January, 2010
Within the past week, I have had at least 3 inquiries as to whether someone would qualify for the extended tax credit. There are two Tax Credits we’ll discuss in this article; the First Time Homebuyer Credit, and The Homeownership and Business Assistance Act of 2009. The guidelines can be somewhat confusing, therefore, I’ll attempt to provide a little clarification in the following paragraphs.
First Time Homebuyer Credit:
If you have not owned a principal residence during the three years prior to the purchase date then there is a great chance you may qualify for the First Time Homebuyer Credit. The purchase date must have occurred after April 8, 2009 and before May 1, 2010 with a closing date prior to July 1, 2010. The credit is equal to 10% of the purchase price with a maximum of $8000. If you take advantage of the tax credit, you must reside in the home, as a primary residence, for three years or you will have to repay the tax credit.
A couple of rules that are attached to the tax credit are as follows: First, the property cannot be purchased from a relative. Second, married taxpayers must both qualify as first time homebuyers if they file their taxes jointly.
The Homeownership and Business Assistance Act of 2009:
The Homeownership and Business Assistance Act of 2009 extended the tax credit from November 30, 2009 to April 30, 2010. That means there must be a binding contract in place prior to April 30, 2010 and closing must occur before July 1, 2010. With this extension came a few more guidelines for those who purchased homes after November 6, 2009: First, you must be 18 years of age on the purchase date and cannot be claimed as a dependent. Second, if married, at least one of the spouses must be 18 or older. Third, the purchase price cannot exceed $800,000.
Current homeownersare not being left out of this tax credit. The Homeownership and Business Assistance Act modified the credit to include current homeowners who have lived in their same principal residence for a five consecutive year period. They are eligible for a credit of up to $6500 if the home is purchased before April 30, 2010. Homeowners looking to purchase a replacement primary residence must be in a binding contract after Nov 6, 2009 and before May 1, 2010 with a closing date on or before July 1, 2010.
For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.
The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.
For homes purchased in 2009, tax credits must be claimed on their 2009 income tax return. For 2010 purchases, those can be claimed on either the 2009 or 2010 income tax returns. So, for all you readers who are contemplating a purchase in the Fredericksburg Real Estate market and surrounding areas, now is the time to buy.
Category : Blog
I wanted to write this post to let our readers know the changes that are taking place very soonwithin the FHA lending program that will have an effect here in the Fredericksburg real estate market. Why is changes to FHA lending important? Because approximately 80% of current home purchases are FHA loans. Most people use FHA because they require a substantially smaller down payment than conventional loans and allow for more help from the seller. Until these changes take place that is.
For anyone who is looking to purchase a home within the next 6 months to a year, they might want to consider stepping up their time table. For any loan application/home purchase that is using the FHA is not in underwriting by April 5, 2010, the new FHA rules will apply. Our initial understanding of the changes are primarily this:
- The funding fee charged by FHA, which currently stands at 1.75% of the purchase price, will increase to somewhere between 2% and 2.25%. Most people roll the funding fee into their loan, which increases the principle of the loan. On a $200,000 home that means the funding fee increases from $3,500 to between $4,000 and $4,500.
- Secondly and possibly a critical issue for many home buyers is the change to the seller concessions. Seller concessions is the term used for money the seller allots to the purchase to pay their closing costs and other fees. Many people who use FHA need anywhere between 3% and 6% of the purchase price in seller concessions to make the loan/purchase doable. FHA currently allows up to 6% in seller concessions. For any transactions not in underwriting by April 5, 2010, the seller concessions will be reduced to a maximum of 3%. That is huge. Again on a $200,000 home, the seller concessions just went from $12,000 to $6,000. Many potential buyers won’t have the extra cash to pay for closing costs that exceed the 3%.
- The down payment requirement of 3.5% of the purchase price will remain the same, with some caveats for specific situations.
So, again, if you know of anyone who is wanting to buy a home sooner rather than later, please pass this information along to them. You or anyone you pass this on to may call or email me with questions. Or you may call the mortgage planner that we partner with Kim Thagholm at (540) 295-6674. We want everyone who is capable of taking advantage of the existing program to do so before it soon changes.
Share on Facebook
Category : Blog
Great Home for Senior Citizens
We have the honor of listing and marketing this delightful home located in The Greens at Lee’s Hill. This is a great home for Senior Citizens, as the Homeowners Association takes care of the lawn, leaves, roof and more, removing the burden of much of the exterior maintenance of home ownership. The additional amenities of the community afford many other recreational opportunities for home owners, and their families, including tennis, swimming pools, trails, playgrounds, and more. Golfers will enjoy the golf course accessed from within the Lee’s Hill community.
