The homebuying process can seem complicated, but if you take things step-by-step, you will soon be holding the keys to your own home!
Nine steps to buying a home
Figure out how much you can afford
Know your rights
Shop for a loan
Learn about homebuying programs
Shop for a home
Make an offer
Get a home inspection
Shop for homeowners insurance
Sign papers
Step 1: Figure out how much you can afford
What you can afford depends on your income, credit rating, current monthly expenses, downpayment and the interest rate. The calculators below can help, but it is best to visit a lender to find out for sure.
How much home can you afford?
Buying vs. Renting
Home Economics
Need help with your downpayment and/or closing costs?
Homebuying programs in your state
A housing counselor can help you figure out how to manage and pay off your debt, and start saving for that downpayment!
Find a housing counselor near you
Step 2: Know your rights
Fair Housing: Equal Opportunity for All - brochure
Real Estate Settlement Procedures Act (RESPA)
Borrower's rights
Predatory lending
Back to Top
Step 3: Shop for a loan
Save money by doing your homework. Talk to several lenders, compare costs and interest rates, negotiate to get a better deal. Consider getting pre-approved for a loan.
Looking for the best mortgage: shop, compare, negotiate - brochure
Let FHA help you
Why Ask for an FHA Loan?
Learn about interest only loans
Avoid Predatory Lenders
Step 4: Learn about homebuying programs
Homebuying programs in your state
FHA loan programs offer lower downpayments and are a good option for first-time homebuyers.
Let FHA help you
HUD's special homebuying programs Good Neighbor Next Door (formerly known as Teacher/Officer/Firefighter Next Door)
Hurricane Evacuees discounted sales
Homeownership for public housing residents
Indian Home Loan Guarantee Program (Section 184)
Step 5: Shop for a home
Choose a real estate agent
Wish list - what features do you want?
Home-shopping checklist – take this list with you when comparing homes
Homes for sale (including HUD homes)
" Fixer-uppers " - home purchase and repair programs
Manufactured (mobile) homes
Build a home
If you choose a home in a neighborhood with a Home Owners Association (HOA), be sure to request a copy of the HOA packet, so you can review before closing.
Back to Top
Step 6: Make an offer
Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale.
Making an offer
Step 7: Get a home inspection
Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs.
For Your Protection Get a Home Inspection
10 Questions to ask a home inspector
Step 8: Shop for homeowners insurance
Lenders require that you have homeowners insurance. Be sure to shop around.
Homeowners insurance
12 ways to lower your homeowners insurance costs
Step 9: Sign papers
You're finally ready to go to "settlement" or "closing." Be sure to read everything before you sign!
Settlement Costs and Helpful Information
Showing posts with label MetroCity Reality and Loans. Show all posts
Showing posts with label MetroCity Reality and Loans. Show all posts
Friday, November 20, 2009
Thursday, October 29, 2009
Senate panel OKs extension for home buyers' credit
By Alan J. Heavens Inquirer Real Estate Writer
A Senate committee reached a compromise yesterday to extend the $8,000 tax credit for first-time home buyers, a boost the housing industry expects will help it pull out of its two-year-old downturn.
Lawmakers in Washington also added a $6,500 tax credit for other primary-home purchasers and raised the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, housing-industry sources said.
Under the Senate panel compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, the sources said. The measure still faces votes in the full Senate and the House.
The current tax credit did little for the new-home market in September, the Commerce Department reported yesterday - news that took many industry analysts by surprise. Sales fell 3.6 percent from August and 7.8 percent from September 2008.
Industry observers had expected a fifth consecutive monthly increase in new-home sales, believing that the tax incentive for qualified first-time buyers - credited with 357,000 sales of previously owned homes so far this year - would do the trick. Instead, sales of typically more expensive newly built houses slipped.
"The decline in new-home sales seems to us to be more a function of the attractive pricing available on resales in the current environment than a reflection of weakening demand," said Michael Feder, president of Radar Logic Inc., of New York, which tracks the market.
"Big deal," said Joel L. Naroff, of Naroff Economic Advisors, of Holland, Bucks County. "Since hitting rock bottom in March, demand is up 20 percent."
For Naroff, the robust rise in existing-home purchases - 9.2 percent year over year in September - indicated that the housing market was not faltering.
"Maybe the issue is supply, which fell to its lowest level in 27 years," he said. "Builders, at least those left standing, have been making sure they don't have any houses sitting around, and they have been very successful in controlling inventories."
IHS Global Insight Inc. economist Patrick Newport echoed that, noting new-home inventories "sank for the 29th straight month to their lowest level since November 1982."
Naroff maintained housing had recovered enough to stand without the tax credit. But Newport said he believed that if the credit were not extended and expanded, housing demand would take a hit, and home sales would drop.
Until the Senate compromise yesterday, the extension of the credit seemed mired in what National Association of Home Builders vice president Jerry Howard called "a game of partisan chicken."
Howard's take on the lower September numbers: It was too late to sign a contract on a house that would be completed by the current Nov. 30 deadline, and many buyers were concerned the credit would not be extended.
The credit has helped, acknowledged Marshal Granor, a principal in Granor Price Homes, of Horsham. But he added, "I'd love for it to go away, for a month."
"People who believe there is no rush aren't buying, they are waiting for more bargains from more squeezed sellers," Granor said.
Still, said Feder of Radar Logic, lower home prices have carried "buyers further into the autumn than we would expect, based on historic patterns." Declining inventory means builders will have to ramp up production, Newport said.
As the Senate worked on the compromise, third-quarter data were released showing that the burden of foreclosure filings in the post-bubble market continued to shift from the subprime-ridden "sand" states (California, Nevada, Florida and Arizona) to areas with rising levels of unemployment and adjusting rates on the "exotic" mortgages prevalent in high-cost metropolitan markets.
Yet Las Vegas remained the toxic-loan capital, according to the third-quarter survey by RealtyTrac Inc., of Irvine, Calif. - its rate of foreclosure filings was seven times higher than the national average.
The Philadelphia region, including Wilmington, ranked 110 of the 203 metro areas surveyed.
Only Houston at 124 and New York at 138 were lower on the list.
A Senate committee reached a compromise yesterday to extend the $8,000 tax credit for first-time home buyers, a boost the housing industry expects will help it pull out of its two-year-old downturn.
Lawmakers in Washington also added a $6,500 tax credit for other primary-home purchasers and raised the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, housing-industry sources said.
Under the Senate panel compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, the sources said. The measure still faces votes in the full Senate and the House.
The current tax credit did little for the new-home market in September, the Commerce Department reported yesterday - news that took many industry analysts by surprise. Sales fell 3.6 percent from August and 7.8 percent from September 2008.
Industry observers had expected a fifth consecutive monthly increase in new-home sales, believing that the tax incentive for qualified first-time buyers - credited with 357,000 sales of previously owned homes so far this year - would do the trick. Instead, sales of typically more expensive newly built houses slipped.
"The decline in new-home sales seems to us to be more a function of the attractive pricing available on resales in the current environment than a reflection of weakening demand," said Michael Feder, president of Radar Logic Inc., of New York, which tracks the market.
"Big deal," said Joel L. Naroff, of Naroff Economic Advisors, of Holland, Bucks County. "Since hitting rock bottom in March, demand is up 20 percent."
For Naroff, the robust rise in existing-home purchases - 9.2 percent year over year in September - indicated that the housing market was not faltering.
"Maybe the issue is supply, which fell to its lowest level in 27 years," he said. "Builders, at least those left standing, have been making sure they don't have any houses sitting around, and they have been very successful in controlling inventories."
IHS Global Insight Inc. economist Patrick Newport echoed that, noting new-home inventories "sank for the 29th straight month to their lowest level since November 1982."
Naroff maintained housing had recovered enough to stand without the tax credit. But Newport said he believed that if the credit were not extended and expanded, housing demand would take a hit, and home sales would drop.
Until the Senate compromise yesterday, the extension of the credit seemed mired in what National Association of Home Builders vice president Jerry Howard called "a game of partisan chicken."
Howard's take on the lower September numbers: It was too late to sign a contract on a house that would be completed by the current Nov. 30 deadline, and many buyers were concerned the credit would not be extended.
The credit has helped, acknowledged Marshal Granor, a principal in Granor Price Homes, of Horsham. But he added, "I'd love for it to go away, for a month."
"People who believe there is no rush aren't buying, they are waiting for more bargains from more squeezed sellers," Granor said.
Still, said Feder of Radar Logic, lower home prices have carried "buyers further into the autumn than we would expect, based on historic patterns." Declining inventory means builders will have to ramp up production, Newport said.
As the Senate worked on the compromise, third-quarter data were released showing that the burden of foreclosure filings in the post-bubble market continued to shift from the subprime-ridden "sand" states (California, Nevada, Florida and Arizona) to areas with rising levels of unemployment and adjusting rates on the "exotic" mortgages prevalent in high-cost metropolitan markets.
Yet Las Vegas remained the toxic-loan capital, according to the third-quarter survey by RealtyTrac Inc., of Irvine, Calif. - its rate of foreclosure filings was seven times higher than the national average.
The Philadelphia region, including Wilmington, ranked 110 of the 203 metro areas surveyed.
Only Houston at 124 and New York at 138 were lower on the list.
Wednesday, October 28, 2009
Talks continue on home tax credit
By Alan J. Heavens Inquirer Real Estate Writer
Senate negotiators spent yesterday trying to forge an agreement that would extend the $8,000 tax credit for qualified first-time home buyers past its Nov. 30 deadline.
A decision had been expected by last night, but procedural issues caused a delay, housing-industry sources said.
The Senate compromise would cut the tax credit to 10 percent of the sale price, with a $7,290 cap, the sources said, and would make the credit available for houses under agreement of sale by April 30, with 60 more days to settle. Once the Senate acts, the plan will go to the House and then to President Obama.
Supporters of the extension attribute 357,000 of the two million sales of previously owned homes that have been recorded this year through Sept. 15 to the credit, which is retroactive to Jan. 1 - purchases they say would not have been made otherwise.
The National Association of Realtors' chief economist, Lawrence Yun, expects the final credit tally to be 400,000 of the five million existing-home sales anticipated this year.
Sales of new homes, whose September numbers will be reported by the Commerce Department today, also are benefiting from the incentive, with a combination of the credit and interest rates at 5 percent "boosting lower-end sales," said Wayne Norris, sales director for Hanley Wood Market Intelligence, which tracks the market.
Without the credit, recent improvements in the housing market might not have materialized, some observers said.
For example, Standard & Poor's Case-Shiller Composite Index for August, released yesterday, showed prices in 20 metropolitan areas rising for the third consecutive month, this time 1.25 percent.
According to the index, which excludes the Philadelphia region, the steep price declines of the last two years began slowing in February across the nation.
Philadelphia home prices continue to fare much better than those in the rest of the country, third-quarter data from Kevin Gillen of Econsult Corp. show.
Though Gillen did not yet have figures for the entire eight-county region, his city numbers show prices rising a scant 0.2 percent during the summer, compared with a 6.8 percent rise in the spring.
Case-Shiller says home prices in the 10 largest U.S. cities on its list have fallen 32 percent since the real estate bubble burst in 2006. In Philadelphia, the drop has been just 8 percent.
