Ann Arbor, MI November 6, 2009 - Congress just passed an expanded version of the $8,000 first time home buyer tax credit that was set to expire on November 30. "The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. "Although the tax credit remains at $8,000 for home buyers that have not owned a primary residence in the last three years, it has been expanded to include a $6,500 tax credit for home buyers that have lived in their current primary residence for at least five consecutive years out of the past eights years. Under the old rules, move-up home buyers did not qualify.
The tax credit applies to homes purchased for less than $800,000 before May 1, 2010. "If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010." Nicholas said. "It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit.
The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. "This means that more people will qualify for the credit - especially in parts of the country with higher costs of living." Nicholas said. "This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit."
There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:
*The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence - you could live in one unit and rent out the others.
*If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit.)
*The credit applies even if you have co-signers on your mortgage loan.
If you have any questions about qualifying for the new tax credit, please contact Sandy Scott with Real Estate One at 432-683-1377 or Suzanne Smith with HNB Mortgage at 432-683-0081.
This article compliments of Suzanne Smith, HNB Mortgage, Midland Texas, 432-683-0081, suzanne@hnbmortgage.com.
Friday, November 13, 2009
Tuesday, September 15, 2009
An Ocean of Options
As a buyer, you may find yourself drifting on an ocean of financing options. As lenders tighten their requirements, there are a few aspects of the loan application of which you should be aware before applying for a mortgage.
First, determine whether you are seeking "pre-qualification" or "pre-approval." What's the difference? Generally speaking, when you are pre-qualified, the lender reviews your information and hazards a "best guess" as to the size of loan for which you would qualify.
In the pre-approval process, however, the lender verifies everything on your application, and offers to approve a certain amount at a certain interest rate. Either way, the final loan is only cleared upon receipt of an acceptable appraisal, title check, last-minute credit check, and other verifications. Usually, a pre-approval puts you on stronger buying ground.
A critical aspect of your application is your credit score. Excessive credit, like car loans and credit cards, can sometimes prove as unattractive to lenders as bad or no credit, so make sure that you have plenty of credit available before applying, and put off major purchases until after you've bought your home.
Finally, investigate all of your loan options, compare worst-case scenarios, and do your math. If you need guidance, seek it from a local mortgage specialist or real estate agent who is well versed in current market and lending conditions.
First, determine whether you are seeking "pre-qualification" or "pre-approval." What's the difference? Generally speaking, when you are pre-qualified, the lender reviews your information and hazards a "best guess" as to the size of loan for which you would qualify.
In the pre-approval process, however, the lender verifies everything on your application, and offers to approve a certain amount at a certain interest rate. Either way, the final loan is only cleared upon receipt of an acceptable appraisal, title check, last-minute credit check, and other verifications. Usually, a pre-approval puts you on stronger buying ground.
A critical aspect of your application is your credit score. Excessive credit, like car loans and credit cards, can sometimes prove as unattractive to lenders as bad or no credit, so make sure that you have plenty of credit available before applying, and put off major purchases until after you've bought your home.
Finally, investigate all of your loan options, compare worst-case scenarios, and do your math. If you need guidance, seek it from a local mortgage specialist or real estate agent who is well versed in current market and lending conditions.
Tuesday, August 4, 2009
A Welcome Sight
Home staging has become a popular industry and topic, particularly as it relates to improving the appeal of your listing during challenging times in the real estate market. But what about “staging” your yard?
Sure, any steps that you take to improve your interior's appeal will go a long way towards wooing buyers, but it's the outside of your home that they will see first, and you know that first impressions count! Review some of these helpful tips to make your offering an inviting one.
Go green by seeding and fertilizing your lawn for a lush look. Also, bring your home out from hiding by trimming overgrown branches and shrubbery around the house. Give the impression of easy living by hanging a hammock in the front yard. Seriously, little suggestions like that really sink into a buyer's mind.
Give your flowerbeds and borders more striking visual appeal by applying mulch, and edge the beds and driveway, walkways and sidewalk. Planting annuals such as geraniums and petunias will also add to the impact and brighten up empty areas.
The final step in your outdoor "staging" is to powerwash your home's siding and the sidewalk and patio or deck. When you show pride of ownership and that you care about your home's presentation, it will resonate with buyers looking for value and a home in ready-to-move-in condition.