The home itself is a townhouse style home that features approximately 2400 SF of finished living space on two levels, with 3 bedrooms and 3 full baths. The custom designing resonates throughout the home, and is readily apparent in the dining room that includes an abundance of additional cabinetry and a beautiful ornamental ceiling. Steps away, the bright and cheery sun room provides a cozy atmosphere with walls of windows, four skylights and opens to a nice sized deck.
One bedroom and it’s own full bath is located on the first floor, and the additional bedrooms are located upstairs. A nice library (that could be used as an office, recreation room, etc) is situated at the top of the stairs and continues the open feel of the entire home. A luxurious master bath puts the finishing touches on a home that is close to shopping, transportation routes, and so much more.
This home was just listed for sale in the Fredericksburg real estate market with our team, and will be appearing on the MLS within the next 1 to 2 weeks, priced at around $235,000. If you have questions, feel free to email or call us at (540) 538-7222.
Share on Facebook
Category : Blog
Here is a relatively staggering statistic… 1 in 7 properties in America are distressed properties. Meaning they are delinquent on their payment, facing foreclosure or in foreclosure. Think about that for a minute. In a community that has 50 homes, AT LEAST 7 of those homes are distressed.
There are currently approximately 3.8 million homes currently in foreclosure across America. There another 5 to 7 million homes in what is known as the shadow inventory… homes in foreclosure, but not yet released for sale.
The ramifications of foreclosure are very serious, and present a punishing financial blow to the home owner who loses their home to foreclosure. The staggering concept for me is that many, many of these home owners DID NOT need to lose their home to foreclosure… they had options. The vast majority of them were qualified to short sale their home and be faced with a much better credit and financial situation than where they are now.
So, here is the thing. Market values and our communities here in the Fredericksburg real estate market will benefit greatly from preventing more homes from going into foreclosure. So… think about this question. Who do you know that is behind on their payments and don’t know what to do? You very likely know somebody, probably several somebodies, because you know at least 7 people, right? Remember 1 in 7 properties are distressed, in EVERY price range. So, help them, and help our communities by steering them in the right direction to explore their options.
Do you know of anyone who is behind on their payments and don’t know what to do? Who doesn’t understand all their options? We may be able to help them. Refer them to our short sale page here on the website, have them email us, or better yet, have them call us at (540) 538-7222 or (540) 455-8374. Preventing more foreclosures benefits everybody.
Share on Facebook
Category : Blog
Why has the U.S. Treasury issued new Short Sale guidelines?
The Fredericksburg real estate market is impacted strongly by short sales, and thus we will be impacted by the new short sale guidlines. Here is some information about the new short sale guidelines.
Because of the challenges many homeowners have faced in their attempts at Short Sales, RE/MAX International has worked closely with major lenders, the U.S. Treasury and other federal agencies to streamline and standardize the process. The new guidelines are in response to this advocacy by RE/MAX and others in the industry. Short Sales are seen as a critical component in stemming the increasing number of foreclosures and stabilizing the housing market. The streamlined processes are potentially available to more than 75 percent of the mortgages in the United States.
What’s been improved in the Short Sale process?
Under the Treasury’s Foreclosure Alternatives Program, mortgage servicers have 10 business days to respond to a Short Sale offer. In the past, a lack of timely response has been one of the main reasons for delayed or derailed Short Sales. Also, paperwork and documentation are now standardized. Previously, procedures varied widely between lenders. Various deadlines in the Short Sale process also have been standardized.
Share on Facebook
Category : Blog
We will begin with the basic short sale terminology that applies to the Fredericksburg real estate market.
What is a Short Sale?
In a Short Sale, a lender agrees to allow a homeowner facing financial hardship sell a home for less than the mortgage owed. A Short Sale is an attractive alternative to foreclosure, typically not pursued until after other efforts to keep the owner in the home have been exhausted. There are potential tax consequences that should be discussed with a tax professional.
Why is a Short Sale better than foreclosure?
Typically, a Short Sale is less damaging to the borrower’s credit. The former owner can qualify for a mortgage backed by Fannie Mae or Freddie Mac to buy another home in as few as two years – far sooner than if there had been a foreclosure. Short Sales also help protect other property values in the community by keeping the home out of potential disrepair.
Category : Blog