (MCC) program is another tax credit that enhances the ability of First Time Home Buyers to qualify by effectively increasing your “home buying power”. Plus, it’s a credit you have year after year. Check out the table below for an example.

What is a MCC? A Mortgage Credit Certificate (MCC) entitles qualified homebuyers to reduce the amount of their federal income tax liability by an amount equal to a portion of the interest paid during the year on a home mortgage. The Riverside County MCC Program provides for a 15% rate that can be applied to the interest paid on the mortgage loan. A new homeowner can claim a tax credit equal to 15% of the interest paid during the year. Since the borrowers taxes are being reduced by the amount of the credit, this increases the take-home pay by the amount of the credit. The buyer is still able to take the remaining 85% interest as a deduction. When underwriting the loan, a lender considers this and the borrower is able to qualify for a larger loan than would otherwise be possible.
To receive immediate benefit of the MCC tax credit, the homebuyer would file a revised W-4 withholding from their employer to reduce the amount of federal income tax withheld from his/her wages, thereby increasing their take home pay.

If you elect not to revise your W-4 you would see a dollar for dollar reduction in your tax liability for the year.
Consult your tax professional for the best option for you.

The MCC program is not limited to First Time Home buyers. A non-First Time Home buyer may be eligible if they are purchasing within a Riverside County designated Target Area. Information on Target Areas is available on the EDA Website: www.rivcoeda.org

How do I apply for a MCC? – Borrowers must apply for a MCC through a participating lender who will perform an initial qualification and assist the borrower in completing the MCC submission forms. The lender then submits the MCC application to the County., and when approved will issue a MCC commitment to the lender.
To further enhance all of the Riverside County Programs the MCC may be used in conjunction with the other Riverside County Homeownership Assistance Programs.

Effective Home Buying Power With and Without a 

 

 

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