Sure, any steps that you take to improve your interior's appeal will go a long way towards wooing buyers, but it's the outside of your home that they will see first, and you know that first impressions count! Review some of these helpful tips to make your offering an inviting one.
Go green by seeding and fertilizing your lawn for a lush look. Also, bring your home out from hiding by trimming overgrown branches and shrubbery around the house. Give the impression of easy living by hanging a hammock in the front yard. Seriously, little suggestions like that really sink into a buyer's mind.
Give your flowerbeds and borders more striking visual appeal by applying mulch, and edge the beds and driveway, walkways and sidewalk. Planting annuals such as geraniums and petunias will also add to the impact and brighten up empty areas.
The final step in your outdoor "staging" is to powerwash your home's siding and the sidewalk and patio or deck. When you show pride of ownership and that you care about your home's presentation, it will resonate with buyers looking for value and a home in ready-to-move-in condition.
Wednesday, July 29, 2009
Don't Take Everything
If you plan to move while your home is still listed for sale, you may face a marketing challenge - the vacant home. While lived-in homes may be more attractive during showings, there is much you can do to present your vacant property successfully.
On the outside, give your home an occupied look by asking a neighbor to park their car in your driveway, open and close your drapes, and retrieve any mail that still arrives. During the warm season, have a lawn service maintain the yard (in the winter, a snow removal service may be in order).
On the inside, create a sense of space by leaving some strategically placed pieces of furniture, like a few chairs, tables and lamps. You can create a "bed" by covering an empty mattress box or several moving boxes with a thick comforter.
If you remove furniture that reveals blemishes on the walls, repair and repaint those. If you notice that the carpeting is faded after you've moved furniture, consider replacing it if possible.
Keep it feeling pleasant indoors during all seasons by keeping your power on after you move, and having a neighbor or family member set the temperature at a minimum comfortable setting according to seasonal conditions.
Your agent will have even more suggestions for marketing a vacant home, so put that experience to good use!
On the outside, give your home an occupied look by asking a neighbor to park their car in your driveway, open and close your drapes, and retrieve any mail that still arrives. During the warm season, have a lawn service maintain the yard (in the winter, a snow removal service may be in order).
On the inside, create a sense of space by leaving some strategically placed pieces of furniture, like a few chairs, tables and lamps. You can create a "bed" by covering an empty mattress box or several moving boxes with a thick comforter.
If you remove furniture that reveals blemishes on the walls, repair and repaint those. If you notice that the carpeting is faded after you've moved furniture, consider replacing it if possible.
Keep it feeling pleasant indoors during all seasons by keeping your power on after you move, and having a neighbor or family member set the temperature at a minimum comfortable setting according to seasonal conditions.
Your agent will have even more suggestions for marketing a vacant home, so put that experience to good use!
Tuesday, July 7, 2009
Make Your Move
ALERT: Buyers only have until December 1, 2009 to take advantage of the first-time buyers tax credit authorized in the American Recovery and Reinvestment Act of 2009. Consult now with your tax advisor and real estate representative to get moving!
Most first-time buyers (who haven’t owned a home in three years) will qualify. If you're married, you and your spouse must both satisfy this description.
There are income limits for claiming the credit of up to 10% of the home's purchase price, which maxes out at $8,000. If your modified adjusted gross income (on IRS Form 1040, line 37) is less than $75,000 for individuals or $150,000 for married filing jointly, you can claim the maximum credit. For incomes up to $95,000 or $170,000 respectively, the credit is reduced.
This is not a tax "deduction," but a tax "credit," meaning that the amount you claim is reduced from your total tax bill! If you will owe less than $8,000 on your 2009 return, you'll get a REFUND from the IRS for the difference!
The biggest news is that in response to pressure from the National Association of REALTORS®, FHA lenders will allow buyers to use the credit to cover closing costs, buy down the rate or as additional down payment! I urge you to take this money from the government and make your move before December!
Most first-time buyers (who haven’t owned a home in three years) will qualify. If you're married, you and your spouse must both satisfy this description.
There are income limits for claiming the credit of up to 10% of the home's purchase price, which maxes out at $8,000. If your modified adjusted gross income (on IRS Form 1040, line 37) is less than $75,000 for individuals or $150,000 for married filing jointly, you can claim the maximum credit. For incomes up to $95,000 or $170,000 respectively, the credit is reduced.