Joel L. Naroff of Naroff Economic Advisers in Holland, Bucks County, said the national market was healing enough that "it's worth seeing if it can make it on its own."
By contrast, Moody's Economy.com chief economist Mark Zandi said "the housing market [would be] better able to stand on its own two feet" if extending the tax credit coincided with job growth.
Patrick Newport of IHS Global Insight Inc. predicted that if the credit were not extended, prices would resume their decline an additional 5 percent after the first of the year.
Noelle Barbone, who heads Weichert Realtors' Media office, said the tax credit had raised awareness of homeownership and captured the interest "of people who never thought of buying a home."
Philadelphia Realtor and mortgage broker Fred Glick is not convinced, saying, "Most of the people who bought because of the credit actually would have bought anyway."
But ask Lisa Portadin, who is selling her Collingswood house to move to Boston, if she wants the tax credit extended, and her answer is pretty definitive: "Absolutely."
As originally proposed by Sens. Christopher J. Dodd (D., Conn.) and Johnny Isakson (R., Ga.), the Senate bill would extend the full tax credit to June and expand it to all buyers earning $300,000 or less, except for investors and vacation-home purchasers.
Amendments by Majority Leader Harry Reid (D., Nev.) and Sen. Max Baucus (D., Mont.) would end the full benefit April 1, reducing it by $2,000 each quarter until the end of the year.
Senate negotiators spent yesterday trying to forge an agreement that would extend the $8,000 tax credit for qualified first-time home buyers past its Nov. 30 deadline.
A decision had been expected by last night, but procedural issues caused a delay, housing-industry sources said.
The Senate compromise would cut the tax credit to 10 percent of the sale price, with a $7,290 cap, the sources said, and would make the credit available for houses under agreement of sale by April 30, with 60 more days to settle. Once the Senate acts, the plan will go to the House and then to President Obama.
Supporters of the extension attribute 357,000 of the two million sales of previously owned homes that have been recorded this year through Sept. 15 to the credit, which is retroactive to Jan. 1 - purchases they say would not have been made otherwise.
The National Association of Realtors' chief economist, Lawrence Yun, expects the final credit tally to be 400,000 of the five million existing-home sales anticipated this year.
Sales of new homes, whose September numbers will be reported by the Commerce Department today, also are benefiting from the incentive, with a combination of the credit and interest rates at 5 percent "boosting lower-end sales," said Wayne Norris, sales director for Hanley Wood Market Intelligence, which tracks the market.
Without the credit, recent improvements in the housing market might not have materialized, some observers said.
For example, Standard & Poor's Case-Shiller Composite Index for August, released yesterday, showed prices in 20 metropolitan areas rising for the third consecutive month, this time 1.25 percent.
According to the index, which excludes the Philadelphia region, the steep price declines of the last two years began slowing in February across the nation.
Philadelphia home prices continue to fare much better than those in the rest of the country, third-quarter data from Kevin Gillen of Econsult Corp. show.
Though Gillen did not yet have figures for the entire eight-county region, his city numbers show prices rising a scant 0.2 percent during the summer, compared with a 6.8 percent rise in the spring.
Case-Shiller says home prices in the 10 largest U.S. cities on its list have fallen 32 percent since the real estate bubble burst in 2006. In Philadelphia, the drop has been just 8 percent.
Joel L. Naroff of Naroff Economic Advisers in Holland, Bucks County, said the national market was healing enough that "it's worth seeing if it can make it on its own."
By contrast, Moody's Economy.com chief economist Mark Zandi said "the housing market [would be] better able to stand on its own two feet" if extending the tax credit coincided with job growth.
Patrick Newport of IHS Global Insight Inc. predicted that if the credit were not extended, prices would resume their decline an additional 5 percent after the first of the year.
Noelle Barbone, who heads Weichert Realtors' Media office, said the tax credit had raised awareness of homeownership and captured the interest "of people who never thought of buying a home."
Philadelphia Realtor and mortgage broker Fred Glick is not convinced, saying, "Most of the people who bought because of the credit actually would have bought anyway."
But ask Lisa Portadin, who is selling her Collingswood house to move to Boston, if she wants the tax credit extended, and her answer is pretty definitive: "Absolutely."
As originally proposed by Sens. Christopher J. Dodd (D., Conn.) and Johnny Isakson (R., Ga.), the Senate bill would extend the full tax credit to June and expand it to all buyers earning $300,000 or less, except for investors and vacation-home purchasers.
Amendments by Majority Leader Harry Reid (D., Nev.) and Sen. Max Baucus (D., Mont.) would end the full benefit April 1, reducing it by $2,000 each quarter until the end of the year.
Tuesday, October 27, 2009
Senate aims to extend credit for first-time homebuyers
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Bloomberg is reporting that Senate leaders are working to extend the $8,000 tax credit for first-time homebuyers and then gradually reduce it next year.
“We should be able to extend that later this week,” said Sen. Bill Nelson, D-Fla., who was on Air Force One with President Obama on his way to a speech in Jacksonville. The credit expires Nov. 30.
Update at 5:08 p.m. ET: Because of fraud and administrative snafus, the IRS handed out $620 million in credits last year to filers who weren't eligible. As a result, the IRS will review by hand the tax returns of all filers claiming the first-time-buyer's credit for 2009 or amending their 2008 returns, MarketWatch reports. That means a long wait for your $8,000
Bloomberg is reporting that Senate leaders are working to extend the $8,000 tax credit for first-time homebuyers and then gradually reduce it next year.
“We should be able to extend that later this week,” said Sen. Bill Nelson, D-Fla., who was on Air Force One with President Obama on his way to a speech in Jacksonville. The credit expires Nov. 30.
Update at 5:08 p.m. ET: Because of fraud and administrative snafus, the IRS handed out $620 million in credits last year to filers who weren't eligible. As a result, the IRS will review by hand the tax returns of all filers claiming the first-time-buyer's credit for 2009 or amending their 2008 returns, MarketWatch reports. That means a long wait for your $8,000
Monday, October 26, 2009
Home-buyer tax credit is administrative nightmare
Get ready to wait: 2009 tax refunds will be delayed for months
Fraud found in home-buyer tax-credit claims
Gold descending a slope of hope
By Eva Rosenberg, MarketWatch
LOS ANGELES (MarketWatch) -- Last November, J. Russell George, the Treasury Inspector General for Tax Administration, warned the Internal Revenue Service that if they didn't ask for documentation from people filing for the first-time home-buyer credit, there would be fraud. The IRS ignored the advice. The result?
The IRS doled out about $620 million to ineligible filers. See TaxWatch.
Big deal, you might say. How does it affect me? Well, thanks to the problems, the IRS is now checking every return by hand. If you're among the millions of people who bought or plan to buy a first home in 2009, be prepared for long delays in getting your tax refund sent to you.
Flaws in the home tax-break program
Amid alleged fraud and administrative problems in the first-time home-buyers tax-credit program, the News Hub panel discusses whether it should be extended.
That's true whether you plan to claim the credit on your 2009 return, or you've amended your 2008 tax return to get your refund sooner. Either way, get ready to wait. TaxMama has been hearing from people whose amended returns were filed as far back as June or July who are still waiting for their money.
What's holding it all up?
TaxMama's office has processed several hundred amended 2008 returns (From 1040X), and a few original 2008 electronically filed returns (Form 1040). Most were processed properly in the normal course of business. Then the calls started. We began to realize there's a huge problem, and it's just beginning. There are three different scenarios we've encountered.
Problem No. 1: The IRS lost some returns. We thought IRS was simply not recording them on the taxpayer record until the amended returns were processed. We reassured clients and callers, advocating patience. After four months, without their 1040X appearing in the system, we investigated, using a Power of Attorney authorization from several taxpayers.
The expert staff at the Practitioner Priority Service hotline can find just about anything -- if it's in the system. They absolutely could not find two of the returns we asked about.
We've received many calls from worried taxpayers about this, but we have definitive proof about two instances. Oddly, both were received at the IRS on June 10 at 12:35 p.m., in the IRS P.O. Box at Kansas City, Mo. 64999. We're still investigating to see how many other returns were lost.
If this happens to you, resubmit a signed copy of your amended return with a cover letter. Tell IRS when and where it was filed. Attach proof if you have it. (We have USPS tracking codes for each of the hundreds of returns, and can print out the proof of delivery.) Request your resubmission be placed at the head of the processing queue, since it was filed months ago and was lost somewhere inside IRS. Attach proof of the purchase of your home. Send your resubmission to IRS's street address, rather than the P.O. Box. Call the IRS to get it: (800) 829-1040.
Problem No. 2. Some people are getting too much money. We heard this a few times. One person provided proof. The Form 5405 (to claim the first-time home-buyer credit) we prepared called for a refund of $3,232. This taxpayer found $8,086 deposited into his bank account! He provided us with a copy of the IRS letter informing him his refund was approved for $8,000.
If this happens to you, if you receive the payments by check, the IRS says don't cash it, to avoid possible interest charges. Call the IRS at (800) 829-1040 or send a letter explaining the matter to the IRS center where you filed the return. Include the Social Security number, tax year and name as shown on the return. IRS does not say how long it will take to get your money back. TaxMama says: If you want the money now, cash the check. Send the IRS the difference. You'll have to pay a little interest.
If you receive the payment by direct deposit: Promptly write a check for the excess and send it (and a note explaining the situation) to the IRS at the center where you filed or e-filed your return. Expect to be charged interest.
Problem No. 3. The big problem. Once the IRS realized that fraud was taking place, they acted quickly to curtail the fraud. How? By auditing every request for the credit. Form 1040s are being audited, as well as the amended returns. An IRS worker must process each and every Form 5405. Can you imagine how long that takes with the modest staff IRS has? Can you imagine the burden and the pressure on the IRS staff wading their way through this?
Kirsten Helgeson, a public relations professional in Milwaukee, Wis., was smart enough to have her accountant put her 2008 tax return on extension, knowing she was about to buy a house. She filed on July 3, 2009. She just received her tax-credit check in the mail on Oct. 19. IRS requested proof of purchase from her a few weeks after she filed her tax return. At first, they were not able to find the documents she sent via certified mail. So, she called the IRS audit unit each and every week to help the case along, until the refund arrived. Helgeson believes that it's only because she did stay on top of her case that she got her money as soon as she did -- in about three-and-a-half months.
If you've been waiting on your refund for more than six weeks and have not heard from the IRS, call them now at (800) 829-1040. Have them find the group that is working on your original or amended tax return. Get the group number and address and send them all the proofs of purchase they could possibly want, to speed up the process. (Or if they can't find your return, see solution to Problem No. 1, above.) Send the information by certified mail, and make sure it's received.
By Eva Rosenberg, MarketWatch
Continued from page 1
Page 1Page 2
Sit back and wait
The IRS's reports about the processing timeframe are not consistent. The official party line is still 12 to 16 weeks. A speaker at the recent IRS Tax Forum in Atlanta said it was at least 20 weeks. If you're considering filing an amended 2008 return to get your refund more quickly, don't bother. But for those who are amending 2008 returns for other reasons, go ahead and include the proof of purchase documentation with the amended return. See the list of documents the IRS is demanding on TaxQuips.com.
What will happen in 2010?
