Real Estate Information

There are a lot of changes going on in the mortgage industry.  One change that could have a major impact on the housing industry is the strong indication that loans handled by FHA mortgages, will be changing in the near future.  These FHA backed mortgage programs are going to be adjusted or even overhauled by the government.

During the real estate boom, the use of FHA mortgages dropped to around 2%.  That figure has shot up to 25% and even higher in some markets.  Any substantial changes to FHA lending requirements could affect in some cases, the most active segment in many real estate markets (First Time Homebuyers).

Congress is pressuring FHA to tighten the standards toward borrowers.  The options on what they will do to tighten these standards are broad:

          1. Increase FICO score requirements

          2. Increase amount of down payment

          3. Reduce seller contribution to closing costs

We'll certainly be keeping a close eye on this and let our clients know of any changes but in the meantime, if a FHA loan is something you were considering, you might want to act sooner rather than later.

As always, for all your real estate needs, we're just a phone call away,  melaniecameron@seacoastrealty.com or 910-202-2546

Check out this great article about getting out of debt in the New Year.  It makes a lot of sense and will probably work if you follow these tips.

Check out the full article at:

http://rismedia.com/2009-12-29/8-ways-to-get-out-of-debt-and-start-saving-for-the-new-year/

Questions or comments, call or email us...910-233-2840 or melaniecameron@seacoastrealty.com

I was planning on writing today about the incredible interest rates that are currently available for buyers and how they are at historically low rates (lower than we've seen in 40 years) and that it's not a question of IF but WHEN they will increase.  Instead, I found this great article in Business Week that sums up my thoughts on the matter (and even makes a few points I hadn't thought of).  Check it out at: http://www.businessweek.com/lifestyle/content/dec2009/bw2009127_753974.htm

If you have any questions or comments, please give us a call or email at 910-202-2546 or melaniecameron@seacoastrealty.com

Existing home sales jump to their highest in nearly 2.5 years.  Check outthis great article from cnbc.com

http://www.cnbc.com/id/34107568

NAR SEES REAL ESTATE REBOUND

      The National Association of Realtors predicts a 13.6% rise in existing home sales for 2010, much more robust than the 2% increase this year.  And new home sales could rise as much as 38%.  NAR reports that the tax credit for new home buyers is working even better than projected with first timers now accounting for 47% of all home purchasers, up from 41% in 2008.  The organization also predicts home prices will rise 4% in 2010 after declining about 13% this year.

Questions or comments, contact me at 910-233-2840 or melaniecameron@seacoastrealty.com

First Time Homebuyer Tax Credit Extended Into 2010!
Plus...A New Tax Credit for Certain Existing Home Owners!

It's official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
• You do not use the home as your principal residence.
• You sell your home before the end of the year.
• You are a nonresident alien.
• You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.

Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

For more information on how to benefit from this tax credit, please call me at 910-233-2840 or melaniecameron@seacoastrealty.com

Breaking News: Homebuyer Tax Credit Set to be Extended and Expanded!

Earlier this week, the U.S. Senate unanimously passed an extension and expansion of the homebuyer tax credit. This morning, the House of Representatives approved the agreement reached in the Senate by a vote of 403-12. The bill has now passed both chambers and is awaiting the President’s signature, which could be as early as tomorrow!

Below is a summary of the new modifications in the extension and expansion of the tax credit:

1)  The $8,000 tax credit will be extended and available for first-time purchases before May 1, 2010.

2)  A new $6,500 tax credit will be available for repeat buyers who purchase between December 1, 2009, and May 1, 2010. To qualify for this provision, buyers must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.

3)  Prospective purchasers with binding contracts in place as of April 30, 2010, will be allowed an additional 60 days to complete the transaction.

4)  Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.

If you know anyone looking to buy their first home at a time when prices and interest rates are still down, or if you are thinking of buying another home and getting the new $6,500 credit please contact me today.

There was a great article in the Wall Street Journal on October 22^nd, last week.  It covered a broad range of issues from low inventory levels, to the shadow inventory of foreclosures and specific examples of foreclosures and modifications. 

I know I've been preaching for months about it being such a great buyers market with all the inventory and low interest rates and that if you're planning on buying, now's the time.  Well... I'm still saying the same thing. 

I just read an interesting article in the NY Times about how this coming Spring, the Federal Reserve was going to start weaning the securities market off government support.  The Federal Government has spent about $905 billion dollars buying government-guaranteed mortgages in an effort to keep mortgage rates low and will continue buying until it reaches its target of $1.25 trillion.  The result, will be the need for investors to buys these mortgages and since investors want to make a profit,  we will likely see an increase in interest rates come Spring/Summer 2010.  Interest rates are going to have a far bigger effect on your purchasing power than current property values.  For example, a mortgage for $360,000 at 5% would have the similar payment of a $300,000 mortgage at 6%.  That's a HUGE difference.  I'm not saying this to scare you, but to inform you as to what is going on the industry.   Our goal is to have well informed, educated clients.

If you have questions or concerns, please give us a call.  We are here for all your real estate needs.  Melaniecameron@seacoastrealty.com or 910-233-2840

Have a great week!

Lawmakers are looking into extending the homebuyer tax credit past the Nov. 30th deadline.  Check out this great article below..

http://www.nbnnews.com/NBN/issues/2009-10-19/Front%2BPage/index.html

Comments or questions, please call or email me at 910-233-2840 or melaniecameron@seacoastrealty.com