This is not a tax "deduction," but a tax "credit," meaning that the amount you claim is reduced from your total tax bill! If you will owe less than $8,000 on your 2009 return, you'll get a REFUND from the IRS for the difference!
The biggest news is that in response to pressure from the National Association of REALTORS®, FHA lenders will allow buyers to use the credit to cover closing costs, buy down the rate or as additional down payment! I urge you to take this money from the government and make your move before December!
Tuesday, June 30, 2009
Keep the Horse Before the Cart
While many buyers are aware that a mortgage pre-approval letter increases their buying confidence and power, most may not understand exactly why pre-approval is so important. Why should you jump through the application hoops before even beginning your home search?
First, you'll know exactly how much loan you can afford, making your initial home search much easier. Why waste your time looking at homes either out of your reach or well below your financial grasp?
Second, pre-approved buyers stand on solid negotiating ground with sellers. Sellers working with well-qualified buyers are more likely to accept the offer and less likely to stall on terms and conditions.
Notice that the topic of this column is "pre-approval," and not "pre-qualification." What's the difference? Pre-qualification is easy - you provide basic information to a lender, and in a few short minutes, you have an answer. Pre-approval requires strict verification of documentation relating to your employment, credit history, sources of income, etc. It takes more time, but is more accurate and carries more weight.
Understand that pre-approval is not binding, and is still subject to a satisfactory appraisal on the prospective purchase. If your financial situation changes, interest rates rise or fall, or the deadline passes, a recalculation will be necessary; but a little legwork now will pay off handsomely as you approach the finish line on your contract.
First, you'll know exactly how much loan you can afford, making your initial home search much easier. Why waste your time looking at homes either out of your reach or well below your financial grasp?
Second, pre-approved buyers stand on solid negotiating ground with sellers. Sellers working with well-qualified buyers are more likely to accept the offer and less likely to stall on terms and conditions.
Notice that the topic of this column is "pre-approval," and not "pre-qualification." What's the difference? Pre-qualification is easy - you provide basic information to a lender, and in a few short minutes, you have an answer. Pre-approval requires strict verification of documentation relating to your employment, credit history, sources of income, etc. It takes more time, but is more accurate and carries more weight.
Understand that pre-approval is not binding, and is still subject to a satisfactory appraisal on the prospective purchase. If your financial situation changes, interest rates rise or fall, or the deadline passes, a recalculation will be necessary; but a little legwork now will pay off handsomely as you approach the finish line on your contract.
Wednesday, April 22, 2009
A Portfolio of Commodities
Have you ever thought of a home as a commodity? A commodity can be defined as a raw material or product that can be bought and sold. A home is not a raw material, but it is certainly built out of many, like a box full of wood, steel, cement, glass and copper.
Over the long term, home prices usually rise along with the cost of the commodities it takes for construction. While high inventories of housing may be keeping prices lower right now, the cost of the raw materials that are intrinsically tied to a home's value are rising, and rapidly.
With increasingly higher construction costs on the horizon, buying now is an ideal investment, and a hedge against the rising cost of commodities. Every home is a store of value for all the materials, the land and the labor involved in its construction. So the long-term value of a home is tightly connected to the cost of its production, making it a very different type of investment from stocks or bonds.
Investing in commodities has always been a great way to make lemonade from the economy's lemons. And what better way to buy into the commodities market than by purchasing a home? Sooner or later, home prices will be pushed higher by the rising cost of raw materials, so make your move now!
Over the long term, home prices usually rise along with the cost of the commodities it takes for construction. While high inventories of housing may be keeping prices lower right now, the cost of the raw materials that are intrinsically tied to a home's value are rising, and rapidly.
With increasingly higher construction costs on the horizon, buying now is an ideal investment, and a hedge against the rising cost of commodities. Every home is a store of value for all the materials, the land and the labor involved in its construction. So the long-term value of a home is tightly connected to the cost of its production, making it a very different type of investment from stocks or bonds.
Investing in commodities has always been a great way to make lemonade from the economy's lemons. And what better way to buy into the commodities market than by purchasing a home? Sooner or later, home prices will be pushed higher by the rising cost of raw materials, so make your move now!
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