IRS has not updated the instructions to Form 5405. New homeowners in 2009 are not being instructed to send proof that they purchased their home, or proof of being first-time home buyers. Thus, every single tax return that requests the first-time home-buyer credit will be held back and processed manually. Expect your refund to be delayed three to four months.
This problem could be prevented easily right now. Doing this would save thousands of staff hours, and avoid many angry taxpayer calls: The IRS simply has to change two forms and their related instructions: 1) Form 5405 should have a box to check to indicate that proof of purchase is being sent to IRS via Form 8453. Put information into the instructions for Form 5405 spelling out the documentation that IRS wants to receive. 2) Form 8453 should have a checkbox for the Form 5405 proof of purchase. People will still be able to file electronically -- they'll just mail the back-up with Form 8453, just like they do some other documents.
See the current Form 5405.
See the current Form 8453.
Next steps
So, what can you do, as a taxpayer wanting your credit? First, call the IRS or your legislator and let them know you see this as a problem and that the agency should change the forms or put an easier system in place to screen for refunds. See page on IRS site for proposing solutions.
Second, when you file your 2009 tax return, file it on paper. Include all the purchase documentation with it. You're not going to get the quick electronic refund anyway. This will speed up your return's examination. You'll probably get your refund in a month, instead of four months.
Eva Rosenberg is founder of TaxMama.com and an enrolled agent licensed to represent taxpayers before the IRS. She is the author of the new e-book, "The 100% Home-Based Business Tax Solution." Reach her at taxwatch@gmail.com
Fraud found in home-buyer tax-credit claims
Gold descending a slope of hope
By Eva Rosenberg, MarketWatch
LOS ANGELES (MarketWatch) -- Last November, J. Russell George, the Treasury Inspector General for Tax Administration, warned the Internal Revenue Service that if they didn't ask for documentation from people filing for the first-time home-buyer credit, there would be fraud. The IRS ignored the advice. The result?
The IRS doled out about $620 million to ineligible filers. See TaxWatch.
Big deal, you might say. How does it affect me? Well, thanks to the problems, the IRS is now checking every return by hand. If you're among the millions of people who bought or plan to buy a first home in 2009, be prepared for long delays in getting your tax refund sent to you.
Flaws in the home tax-break program
Amid alleged fraud and administrative problems in the first-time home-buyers tax-credit program, the News Hub panel discusses whether it should be extended.
That's true whether you plan to claim the credit on your 2009 return, or you've amended your 2008 tax return to get your refund sooner. Either way, get ready to wait. TaxMama has been hearing from people whose amended returns were filed as far back as June or July who are still waiting for their money.
What's holding it all up?
TaxMama's office has processed several hundred amended 2008 returns (From 1040X), and a few original 2008 electronically filed returns (Form 1040). Most were processed properly in the normal course of business. Then the calls started. We began to realize there's a huge problem, and it's just beginning. There are three different scenarios we've encountered.
Problem No. 1: The IRS lost some returns. We thought IRS was simply not recording them on the taxpayer record until the amended returns were processed. We reassured clients and callers, advocating patience. After four months, without their 1040X appearing in the system, we investigated, using a Power of Attorney authorization from several taxpayers.
The expert staff at the Practitioner Priority Service hotline can find just about anything -- if it's in the system. They absolutely could not find two of the returns we asked about.
We've received many calls from worried taxpayers about this, but we have definitive proof about two instances. Oddly, both were received at the IRS on June 10 at 12:35 p.m., in the IRS P.O. Box at Kansas City, Mo. 64999. We're still investigating to see how many other returns were lost.
If this happens to you, resubmit a signed copy of your amended return with a cover letter. Tell IRS when and where it was filed. Attach proof if you have it. (We have USPS tracking codes for each of the hundreds of returns, and can print out the proof of delivery.) Request your resubmission be placed at the head of the processing queue, since it was filed months ago and was lost somewhere inside IRS. Attach proof of the purchase of your home. Send your resubmission to IRS's street address, rather than the P.O. Box. Call the IRS to get it: (800) 829-1040.
Problem No. 2. Some people are getting too much money. We heard this a few times. One person provided proof. The Form 5405 (to claim the first-time home-buyer credit) we prepared called for a refund of $3,232. This taxpayer found $8,086 deposited into his bank account! He provided us with a copy of the IRS letter informing him his refund was approved for $8,000.
If this happens to you, if you receive the payments by check, the IRS says don't cash it, to avoid possible interest charges. Call the IRS at (800) 829-1040 or send a letter explaining the matter to the IRS center where you filed the return. Include the Social Security number, tax year and name as shown on the return. IRS does not say how long it will take to get your money back. TaxMama says: If you want the money now, cash the check. Send the IRS the difference. You'll have to pay a little interest.
If you receive the payment by direct deposit: Promptly write a check for the excess and send it (and a note explaining the situation) to the IRS at the center where you filed or e-filed your return. Expect to be charged interest.
Problem No. 3. The big problem. Once the IRS realized that fraud was taking place, they acted quickly to curtail the fraud. How? By auditing every request for the credit. Form 1040s are being audited, as well as the amended returns. An IRS worker must process each and every Form 5405. Can you imagine how long that takes with the modest staff IRS has? Can you imagine the burden and the pressure on the IRS staff wading their way through this?
Kirsten Helgeson, a public relations professional in Milwaukee, Wis., was smart enough to have her accountant put her 2008 tax return on extension, knowing she was about to buy a house. She filed on July 3, 2009. She just received her tax-credit check in the mail on Oct. 19. IRS requested proof of purchase from her a few weeks after she filed her tax return. At first, they were not able to find the documents she sent via certified mail. So, she called the IRS audit unit each and every week to help the case along, until the refund arrived. Helgeson believes that it's only because she did stay on top of her case that she got her money as soon as she did -- in about three-and-a-half months.
If you've been waiting on your refund for more than six weeks and have not heard from the IRS, call them now at (800) 829-1040. Have them find the group that is working on your original or amended tax return. Get the group number and address and send them all the proofs of purchase they could possibly want, to speed up the process. (Or if they can't find your return, see solution to Problem No. 1, above.) Send the information by certified mail, and make sure it's received.
By Eva Rosenberg, MarketWatch
Continued from page 1
Page 1Page 2
Sit back and wait
The IRS's reports about the processing timeframe are not consistent. The official party line is still 12 to 16 weeks. A speaker at the recent IRS Tax Forum in Atlanta said it was at least 20 weeks. If you're considering filing an amended 2008 return to get your refund more quickly, don't bother. But for those who are amending 2008 returns for other reasons, go ahead and include the proof of purchase documentation with the amended return. See the list of documents the IRS is demanding on TaxQuips.com.
What will happen in 2010?
IRS has not updated the instructions to Form 5405. New homeowners in 2009 are not being instructed to send proof that they purchased their home, or proof of being first-time home buyers. Thus, every single tax return that requests the first-time home-buyer credit will be held back and processed manually. Expect your refund to be delayed three to four months.
This problem could be prevented easily right now. Doing this would save thousands of staff hours, and avoid many angry taxpayer calls: The IRS simply has to change two forms and their related instructions: 1) Form 5405 should have a box to check to indicate that proof of purchase is being sent to IRS via Form 8453. Put information into the instructions for Form 5405 spelling out the documentation that IRS wants to receive. 2) Form 8453 should have a checkbox for the Form 5405 proof of purchase. People will still be able to file electronically -- they'll just mail the back-up with Form 8453, just like they do some other documents.
See the current Form 5405.
See the current Form 8453.
Next steps
So, what can you do, as a taxpayer wanting your credit? First, call the IRS or your legislator and let them know you see this as a problem and that the agency should change the forms or put an easier system in place to screen for refunds. See page on IRS site for proposing solutions.
Second, when you file your 2009 tax return, file it on paper. Include all the purchase documentation with it. You're not going to get the quick electronic refund anyway. This will speed up your return's examination. You'll probably get your refund in a month, instead of four months.
Eva Rosenberg is founder of TaxMama.com and an enrolled agent licensed to represent taxpayers before the IRS. She is the author of the new e-book, "The 100% Home-Based Business Tax Solution." Reach her at taxwatch@gmail.com
Monday, October 19, 2009
California State Senate Approves $10,000 Tax Credit for New Home Buyers
From the Sacramento Bee:
A shattered California home building industry received a boost Wednesday when the state Senate voted to extend a popular $10,000 tax credit that fueled thousands of new-home sales last spring and summer.
The Senate voted 35-1 to reauthorize the use of $30 million in credits not awarded during the first program. That should allow the state to give tax credits to about 4,300 more buyers of new unoccupied homes, many of which are in inland areas of California including the Central Valley. Eligible buyers would get a maximum of $3,333 in credits for each of the next three years.
Senate Bill X3 37 goes now to the Assembly, which is expected to consider it next week. It must pass that legislative body and be signed by Gov. Arnold Schwarzenegger to become law. But the Assembly approved an earlier version of the bill by wide margins and the governor has said he favors the buyer tax credit as a stimulus to the economy.
"This tax credit worked so well that in just four months it was gone," said Sen. Ray Ashburn, R-Bakersfield, author of SB X3 37. "This is a good program that assisted people in buying homes and sharing in the American dream."
More than 10,600 buyers of new homes were approved for the tax credit before the state Franchise Tax Board stopped taking applications July 2. Many buyers combined it with a federal $8,000 tax credit for first-time homebuyers to claim up to $18,000.
A shattered California home building industry received a boost Wednesday when the state Senate voted to extend a popular $10,000 tax credit that fueled thousands of new-home sales last spring and summer.
The Senate voted 35-1 to reauthorize the use of $30 million in credits not awarded during the first program. That should allow the state to give tax credits to about 4,300 more buyers of new unoccupied homes, many of which are in inland areas of California including the Central Valley. Eligible buyers would get a maximum of $3,333 in credits for each of the next three years.
Senate Bill X3 37 goes now to the Assembly, which is expected to consider it next week. It must pass that legislative body and be signed by Gov. Arnold Schwarzenegger to become law. But the Assembly approved an earlier version of the bill by wide margins and the governor has said he favors the buyer tax credit as a stimulus to the economy.
"This tax credit worked so well that in just four months it was gone," said Sen. Ray Ashburn, R-Bakersfield, author of SB X3 37. "This is a good program that assisted people in buying homes and sharing in the American dream."
More than 10,600 buyers of new homes were approved for the tax credit before the state Franchise Tax Board stopped taking applications July 2. Many buyers combined it with a federal $8,000 tax credit for first-time homebuyers to claim up to $18,000.
Your Mortgage News SourceFirst Time Home Buyer Tax Credit Extension Becoming a Reality?
Subprime Blogger
Your Mortgage News SourceFirst Time Home Buyer Tax Credit Extension Becoming a Reality?
Posted on
October 18, 2009
When the idea of the first time home buyer tax credit extension was first introduced there were many skeptics, now it many becoming a reality. Diana Olick of CNBC wrote a column on Friday that pointed out many reasons as to why the tax credit extension could happen. When Diana asked FHA commissoner David Stevens in an interview about the extension he said “We’re looking at the first time home buyer tax credit. It’s had an impact. It’s being measured. The administration will come out with a recommendation and their position on where we stand on the tax credit. We’ll support that position.”
We have seen great interest in the idea of an extension of the tax credit on Subprime Blogger. We would like to thank all the readers who have read and responded to our articles. The goal is to get 10,000 votes in favor of an extension and possible expansion of the tax credit. If we get enough votes we can take this to government officials and let them know how the public feels. If you would like to help please vote at the following poll:
First Time Home Buyers Tax Credit Extension Poll.
Treasury Secretary Timothy Geithner also hinted several times in an interview with Maria Bartiromo that there is the possibility of a first time home buyers tax credit extension. He did not come out a say it point blank but he did say that he did not want our country to make the same mistakes that other countries have mad by “putting the brakes on too earlier” when it comes to the stimulus.
Last week we found out that the Congress’ Joint Committee on taxation estimated the cost of an extension and expansion of this tax credit would cost $16.7 billion. The expansion would included all home buyers and would raise the income maximum to $150,000 for individuals and $300,000 for couples. Many people working in the real estate industry thinks this is money well spent because a great deal of business is coming from the advantages of this tax credit.
Please return to Subprime Blogger to get all of your up-to-minute information on the first time home buyers tax credit extension. We will be sure to relay all the information to you as soon as we get it. As always, please make sure to return to Subprime Blogger for all your mortgage and financial news. To stay up to date on the current state of finances make sure to bookmark the current news category below.
Current News
Author: Jesse Wojdylo
Your Mortgage News SourceFirst Time Home Buyer Tax Credit Extension Becoming a Reality?
Posted on
October 18, 2009
When the idea of the first time home buyer tax credit extension was first introduced there were many skeptics, now it many becoming a reality. Diana Olick of CNBC wrote a column on Friday that pointed out many reasons as to why the tax credit extension could happen. When Diana asked FHA commissoner David Stevens in an interview about the extension he said “We’re looking at the first time home buyer tax credit. It’s had an impact. It’s being measured. The administration will come out with a recommendation and their position on where we stand on the tax credit. We’ll support that position.”
We have seen great interest in the idea of an extension of the tax credit on Subprime Blogger. We would like to thank all the readers who have read and responded to our articles. The goal is to get 10,000 votes in favor of an extension and possible expansion of the tax credit. If we get enough votes we can take this to government officials and let them know how the public feels. If you would like to help please vote at the following poll:
First Time Home Buyers Tax Credit Extension Poll.
Treasury Secretary Timothy Geithner also hinted several times in an interview with Maria Bartiromo that there is the possibility of a first time home buyers tax credit extension. He did not come out a say it point blank but he did say that he did not want our country to make the same mistakes that other countries have mad by “putting the brakes on too earlier” when it comes to the stimulus.
Last week we found out that the Congress’ Joint Committee on taxation estimated the cost of an extension and expansion of this tax credit would cost $16.7 billion. The expansion would included all home buyers and would raise the income maximum to $150,000 for individuals and $300,000 for couples. Many people working in the real estate industry thinks this is money well spent because a great deal of business is coming from the advantages of this tax credit.
Please return to Subprime Blogger to get all of your up-to-minute information on the first time home buyers tax credit extension. We will be sure to relay all the information to you as soon as we get it. As always, please make sure to return to Subprime Blogger for all your mortgage and financial news. To stay up to date on the current state of finances make sure to bookmark the current news category below.
Current News
Author: Jesse Wojdylo
Thursday, October 15, 2009
Congress appears ready to extend home-buyer credit
Thursday, October 15, 2009
Stephen Koff
Plain Dealer Bureau Chief
Washington- First-time buyers still might want to find their dream houses quickly so they can get up to $8,000 in a tax credit, but Congress could soon grant them more time.
The home buyer credit is scheduled to expire Nov. 30. But with 20 separate bills proposing extensions, according to a count by the National Association of Realtors, it's clear that many in Congress want to keep the program going. Some even want to expand the income rules, allowing upper-middle-class home buyers to participate.
Currently, individuals can make no more than $75,000 and couples no more than $150,000 to get the full $8,000 credit, which was designed for first-time buyers. A new measure proposed by Sens. Johnny Isakson, Republican of Georgia, and Chris Dodd, Democrat of Connecticut, would raise the limits to $150,000 for individuals and $300,000 for couples.
It would not matter if this was their first or fifth purchase, as long as the house was for their principal residence. Isakson and Dodd could offer their measure as soon as next week as an amendment to a bill extending unemployment compensation, an Isakson spokeswoman said.
"Sen. Isakson has argued that the first-time buyer credit helped the first-time buyer, but it hasn't helped the move-up buyer - the person who had a job transfer from Atlanta to Cleveland" and must buy a new home, said Sheridan Watson, Isakson's press secretary.
An expansion of the program's income limits would probably trigger debate about government subsidies. Yet putting aside income limits, there's no shortage of lawmakers who favor extending the tax credit in one form or another, reasoning that it could speed up the economic recovery. That bolsters the chances of some form of extension passing.
Sen. Sherrod Brown, Democrat of Ohio, backs a bill to extend the existing program until May 31. Isakson, too, supported it earlier. Asked if he would support inclusion of higher incomes, Brown said it might be too expensive from a budgetary standpoint. But "I'm not going to close the door on any proposals," Brown added.
Watson said a review by the congressional Joint Committee on Taxation found that the Dodd-Isakson measure, expanding the program and extending it until June 30, would cost $16.7 billion. Simply extending the current program without a change in income limits would cost about $1 billion a month, or $6 billion until May 31, Brown said.
The program was created in 2008 to spur the troubled housing market, and was extended as part of this year's economic recovery act. Brown said that by the end of August, it had already helped more than 1.4 million Americans buy homes, 48,000 of them in Ohio.
The White House is still reviewing the economic impact, but Democratic congressional leaders appear to support an extension. So does House Minority Leader John Boehner, of West Chester, Ohio, who early this year proposed an extension as an alternative to President Barack Obama's economic stimulus package, according to Boehner spokesman Cory Fritz.
Stephen Koff
Plain Dealer Bureau Chief
Washington- First-time buyers still might want to find their dream houses quickly so they can get up to $8,000 in a tax credit, but Congress could soon grant them more time.
The home buyer credit is scheduled to expire Nov. 30. But with 20 separate bills proposing extensions, according to a count by the National Association of Realtors, it's clear that many in Congress want to keep the program going. Some even want to expand the income rules, allowing upper-middle-class home buyers to participate.
Currently, individuals can make no more than $75,000 and couples no more than $150,000 to get the full $8,000 credit, which was designed for first-time buyers. A new measure proposed by Sens. Johnny Isakson, Republican of Georgia, and Chris Dodd, Democrat of Connecticut, would raise the limits to $150,000 for individuals and $300,000 for couples.
It would not matter if this was their first or fifth purchase, as long as the house was for their principal residence. Isakson and Dodd could offer their measure as soon as next week as an amendment to a bill extending unemployment compensation, an Isakson spokeswoman said.
"Sen. Isakson has argued that the first-time buyer credit helped the first-time buyer, but it hasn't helped the move-up buyer - the person who had a job transfer from Atlanta to Cleveland" and must buy a new home, said Sheridan Watson, Isakson's press secretary.
An expansion of the program's income limits would probably trigger debate about government subsidies. Yet putting aside income limits, there's no shortage of lawmakers who favor extending the tax credit in one form or another, reasoning that it could speed up the economic recovery. That bolsters the chances of some form of extension passing.
Sen. Sherrod Brown, Democrat of Ohio, backs a bill to extend the existing program until May 31. Isakson, too, supported it earlier. Asked if he would support inclusion of higher incomes, Brown said it might be too expensive from a budgetary standpoint. But "I'm not going to close the door on any proposals," Brown added.
Watson said a review by the congressional Joint Committee on Taxation found that the Dodd-Isakson measure, expanding the program and extending it until June 30, would cost $16.7 billion. Simply extending the current program without a change in income limits would cost about $1 billion a month, or $6 billion until May 31, Brown said.
The program was created in 2008 to spur the troubled housing market, and was extended as part of this year's economic recovery act. Brown said that by the end of August, it had already helped more than 1.4 million Americans buy homes, 48,000 of them in Ohio.
The White House is still reviewing the economic impact, but Democratic congressional leaders appear to support an extension. So does House Minority Leader John Boehner, of West Chester, Ohio, who early this year proposed an extension as an alternative to President Barack Obama's economic stimulus package, according to Boehner spokesman Cory Fritz.
Wednesday, October 14, 2009
Ten Questions First-Time Buyers Can Ask a Home Inspector
SAN DIEGO, CA -- 10/13/09 -- Homebuyers in a rush to close on a new home before the deadline for the $8000 first-time buyer tax credit expires on December 1 won't save any time by skipping a complete home inspection of their prospective purchase. By doing so, they might incur thousands of dollars of liability and years of heartache from costly problems a home inspection would have uncovered.
A home inspection is a thorough examination of a property's structural and mechanical systems from foundation to roof. It includes careful checkups of the basement, attic, walls, ceilings, doors, interior plumbing, heating, cooling and electrical systems. The work is performed by an independent, state-licensed home inspector or building contractor, who also looks for fire, health and safety hazards.
It's easy to find a good home inspector near you. Closing.com, the largest and most comprehensive online source of information about real estate closing-related services ever assembled online, lists home inspectors in counties across the nation.
Buyers should shop around and interview at least three inspectors. Get more than one estimate and check references. Remember, a great deal is at stake in your inspection and the least expensive quote may not yield the best service. Ten questions to ask a home inspector before you decide.
If you are buying a property, be sure to include a contingency clause in the purchase agreement that makes it possible for you to withdraw from or renegotiate the sale if severe structural damage is discovered. It's also important to take a final walk through of the property to make sure that all outstanding repairs are completed to your satisfaction before you sign the paperwork that closes the transaction.
"Buying a home without an inspection is foolish and unnecessary. First-time homebuyers who think they can gain a day or two toward qualifying for the credit by forgoing an inspection may find that they have made a very expensive mistake," said Tony Farwell, CEO of ClosingCorp.
Find out more about home inspections and hiring a home inspection service with this easy-to-use Home Inspection Checklist available free on the Closing.com site. About Closing.com
Based in La Jolla, CA, Closing.com is the most comprehensive source for real estate closing services on the Web. The site empowers consumers and real estate professionals to shop, compare and evaluate real estate closing services in their area. Visitors to Closing.com can estimate their closing costs, learn more about a real estate provider's products, services and rates and make direct inquiries online.
A home inspection is a thorough examination of a property's structural and mechanical systems from foundation to roof. It includes careful checkups of the basement, attic, walls, ceilings, doors, interior plumbing, heating, cooling and electrical systems. The work is performed by an independent, state-licensed home inspector or building contractor, who also looks for fire, health and safety hazards.
It's easy to find a good home inspector near you. Closing.com, the largest and most comprehensive online source of information about real estate closing-related services ever assembled online, lists home inspectors in counties across the nation.
Buyers should shop around and interview at least three inspectors. Get more than one estimate and check references. Remember, a great deal is at stake in your inspection and the least expensive quote may not yield the best service. Ten questions to ask a home inspector before you decide.
If you are buying a property, be sure to include a contingency clause in the purchase agreement that makes it possible for you to withdraw from or renegotiate the sale if severe structural damage is discovered. It's also important to take a final walk through of the property to make sure that all outstanding repairs are completed to your satisfaction before you sign the paperwork that closes the transaction.
"Buying a home without an inspection is foolish and unnecessary. First-time homebuyers who think they can gain a day or two toward qualifying for the credit by forgoing an inspection may find that they have made a very expensive mistake," said Tony Farwell, CEO of ClosingCorp.
Find out more about home inspections and hiring a home inspection service with this easy-to-use Home Inspection Checklist available free on the Closing.com site. About Closing.com
Based in La Jolla, CA, Closing.com is the most comprehensive source for real estate closing services on the Web. The site empowers consumers and real estate professionals to shop, compare and evaluate real estate closing services in their area. Visitors to Closing.com can estimate their closing costs, learn more about a real estate provider's products, services and rates and make direct inquiries online.
Investors Snatching Up Foreclosures
Reported By Dave D'Marko
ORLANDO -- The number of homes for sale in Orlando is at its lowest point in three years.
Realtors are working the phones and trying to find new listings for first-time homebuyers. But it's getting more difficult.
At the beginning of the year, the inventory of homes for sale was estimated at taking 22 months to sell -- even if no new listings came available. Now that number is at a three-year low of less than 8 months.
About half of all sales are foreclosures.
"We're also getting a lot of multiple offers on the bank owned homes. We are writing two to seven contracts before we actually get a home for somebody," Sampson said.
But the Housing and Urban Development Secretary fears too many homes are being snatched up by investors.
"Even when there are many buyers that come into neighborhoods that have had concentrated foreclosures, the houses get rented out, they aren't renovated up to a standard that the community might hope for," said Shaun Donovan, HUD Secretary.
Donovan was in Orlando Monday with Congressman Alan Grayson touring a home that's part of Orlando's Neighborhood stabilization program.
The City of Orlando got more than $6 million it hopes to buy 30 homes with, fixing them up and then selling them to HUD qualified borrowers.
Meanwhile, the crunch is on for first-time homebuyers trying to make the Nov. 30 deadline.Homes often take 30 to 45 days to close.
"We are all just trying to get through this together, we've become more advisors and educators, in this business than we ever before for both buyers and sellers," Sampson said.
On Real Estate: Tax credit deadline approaches, talks of extending credit swirl
By Jim Hagerty
Staff Writer
As expected, millions of first-time home buyers jumped at the chance to purchase when the federal government began doling out up to $8,000 on every first-time sale. Some, however, have been left to battle stringent underwriting and lack of loan programs. With the deadline to purchase using the first-time tax credit inching closer, it’s fairly clear a buyer’s market is still ripe for the picking in most areas of the U.S.
First-time buyers must close by Nov. 30 to qualify for the tax credit, part of the American Recovery and Reinvestment Act of 2009.
As expected, the program has created a slight increase in sales since the real estate market hit the skids about two years ago. However, the results are hardly what the Barack Obama administration predicted earlier this year.
To those in the industry, having the tax credit pulled now could send the industry into rewind, especially when the overall economy is still shaky, at best, in most U.S. cities. This is why the National Association of Realtors predicts an onslaught of applicants in the next few weeks. It is also time for the feds to keep abreast of the president’s promise to fix the housing slump.
There’s no secret Obama inherited a hornet’s nest when he took office in January. The American auto and real estate industries were on the brink of implosion, as major banking players on Wall Street were pummeled with losses. The president, in turn, pushed to save the day. That push included billions in federal assistance dollars that many feel should be kept flowing, especially to first-time home buyers. According to the National Association of Realtors, a cry to Congress for an extension of the tax credit is not only being prepared, it may come with a request to increase the credit from $8,000 to $15,000.
Any increase, like anything else, looks wonderful on its face. The feds, on the other hand, will be looking closely at what an extension will cost. Estimates show any increase could come with a $15 billion, or more, price tag. With the current underwriting process taking as long as 60 days on new home loans, a score of tax credit-loaded buyers are stalled waiting for closing dates.
Some states are offering additional assistance programs aimed at sparking the housing market. Zero-interest second liens, rehab loans and 100-percent financing options are making their way back into the financing fold. First-time buyers are still at the mercy of some of the most stringent underwriting in about two decades.
Industry pros say an extension makes sense, especially in areas hit the hardest by the housing crash. With more than 15 percent of the Rockford population out of work and an overflowing housing inventory, an extension of the tax credit makes nothing but sense. However, with unemployment comes a stall in home financing, a problem many cities are facing. Mortgage rates are low, and programs through HUD are attractive, but again, the out-of-work are out of luck.
From the October 14-20, 2009 issue
Staff Writer
As expected, millions of first-time home buyers jumped at the chance to purchase when the federal government began doling out up to $8,000 on every first-time sale. Some, however, have been left to battle stringent underwriting and lack of loan programs. With the deadline to purchase using the first-time tax credit inching closer, it’s fairly clear a buyer’s market is still ripe for the picking in most areas of the U.S.
First-time buyers must close by Nov. 30 to qualify for the tax credit, part of the American Recovery and Reinvestment Act of 2009.
As expected, the program has created a slight increase in sales since the real estate market hit the skids about two years ago. However, the results are hardly what the Barack Obama administration predicted earlier this year.
To those in the industry, having the tax credit pulled now could send the industry into rewind, especially when the overall economy is still shaky, at best, in most U.S. cities. This is why the National Association of Realtors predicts an onslaught of applicants in the next few weeks. It is also time for the feds to keep abreast of the president’s promise to fix the housing slump.
There’s no secret Obama inherited a hornet’s nest when he took office in January. The American auto and real estate industries were on the brink of implosion, as major banking players on Wall Street were pummeled with losses. The president, in turn, pushed to save the day. That push included billions in federal assistance dollars that many feel should be kept flowing, especially to first-time home buyers. According to the National Association of Realtors, a cry to Congress for an extension of the tax credit is not only being prepared, it may come with a request to increase the credit from $8,000 to $15,000.
Any increase, like anything else, looks wonderful on its face. The feds, on the other hand, will be looking closely at what an extension will cost. Estimates show any increase could come with a $15 billion, or more, price tag. With the current underwriting process taking as long as 60 days on new home loans, a score of tax credit-loaded buyers are stalled waiting for closing dates.
Some states are offering additional assistance programs aimed at sparking the housing market. Zero-interest second liens, rehab loans and 100-percent financing options are making their way back into the financing fold. First-time buyers are still at the mercy of some of the most stringent underwriting in about two decades.
Industry pros say an extension makes sense, especially in areas hit the hardest by the housing crash. With more than 15 percent of the Rockford population out of work and an overflowing housing inventory, an extension of the tax credit makes nothing but sense. However, with unemployment comes a stall in home financing, a problem many cities are facing. Mortgage rates are low, and programs through HUD are attractive, but again, the out-of-work are out of luck.
From the October 14-20, 2009 issue
Monday, October 12, 2009
What You Should Know About Buying A First Home
Oct. 11th, 2009
in Real Estate
by John Dashwood
in Real Estate
by John Dashwood
One problem plaguing excited first time home buyers is the deposit for the house of their dreams. If you are one of them, this problem can be resolved with a little help from family or friends or the First Time Homebuyer Credit. But all these are just the beginning of your new life as a homeowner and your responsibilities is just starting.
If you have never owned a home before, you may be eligible for first time buyer programs with government insured loans. These programs often have less stringent requirements for credit ratings and down payments than private lenders. If you are comfortable with your current rent payment, shop for a mortgage payment that will be about the same as your rent. A mortgage payment will help you build equity, a rent payment will not.
The first thing couples should do is to stick to their budget. I f that house so perfect for you but the price is beyond your means, don’t fantasize about job promotions and increased pay and think that you can swing it. Be realistic. Assess the price according to your present not future means. Should you get a pay increase, you can always make modest improvements on the house you bought. In the long term, you increase the value of your home and this will serve you well should you decide to sell your home at the right time.
Young newly-weds are always excited at the prospect of owning a house that they jump into a deal without examining what goes with the mortgage. They take the first offer that looks good on paper without knowing that there are fees and more fees attached to the deal.
Some young buyers may receive help with their down payment from family members. It may be better to try for a government program that waives that down payment. Some state governments also offer first time buyer incentives, so you may want to look into the programs available. A good credit rating will still qualify you for a lower interest rate. Remember that in addition to your down payment, you will need to pay closing costs at the time of sale. Closing costs can be several thousand dollars.
The closing costs include the origination fee from the lender, the cost of title search and any other necessary fees that must be paid by either the buyer, the seller or both before the sale is final. If the home requires repairs, the lender may require that either the buyer or seller set aside funds in an escrow account to insure the repairs will be completed. Be prepared for disappointment. Your lender may find a problem with the home and decline the loan for that reason. VA and HUD insured mortgages have strict regulations for the homes they will finance.
You can compare lenders online. Many will give a quote for their origination fee and current interest rates. It is always best for new homeowners to seek a fixed rate mortgage rather than an adjustable rate or balloon mortgage. Looked for the lowest fixed rate you can qualify for and consider the origination fee and other costs when deciding on a mortgage lender.
After you have done your own personal financial analysis and decided how much you can afford to spend on a house, it is time to start looking around. Don’t put in an offer on the first house you see, check several properties before you make a decision. Chances are you’ll be living there a long time.
About the Author:
If you are looking for more advice about East Lansing mortgage, you should check out this site which has great info about Lansing mortgage company.
Federal Housing Grants To Help You Buy Your First Home!
Oct. 11th, 2009
in Real Estate
Nina Lopp
by Brady Mitchell
You may be interested in acquiring your first home. Then you will have to start to contemplate if you qualify for free grant money from the federal government. There are varied federal grant programs for first time house purchasers that are accessible to home purchasers who pass muster. These grants are very much preferred because if you abide in your house you may not have to concern yourself about returning the assistance money. It is a great way to get extra funding for buying your new property.
When financing is the issue for their property, grants from the federal government are an excellent source. Finding assistance money from the federal government would mean that they do not have to worry about repaying the grant money through additional home mortgage payments. It must also help any home buyer cover their down payment for the home. To qualify for the open assistance money any home buyer needs to be a first time property buyer.
Grant funds can even be used as a down payment for the property to pass muster for the free money needed to be a first time house buyer.
This means that home buyers can not apply for government grants for first time property buyers and use the grant money for additional fees. The assistance money that is granted to they must be used for their particular house purchase.
This means that you can not apply for federal government grant programs for first time home buyers and use the money for something else. The money that is granted to you must be used for your house purchase. If any home buyer is interested in seeing if you qualify for a grant you can go online and find different home buyer grants that are accessible.
If any home buyers are a first time house buyer then you could apply for a federal grant programs grant. There are numerous varied home buyer grants which are available for house buyers, you simply need to do the research and get a housing grant that you pass muster for.
About the Author:
Gavin King is a Middleton REO agent and enjoys writing articles about Boise homes.
Sunday, October 11, 2009
$15,000 First Time Homebuyer Tax Credit on the Way?
Saturday, October 10, 2009
Under this new proposal from ALL home buyers would be considered, not just new or first time her own house. While most agree that the current plan was beneficial to support a housing recovery, many have complained that it didn''t reach as many potential home buyers ready to buy.
Alongside the expansion of ALL home buyers would be the new proposal will also eliminate the existing income qualifications. Current income qualifications have been set up as a roadblock to see the full potentialthe existing tax credit. In order to qualify the full benefits under the current plan, individual taxpayers are porridge annual income less than U.S. $ 75,000 and married couples have incomes below $ 150,000 a pulp.
Some have for the expansion of the power to hold up to 15,000 U.S. dollars. It seems bipartisan support, including Banking Committee Chairman Chris Dodd, D-Conn.
Think you set it to expire, the existing First-Time Homebuyer Tax Credit to 12/1/09. This means that youto close the transaction for the home purchase on 11/30/09. Time is running out.
This is certainly an issue the highest priority on K Street in DC on their return from Labor Day holiday, as many fear the expiration of the current first time home buyer program (or threaten a housing recovery) at least stabilize, which is displayed on the road be. As much as 40% of house purchase transactions in 2009 have the first time, her own house rushed to take advantage of existing taxCredit.
Stay tuned!
Saturday, October 10, 2009
'Magic number': Loans below 5% drive home sales, refinancing
By Sue McAllister
smcallister@mercurynews.com
Real Estate
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Obama administration's mortgage relief plan hits goal earlyMortgage rates remain below 5 percentOct 7:
Bargain-priced homes expected to drive Silicon Valley market next yearHome loan rates below 5 percent have sent first-time buyers and would-be refinancers flowing into local lending offices to take advantage of the best deals in five months.
"That magic number does seem to be 5 percent," said Brad Blackwell, national sales manager for Wells Fargo Home Mortgage, who said his company has seen applications jump in the past few weeks. "It's a psychological barrier that, once crossed, people jump in."
The national average rate for 30-year, fixed-rate loans fell to 4.87 percent this week, down from 4.94 percent last week, according to a report Thursday from Freddie Mac, a government-run source of mortgage financing. The last time the average rate was lower was in May, at 4.82 percent.
Average interest rates for 30-year "jumbo" loans, those of more than $729,750, were 6.51 percent this week, up from 6.46 percent last week, according to Bankrate.com.
Cathy Warshawsky of Bay Area Loan said fence-sitting customers began calling about two weeks ago as interest rates skirted 5 percent. Most of her customers are refinancing to lower their payments, she said.
But other local brokers said there are plenty of customers hoping to buy homes soon, including some trying to close deals before Nov. 30, when the federal tax credit of up to $8,000 for first-time homebuyers is set to expire.
Though 45- to 60-day escrows are common lately — with banks requiring much
documentation and new appraisal rules often resulting in delays — Warshawsky said it's conceivable that buyers jumping in now could close loans by the tax-credit deadline. But that's only if the transaction is for a "regular," non-bank-owned property.
"If you're not dealing with a foreclosure property, you can get it done in 30 days," she said.
In Washington, D.C., House Speaker Nancy Pelosi said Thursday that lawmakers might extend the credit, Bloomberg News reported.
"The question is, would that be just first-time homeowners or would you open it up to other purchasers of homes?" Pelosi asked.
Sandie Day, who works in human resources for Santa Clara County, said low rates prompted her to refinance her longtime West San Jose home. Using a new loan of about $340,000, she's consolidating her first and second mortgages, plus taking some cash out of her equity to pay off debt and do energy-efficiency home improvements.
When her loan closes in a couple of weeks, the rate will actually be slightly higher than what she had on her first mortgage, "but in the long term, it's going to be better for me," she said. "I just really want to consolidate everything I have and make a strong financial plan."
San Jose mortgage broker Rob McCarthy of The Honte Group said that for customers with stellar credit scores and 40 percent equity in their properties, refinancing loans could be had for as little as 4.75 percent this week, with no points paid upfront. A point is equal to 1 percent of the loan amount; some borrowers opt to pay points in exchange for lower interest rates.
Nationwide, homeowners and buyers appear to be responding to the lure of cheap financing. A report this week from the Mortgage Brokers Association said that two-thirds of loan applications filed in the week ending Oct. 2 were for refinances. Applications for refi's shot up 18 percent compared with the week before, and applications for home purchase loans rose 13 percent.
Tracie Southerland of Opes Advisors, a lender in Palo Alto, said the era of super-low mortgage rates will come to an end in the months to come, as the Federal Reserve gradually stops buying the mortgage-backed securities that provide financing for the vast majority of mortgages nationwide. The Fed announced that plan last month, without specifying when the pullback will begin.
"There is concern that interest rates will go up as that purchasing slows down," she said. "That is triggering people to think, 'If I'm going to take some action, I should probably take it now' "
smcallister@mercurynews.com
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Oct 8:
Obama administration's mortgage relief plan hits goal earlyMortgage rates remain below 5 percentOct 7:
Bargain-priced homes expected to drive Silicon Valley market next yearHome loan rates below 5 percent have sent first-time buyers and would-be refinancers flowing into local lending offices to take advantage of the best deals in five months.
"That magic number does seem to be 5 percent," said Brad Blackwell, national sales manager for Wells Fargo Home Mortgage, who said his company has seen applications jump in the past few weeks. "It's a psychological barrier that, once crossed, people jump in."
The national average rate for 30-year, fixed-rate loans fell to 4.87 percent this week, down from 4.94 percent last week, according to a report Thursday from Freddie Mac, a government-run source of mortgage financing. The last time the average rate was lower was in May, at 4.82 percent.
Average interest rates for 30-year "jumbo" loans, those of more than $729,750, were 6.51 percent this week, up from 6.46 percent last week, according to Bankrate.com.
Cathy Warshawsky of Bay Area Loan said fence-sitting customers began calling about two weeks ago as interest rates skirted 5 percent. Most of her customers are refinancing to lower their payments, she said.
But other local brokers said there are plenty of customers hoping to buy homes soon, including some trying to close deals before Nov. 30, when the federal tax credit of up to $8,000 for first-time homebuyers is set to expire.
Though 45- to 60-day escrows are common lately — with banks requiring much
documentation and new appraisal rules often resulting in delays — Warshawsky said it's conceivable that buyers jumping in now could close loans by the tax-credit deadline. But that's only if the transaction is for a "regular," non-bank-owned property.
"If you're not dealing with a foreclosure property, you can get it done in 30 days," she said.
In Washington, D.C., House Speaker Nancy Pelosi said Thursday that lawmakers might extend the credit, Bloomberg News reported.
"The question is, would that be just first-time homeowners or would you open it up to other purchasers of homes?" Pelosi asked.
Sandie Day, who works in human resources for Santa Clara County, said low rates prompted her to refinance her longtime West San Jose home. Using a new loan of about $340,000, she's consolidating her first and second mortgages, plus taking some cash out of her equity to pay off debt and do energy-efficiency home improvements.
When her loan closes in a couple of weeks, the rate will actually be slightly higher than what she had on her first mortgage, "but in the long term, it's going to be better for me," she said. "I just really want to consolidate everything I have and make a strong financial plan."
San Jose mortgage broker Rob McCarthy of The Honte Group said that for customers with stellar credit scores and 40 percent equity in their properties, refinancing loans could be had for as little as 4.75 percent this week, with no points paid upfront. A point is equal to 1 percent of the loan amount; some borrowers opt to pay points in exchange for lower interest rates.
Nationwide, homeowners and buyers appear to be responding to the lure of cheap financing. A report this week from the Mortgage Brokers Association said that two-thirds of loan applications filed in the week ending Oct. 2 were for refinances. Applications for refi's shot up 18 percent compared with the week before, and applications for home purchase loans rose 13 percent.
Tracie Southerland of Opes Advisors, a lender in Palo Alto, said the era of super-low mortgage rates will come to an end in the months to come, as the Federal Reserve gradually stops buying the mortgage-backed securities that provide financing for the vast majority of mortgages nationwide. The Fed announced that plan last month, without specifying when the pullback will begin.
"There is concern that interest rates will go up as that purchasing slows down," she said. "That is triggering people to think, 'If I'm going to take some action, I should probably take it now' "
House Support Grows For Extension Of $8K Home Buyer Credit
By Corey Boles, Of DOW JONES NEWSWIRES
By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com
(Martin Vaughan contributed to this article.)
(END) Dow Jones Newswires
10-08-091515ET
Copyright (c) 2009 Dow Jones & Company, Inc.
WASHINGTON -(Dow Jones)- Several senior House lawmakers expressed support Thursday for extending an $8,000 tax credit for first-time home buyers to continue providing assistance to the still fragile U.S. housing market.
House Speaker Nancy Pelosi, D-Calif., said an extension of the credit, which is set to expire on Dec. 1, along with other measures to help the fledgling economic recovery, are being considered by House leadership.
Pelosi said there is some consideration of extending the credit to all buyers purchasing a principal residence, but that no decisions had been made yet.
Two other members of the Democratic leadership team both said they would support an extension of the existing credit, but hadn't made up their minds as to whether they wanted to extend to a larger group of buyers.
Reps. Chris Van Hollen, D-Md., and John Larson, D-Conn., said they wanted to see how much a wider tax credit would cost first.
Ways and Means Chairman Charles Rangel, D-N.Y., the House's top tax writer, also said Thursday he supports extending the credit.
However, he said he doesn't believe eligibility should be expanded beyond first-time home buyers. "There's no question I think it should be extended. How long, I haven't discussed," Rangel told reporters outside his Capitol office.
A top Republican said the party would also be willing to consider measures that would help to create jobs.
Rep. Eric Cantor, R-Va., the minority whip, said he had long supported both an extension of the home buyer credit to all principal residences, and he said he favors increasing the value of the credit to $15,000.
Rep. Louise Slaughter, D-N.Y., the chair of the powerful House Rules Committee, said she wasn't in favor of an extension, saying it would cost too much taxpayer money and wasn't the most effective means of creating new jobs.
Instead, Slaughter said she thought Congress should pass a long-term extension of the Surface Transportation Board authority, which would direct hundreds of billions of dollars to road, bridge and sewer system construction and repair projects.
Other lawmakers, including Larson, echoed this call.
In the Senate, Majority Leader Harry Reid, D-Nev., has said he supports an extension of the existing home buyer credit. It is unclear whether he would also vote for an increase in the its size or scope.
Pelosi said that other measures being considered include increasing the net operating loss carry-back for small businesses from two to five years, and allowing businesses to write off equipment purchases more quickly.
She said the list isn't an exhaustive one of the components lawmakers are considering, but illustrated the types of measures they are looking at to boost jobs.
Rangel said he was waiting to receive further guidance from the White House before talking publicly about other job-creation measures.
Every Democratic lawmaker interviewed for this article insisted they hadn't given up on the $787 billion economic stimulus plan passed by Congress in February, saying they believed it had saved jobs, and would continue to create or save new jobs.
Cantor, on the other hand, said the fact that Democrats are considering spending more money to boost the job market was convincing evidence of the failure of the first stimulus plan.
(Martin Vaughan contributed to this article.)
(END) Dow Jones Newswires
10-08-091515ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Saturday, September 26, 2009
Tips for First Time Home Buyers
Tips for First Time Home Buyers after the Mortgage Collapse
After the big mortgage collapse a couple months back individuals applying for a home loan for the first time or people with less than perfect credit will find that it is not so easy to be approved any more. In fact, getting approved for a home loan just became a lot stricter because banks and lenders are more cautious than ever after the big fall out. So, what are some tips for first time homebuyers or individuals with less than perfect credit to help them with approval? You will find some great suggestions below.
Don’t Charge
The first thing you should do is make sure you hide all of your credit cards and stop charging! The last thing you want to do is to be charging on your credit cards when you apply for a home loan application. So make sure you only buy what you can afford and do not use your credit card. This will show the loan officer that you are responsible with your credit and will help significantly with your loan application.
Improve Your Credit
Another tip is to start working on your credit score. No matter what your credit score is you likely have some room to improve it. There are very few people that have a credit score so high they do not need to work on improving it. A couple of ways you can start improving your credit include paying off high balances, not charging on your credit cards, not applying for additional credit, and more. If you are lowering your overall debt and not accumulating more then this will show lenders that you are prepared for a home loan. Keep in mind that it will take time to reduce your dent and it will take time for your credit score to improve. But if you focus on it you will have no problem taking your credit score up a few points or a few hundred.
Save for a Down payment
Another great suggestion is to save for a down payment. Many home loans are available with no to little money down. If you have a large sum of money, at least $10,000 that you can invest in your home then that will increase the odds that you will be approved for a home loan. Coming up with a large sum of money may seem difficult, but if you are able to save an extra $400 a month then in two years you will have what you need. That is not that big of a sacrifice if you realize you will be getting your own home!
These are just a few suggestions to help first time homeowners receive approval for their home loan. If you begin now and work on your credit then you will be able to receive a home loan to buy the home of your dreams. It may be a little more difficult now than it was in days past but that is just the way it is. Start putting these tips into practice and in no time at all you will be able to buy your own home!
Posted in Finance.
By dashez – September 24, 2009
After the big mortgage collapse a couple months back individuals applying for a home loan for the first time or people with less than perfect credit will find that it is not so easy to be approved any more. In fact, getting approved for a home loan just became a lot stricter because banks and lenders are more cautious than ever after the big fall out. So, what are some tips for first time homebuyers or individuals with less than perfect credit to help them with approval? You will find some great suggestions below.
Don’t Charge
The first thing you should do is make sure you hide all of your credit cards and stop charging! The last thing you want to do is to be charging on your credit cards when you apply for a home loan application. So make sure you only buy what you can afford and do not use your credit card. This will show the loan officer that you are responsible with your credit and will help significantly with your loan application.
Improve Your Credit
Another tip is to start working on your credit score. No matter what your credit score is you likely have some room to improve it. There are very few people that have a credit score so high they do not need to work on improving it. A couple of ways you can start improving your credit include paying off high balances, not charging on your credit cards, not applying for additional credit, and more. If you are lowering your overall debt and not accumulating more then this will show lenders that you are prepared for a home loan. Keep in mind that it will take time to reduce your dent and it will take time for your credit score to improve. But if you focus on it you will have no problem taking your credit score up a few points or a few hundred.
Save for a Down payment
Another great suggestion is to save for a down payment. Many home loans are available with no to little money down. If you have a large sum of money, at least $10,000 that you can invest in your home then that will increase the odds that you will be approved for a home loan. Coming up with a large sum of money may seem difficult, but if you are able to save an extra $400 a month then in two years you will have what you need. That is not that big of a sacrifice if you realize you will be getting your own home!
These are just a few suggestions to help first time homeowners receive approval for their home loan. If you begin now and work on your credit then you will be able to receive a home loan to buy the home of your dreams. It may be a little more difficult now than it was in days past but that is just the way it is. Start putting these tips into practice and in no time at all you will be able to buy your own home!
Posted in Finance.
By dashez – September 24, 2009
Clock Is Ticking for First-Home Buyers
$8,000 Tax Credit Is Set to Expire Nov. 30 -- Unless Congress Extends It
First-time home buyers are scrambling to take advantage of an $8,000 tax credit set to expire in coming weeks, while Congress considers whether to extend the program or risk removing what may be one of the few supports underpinning the housing market.
Data released Thursday show how delicate the housing market is these days. Sales of existing homes unexpectedly dipped 2.7 percent in August from July after four months of steady gains, according to the National Association of Realtors.
The tax credit was designed to help jump-start the housing market, and it has been credited by the real estate industry for boosting sales. Roughly 1.4 million people took advantage of the program since its enactment early last year, according to the IRS, and more are rushing to do the same.
Given that it can take more than a month to close on a home after a contract is accepted, prospective buyers are running out of time. The program ends Nov. 30.
Robbie Pettit has made offers on six Prince William County homes in the past two months in a desperate effort to beat the clock. But each time, he's been outbid by competing house hunters equally eager to cash in on the program, he said.
"I'm praying for an extension of this credit, praying," said Pettit, 27, who is living with his wife, three children and their dog in a cramped, rented townhouse.
Lawmakers have offered nearly two dozen bills to extend the tax credit or expand it. A bipartisan group that includes Senate Majority Leader Harry M. Reid (D-Nev.), have offered a measure that would maintain the tax credit in its current form until June.
But vigorous lobbying by the real estate industry to keep the credit in place has yielded no action on any of the bills, and the Obama administration is mum on its position.
Supporters of the tax credit argue that it has succeeded in energizing buyers and helping clear a glut of lower-priced homes, including foreclosed properties, that are dragging down home values.
But critics, including some policy analysts at Washington think tanks, balk at the program's projected $15 billion price tag, and they do not want taxpayers to be further burdened. These dissenters attribute the previous pickup in sales to plunging home prices and record-low interest rates. The tax credit, they say, is nothing more than a freebie for people who were going to buy regardless.
Marisa Sandler and her fiance expect to close on a condominium in Friendship Heights on Friday. They plan to use the tax credit to invest in the stock market or pay down their mortgage principal.
"We probably would have bought without the tax credit, but it was the extra push that made us do it this year," she said.
First-time home buyers are scrambling to take advantage of an $8,000 tax credit set to expire in coming weeks, while Congress considers whether to extend the program or risk removing what may be one of the few supports underpinning the housing market.
Data released Thursday show how delicate the housing market is these days. Sales of existing homes unexpectedly dipped 2.7 percent in August from July after four months of steady gains, according to the National Association of Realtors.
The tax credit was designed to help jump-start the housing market, and it has been credited by the real estate industry for boosting sales. Roughly 1.4 million people took advantage of the program since its enactment early last year, according to the IRS, and more are rushing to do the same.
Given that it can take more than a month to close on a home after a contract is accepted, prospective buyers are running out of time. The program ends Nov. 30.
Robbie Pettit has made offers on six Prince William County homes in the past two months in a desperate effort to beat the clock. But each time, he's been outbid by competing house hunters equally eager to cash in on the program, he said.
"I'm praying for an extension of this credit, praying," said Pettit, 27, who is living with his wife, three children and their dog in a cramped, rented townhouse.
Lawmakers have offered nearly two dozen bills to extend the tax credit or expand it. A bipartisan group that includes Senate Majority Leader Harry M. Reid (D-Nev.), have offered a measure that would maintain the tax credit in its current form until June.
But vigorous lobbying by the real estate industry to keep the credit in place has yielded no action on any of the bills, and the Obama administration is mum on its position.
Supporters of the tax credit argue that it has succeeded in energizing buyers and helping clear a glut of lower-priced homes, including foreclosed properties, that are dragging down home values.
But critics, including some policy analysts at Washington think tanks, balk at the program's projected $15 billion price tag, and they do not want taxpayers to be further burdened. These dissenters attribute the previous pickup in sales to plunging home prices and record-low interest rates. The tax credit, they say, is nothing more than a freebie for people who were going to buy regardless.
Marisa Sandler and her fiance expect to close on a condominium in Friendship Heights on Friday. They plan to use the tax credit to invest in the stock market or pay down their mortgage principal.
"We probably would have bought without the tax credit, but it was the extra push that made us do it this year," she said.
The Economy
Borrowers rush in as mortgage rates slip below 5%
Loan applications jumped 13% last week and are up 50% from late June, a mortgage bankers group says, as borrowers have been taking advantage of rates that now average 4.97% on a 30-year loan.
1 2 next | single page
A sign in a branch of Northeast Bank in Brunswick, Maine, in March advertises a mortgage rate below 5%. The nationwide average for a 30-year mortgage has again fallen below that level. (Robert F. Bukaty / Associated Press)
Related
Graphic: Below 5% again
Calls to renew home buyer tax credit get louder in Washington
Home resales nationwide drop 2.7%
Stories
Mortgage modification event set for L.A.
Curbing mortgage abuse
Regulators consider ban on upfront fees for loan modification help
See more stories »
XNew-home sales data are mixed By E. Scott Reckard
September 25, 2009
E-mail Print Text Size
The home mortgage market, propped up by more than $1 trillion in government money, is flashing a strong "buy" sign to house hunters.
Extending a summer-long slide, the average interest rate on new 30-year fixed-rate loans nationwide has broken through the 5% barrier to 4.97%, nearing the lowest level in decades, the Mortgage Bankers Assn. reported this week.
And mortgage finance giant Freddie Mac, which separately tracks rates, reported Thursday that the average fixed rate on a 15-year home loan had dropped to 4.46%, the lowest level on record.
Borrowers are taking notice. Loan applications jumped 13% last week and are up 50% from late June, the bankers group said.
Several factors are fueling the trend, including growing confidence that the economy is recovering, an emerging consensus that housing prices are at or near a bottom, and the federal government's push to keep mortgage rates low.
"This is a pretty rare planetary alignment," said Stew Larsen, head of mortgage banking at Bank of the West. "I don't know if I'd call it a boom just yet, but it's definitely a boomlet."
Accelerating this rush to borrow is the suspicion, probably well grounded, that the ultra-low rates may be gone by early next year.
The 5% level is "really the magic threshold," said Brad Blackwell, a national sales manager at Wells Fargo Home Mortgage, the No. 1 home lender. As recently as early last month, the 30-year average was 5.38%.
Bankers say that most of the borrowers are homeowners trying to save money by refinancing but that a growing number of applications are being filled out by prospective home buyers as well.
Andrea and Brian Morrison know well the pull of a mortgage rate starting with a 4. They had been house-hunting for six months when the 30-year fixed-rate average first dipped into sub-5% territory for a stretch last spring.
"We got a lot more anxious," said Andrea Morrison. "We were like 'We've got to take advantage of this because it's not going to get much lower.' "
Brian Morrison works at a door and window company, and Andrea has taken time off from her job as a corporate controller to be with their 7-month-old son. In May, they took out a 30-year loan at 4.875% and bought their first home, a three-bedroom house in Corona.
When rates tumbled last spring, just 20% of mortgages made by the Morrisons' lender, Bank of the West, went to home buyers, with 80% going to homeowners who were refinancing.
In the last two months, however, 37% of the home loans made by the San Francisco bank have gone to buyers, reflecting the combination of more affordable -- but no longer plunging -- home prices, falling interest rates, greater consumer confidence and an $8,000 tax credit for first-time buyers that will expire Nov. 30 if it isn't extended by Congress.
The ultra-low home-loan rates have been made possible by the Federal Reserve's extraordinary efforts to prop up the housing market and the overall economy in the wake of the global financial crisis.
Not only is the central bank keeping short-term interest rates near zero, but it also said Wednesday that it would buy a total of $1.25 trillion in mortgage-backed bonds issued by Fannie Mae, Freddie Mac and other government-sponsored agencies under a program begun early this year to push mortgage rates down.
The central bank previously had said it would buy as much as $1.25 trillion, but it hadn't committed to the full amount.
Most 30-year fixed-rate mortgages currently made by lenders wind up in the pools backing the kind of mortgage bonds the Fed is buying. And the central bank is now buying 80% of these securities as they are created, which means the government is ultimately financing a huge chunk of the country's newly issued mortgages.
Economists estimate that as a result of the Fed's bond purchases, loan rates are two-tenths to one-half of a percentage point lower than they would be otherwise, according to Michael Fratantoni, an economist at the Mortgage Bankers Assn.
The 30-year average sank as low as 4.61% in March, according to the mortgage bankers group. Freddie Mac, whose numbers tend to run higher, puts the spring low at 4.78% and says 30-year rates now average 5.04%.
Loan applications jumped 13% last week and are up 50% from late June, a mortgage bankers group says, as borrowers have been taking advantage of rates that now average 4.97% on a 30-year loan.
1 2 next | single page
A sign in a branch of Northeast Bank in Brunswick, Maine, in March advertises a mortgage rate below 5%. The nationwide average for a 30-year mortgage has again fallen below that level. (Robert F. Bukaty / Associated Press)
Related
Graphic: Below 5% again
Calls to renew home buyer tax credit get louder in Washington
Home resales nationwide drop 2.7%
Stories
Mortgage modification event set for L.A.
Curbing mortgage abuse
Regulators consider ban on upfront fees for loan modification help
See more stories »
XNew-home sales data are mixed By E. Scott Reckard
September 25, 2009
E-mail Print Text Size
The home mortgage market, propped up by more than $1 trillion in government money, is flashing a strong "buy" sign to house hunters.
Extending a summer-long slide, the average interest rate on new 30-year fixed-rate loans nationwide has broken through the 5% barrier to 4.97%, nearing the lowest level in decades, the Mortgage Bankers Assn. reported this week.
And mortgage finance giant Freddie Mac, which separately tracks rates, reported Thursday that the average fixed rate on a 15-year home loan had dropped to 4.46%, the lowest level on record.
Borrowers are taking notice. Loan applications jumped 13% last week and are up 50% from late June, the bankers group said.
Several factors are fueling the trend, including growing confidence that the economy is recovering, an emerging consensus that housing prices are at or near a bottom, and the federal government's push to keep mortgage rates low.
"This is a pretty rare planetary alignment," said Stew Larsen, head of mortgage banking at Bank of the West. "I don't know if I'd call it a boom just yet, but it's definitely a boomlet."
Accelerating this rush to borrow is the suspicion, probably well grounded, that the ultra-low rates may be gone by early next year.
The 5% level is "really the magic threshold," said Brad Blackwell, a national sales manager at Wells Fargo Home Mortgage, the No. 1 home lender. As recently as early last month, the 30-year average was 5.38%.
Bankers say that most of the borrowers are homeowners trying to save money by refinancing but that a growing number of applications are being filled out by prospective home buyers as well.
Andrea and Brian Morrison know well the pull of a mortgage rate starting with a 4. They had been house-hunting for six months when the 30-year fixed-rate average first dipped into sub-5% territory for a stretch last spring.
"We got a lot more anxious," said Andrea Morrison. "We were like 'We've got to take advantage of this because it's not going to get much lower.' "
Brian Morrison works at a door and window company, and Andrea has taken time off from her job as a corporate controller to be with their 7-month-old son. In May, they took out a 30-year loan at 4.875% and bought their first home, a three-bedroom house in Corona.
When rates tumbled last spring, just 20% of mortgages made by the Morrisons' lender, Bank of the West, went to home buyers, with 80% going to homeowners who were refinancing.
In the last two months, however, 37% of the home loans made by the San Francisco bank have gone to buyers, reflecting the combination of more affordable -- but no longer plunging -- home prices, falling interest rates, greater consumer confidence and an $8,000 tax credit for first-time buyers that will expire Nov. 30 if it isn't extended by Congress.
The ultra-low home-loan rates have been made possible by the Federal Reserve's extraordinary efforts to prop up the housing market and the overall economy in the wake of the global financial crisis.
Not only is the central bank keeping short-term interest rates near zero, but it also said Wednesday that it would buy a total of $1.25 trillion in mortgage-backed bonds issued by Fannie Mae, Freddie Mac and other government-sponsored agencies under a program begun early this year to push mortgage rates down.
The central bank previously had said it would buy as much as $1.25 trillion, but it hadn't committed to the full amount.
Most 30-year fixed-rate mortgages currently made by lenders wind up in the pools backing the kind of mortgage bonds the Fed is buying. And the central bank is now buying 80% of these securities as they are created, which means the government is ultimately financing a huge chunk of the country's newly issued mortgages.
Economists estimate that as a result of the Fed's bond purchases, loan rates are two-tenths to one-half of a percentage point lower than they would be otherwise, according to Michael Fratantoni, an economist at the Mortgage Bankers Assn.
The 30-year average sank as low as 4.61% in March, according to the mortgage bankers group. Freddie Mac, whose numbers tend to run higher, puts the spring low at 4.78% and says 30-year rates now average 5.04%.
Realtors say local home buyer cashing n on first-time credit
This time last year, when the economy tanked, the housing market also took a major hit.
“It was a little scary,” said Shelly Cash, from Counselor Realty in Willmar. Nothing was happening, she said. “People just hunkered down.”
The creation of the $8,000 tax credit for first-time home buyers helped rejuvenate the local market and resulted in a “healthy” summer of transactions, she said. About one-third of the transactions at her office involved first-time home buyers using the tax credit.
The credit had “a positive impact” for the community and for home buyers and sellers, said Cash, who’s concerned people might miss the Nov. 30 deadline to qualify for the incentive.
“There’s a sense of urgency,” she said, especially for those obtaining loans from the USDA Rural Development program. A backlog with that popular program could mean up to eight weeks for loan approval and could mean missing out on the tax credit deadline.
Despite rumblings that the tax credit could be extended to more people and expanded with a larger financial incentive, Cash said there’s no guarantee the tax credit will continue past Nov. 30.
So far, 28,700 Minnesota home-buyers have used the tax credit, according to the IRS. Nationwide, 1.4 million people have signed up.
“We are seeing some people jumping on,” said Lacey Aalderks, from Re/max Preferred Realty of Willmar. “It’s definitely making an impact.”
A couple who’d been looking for a home for 1½ years realized “time was running out” on the tax credit and recently closed on a house, said Aalderks. “They decided they absolutely wanted to get that money.”
Aalderks, who works primarily with first-time home buyers, said 75 percent of her business is happening because of the $8,000 incentive. That’s resulted in a slight increase in sales this year over last year, she said, with first time home buyers picking up houses anywhere in the $20,000 to $200,000 range.
If the tax credit hadn’t happened, Cash has no doubt the housing market would’ve been worse this year.
“Oh my word. I think I’d be looking for a different job,” she said.
But Mary Peterson, a realtor with All-Star Realty in Willmar, said she’s not sure the tax credit has been that big of an incentive.
Tight credit from lending institutions, a shortage of homes under $100,000 and rumors that the credit may be increased to $15,000 may be part of the problem, she said.
“We haven’t seen a huge jump,” she said. The number of homes being purchased now is similar to what it was “before we got into this economic mess.”
What she has seen a big jump in is the number of foreclosures.
Peterson does pre-foreclosure inspections for three area lenders when people “start missing their payments.”
In Kandiyohi County she does 60 to 70 of these inspections every month. About 25 percent result in actual foreclosures, she said.
The remaining 75 percent may be able to stabilize their payments for a time, but it’s not uncommon for financial relapses to occur and for homeowners to move “in and out of danger.” She’s been to the same addresses many times during the two years she’s done the inspections.
There are just as many $50,000 houses as there are $300,000 houses that are at risk of being foreclosed on, she said.
Peterson predicts there will continue to be a high number of foreclosures here for the next two to three years. She said there are options for homeowners to work with mortgage companies to resolve financial issues.
The realtors agreed it’s been a challenging year. “But we will rebound,” said Cash.
“It was a little scary,” said Shelly Cash, from Counselor Realty in Willmar. Nothing was happening, she said. “People just hunkered down.”
The creation of the $8,000 tax credit for first-time home buyers helped rejuvenate the local market and resulted in a “healthy” summer of transactions, she said. About one-third of the transactions at her office involved first-time home buyers using the tax credit.
The credit had “a positive impact” for the community and for home buyers and sellers, said Cash, who’s concerned people might miss the Nov. 30 deadline to qualify for the incentive.
“There’s a sense of urgency,” she said, especially for those obtaining loans from the USDA Rural Development program. A backlog with that popular program could mean up to eight weeks for loan approval and could mean missing out on the tax credit deadline.
Despite rumblings that the tax credit could be extended to more people and expanded with a larger financial incentive, Cash said there’s no guarantee the tax credit will continue past Nov. 30.
So far, 28,700 Minnesota home-buyers have used the tax credit, according to the IRS. Nationwide, 1.4 million people have signed up.
“We are seeing some people jumping on,” said Lacey Aalderks, from Re/max Preferred Realty of Willmar. “It’s definitely making an impact.”
A couple who’d been looking for a home for 1½ years realized “time was running out” on the tax credit and recently closed on a house, said Aalderks. “They decided they absolutely wanted to get that money.”
Aalderks, who works primarily with first-time home buyers, said 75 percent of her business is happening because of the $8,000 incentive. That’s resulted in a slight increase in sales this year over last year, she said, with first time home buyers picking up houses anywhere in the $20,000 to $200,000 range.
If the tax credit hadn’t happened, Cash has no doubt the housing market would’ve been worse this year.
“Oh my word. I think I’d be looking for a different job,” she said.
But Mary Peterson, a realtor with All-Star Realty in Willmar, said she’s not sure the tax credit has been that big of an incentive.
Tight credit from lending institutions, a shortage of homes under $100,000 and rumors that the credit may be increased to $15,000 may be part of the problem, she said.
“We haven’t seen a huge jump,” she said. The number of homes being purchased now is similar to what it was “before we got into this economic mess.”
What she has seen a big jump in is the number of foreclosures.
Peterson does pre-foreclosure inspections for three area lenders when people “start missing their payments.”
In Kandiyohi County she does 60 to 70 of these inspections every month. About 25 percent result in actual foreclosures, she said.
The remaining 75 percent may be able to stabilize their payments for a time, but it’s not uncommon for financial relapses to occur and for homeowners to move “in and out of danger.” She’s been to the same addresses many times during the two years she’s done the inspections.
There are just as many $50,000 houses as there are $300,000 houses that are at risk of being foreclosed on, she said.
Peterson predicts there will continue to be a high number of foreclosures here for the next two to three years. She said there are options for homeowners to work with mortgage companies to resolve financial issues.
The realtors agreed it’s been a challenging year. “But we will rebound,” said Cash.
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