New Housing Tax Credit Q & A's

It’s time to let everyone know! There is a new Tax Credit for First Time Homebuyers. I’m sure a lot of you have questions about it. Who does it benefit? What does the fine print say? How long will this last? Have no fear… I have the simple answers! Know that this is a phenomenal deal for those who qualify.

Here are some popular Q & A’s:

1)Who is eligible?
A: First time homebuyers are eligible. To qualify, the purchase must be made between January 1, 2009 and before December 1, 2009. In this case, the purchase date means the date of closing.

2)Who is a first time buyer?
A: To qualify, the purchaser must not have owned a principal residence during the 3 year period prior to the purchase. For married persons, the law tests the homeownership history of both people, however unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first time buyer.

3)How is the tax credit amount determined?
A: The amount is equal to 10% of the purchase price, up to a maximum of $8,000.

4)Are there income limits for claiming the tax credit?
A: The credit is reduced for buyers with a modified adjusted gross income of more than $75,000 for single taxpayers and $150,000 for married couples filing a joint return. For those singles making $95,000 and married couples making $170,000, the tax credit is reduced to zero.

5)How does this tax credit differ from the last homebuyer tax credit?
A: The main difference is that this credit does NOT have to be repaid! Remember, the buyer must use the home as their principal residence for at least 3 years or face recapture of the tax credit.

6)How do I claim the tax credit?
A: This is easy! You claim the credit on your federal income tax return. Complete IRS form 5405 to determine your credit amount. Then, claim this amount on line 69 of your 1040 tax form. That is it!

7)Is there any way for a homebuyer to access the tax credit money sooner than waiting for their 2009 tax return?
A: Yes. Prospective homebuyers who qualify are permitted to reduce their income tax withholding. Reducing their withholding (up to the amount of the credit) will enable buyers to accumulate cash by raising his/her take home pay. This extra cash can be used as a down payment if the buyer budgets well. Contact your tax advisor if you are interested in this plan.

Oh By the way... I'm never too busy for any of your referrals!

Buy First or Sell First?

This is a great topic for the current market conditions. The answer, of course, depends on the situation in which each homeowner is involved. Most markets are seeing high inventory and not enough buyers to lower those levels. So what do you do? Some sellers choose to carry a bridge loan. This will help them to buy before they sell. A bridge loan helps borrowers by halting payment on their new home until their old home sells.

While this is an option, the old home may not sell. Some research shows less than 50% of homes listed do NOT sell. In a buyer's market such as the one we are in, It is wise to sell before you buy. In a seller's market, it may be a smarter choice to find your new home before you sell because the amount of buyers outweigh the number of homes on the market. This fosters competition and quick turnaround for listings.

I would advise my clients in our current market to do a few things before they decide to make any decisions. Sellers should find out what they owe on their current house. They should get prequalified for a home loan to see how much they can afford for a new home. They could also find out if they qualify for a bridge loan. Their lender should give them a good faith estimate of settlement costs. This will show them what their payments and settlement costs will be for their new home purchase. Sellers will also incur some closing costs on the sale of their current home. When we perform a market analysis, we always provide our prospective sellers an estimated costs to sell sheet. This will give them a pretty good idea what they can expect to net from the sale of their home.

Oh By the way... I'm never too busy for any of your referrals!

10 Questions to ask your lender

10 Questions to Ask Your Lender:

These questions came directly from the real estate checklist online and realtor.org. I think it's a great list to take with you to a home mortgage meeting.

Be sure you find a loan that fits your needs with these comprehensive questions.
1. What are the most popular mortgage loans you make? Why?
2. Which type of mortgage plan do you think would best for us? Why?
3. Are your rates, terms, fees, and closing costs negotiable?
4. Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance is usually required if you make less than a 20-percent downpayment, but most lenders will let you discontinue the policy when you’ve acquired a certain amount of equity by paying down the loan.
5. Who will service the loan? Your bank or another company?
6. What escrow requirements do you have?
7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
8. How long will the loan approval process take?
9. How long will it take to close the loan?
10. Are there any charges or penalties for prepaying the loan?

Some of these questions are more important than others, but they are all good questions to ask. I think it is important to make sure you are getting good terms on your loan, and it is also important that your lender communicates with you (the buyer), the escrow agent (who handles the closing), and me (the realtor). Also, for you first time buyers out there... Be sure to ask about the new tax credit!

Oh By the way... I'm never too busy for any of your referrals!

Buying and Saving with Homeowner's Insurance

Buying the right homeowner's insurance policy is not something you're probably thinking about on a daily basis. Today, I thought I would give you some food for thought...
When you purchase a home you need to protect your investment, as does your lender. Homeowner's insurance will help you do that. Here are a few tips to help you save some time and money...
DETERMINE YOUR INSURABILITY:
You insurance provider will ask you things like when wass the home built? How old is the plumbing and electrical? What about the roof? What is the square footage of the home? and What claims have been filed in the last 5 years?
DEDUCTIBLES:
You may be able to save money by increasing your deductible. Most companies offer deductibles up to $10,000 (be sure to check with your agent about deductible policies).
HOW MUCH INSURANCE DO I NEED?
Your replacement cost should be somewhere between 125%-200% of the home's value. You want this amount of coverage because the cost to rebuild your house may be more than its current value. This could be because of inflation or higher priced materials. Either way, its better to be safe than sorry.
POLICY OPTIONS AND AVAILABLE DISCOUNTS:
You should review your policy options periodically to see how much Liability coverage you have. This will provide protection arising from other's bodily injury or damage to other's property. Also, be sure you are taking advantage of all available discounts. If you have working security system, are over 50, or the biggest, multi-line discounts.
REVIEW YOUR POLICY:
This one is always a fan favorite. I know everyone loves reviewing their insurance policies. This is something we should all do at least once every three years though.

So, remember all these things when it comes to your homeowners' insurance, and you'll be covered!

Oh By the way... I'm never too busy for any of your referrals!

Big Surge in Mortgage Applications!

The first week of 2009 proved to be a busy one for mortgage lenders. Rates for a 30 year fixed rate mortgage are hovering and even dipping below 5% for some applicants. This is a major cause for the mortgage applicant index to be higher than it's been since July 2003. Now that the federal government is committed to buying mortgage-backed securities to keep borrowing costs low, many experts predict that rates will stay low for the next quarter. Note to all first time buyers out there, NOW'S THE TIME to buy. House values have yet to be effected by the rally of mortgage applications.

Oh By the way... I'm never too busy for any of your referrals!

The laws of Attraction!

What is the secret to life? Has anyone not seen the acclaimed film "The Secret" yet? IF not, you must buy the DVD. Not only that, but you need to watch it at least once a month! I'm not kidding. If you feel like you are in a perpetual rut, it could change your views on life, love, money, relationships, everything.

Is anyone else done with the bad economic news. It's time for us to start making good economic news on our own. This holiday season, don't worry about your bank account or your 401k. Instead, be thankful for what you have. We all have something we can be thankful for. We are all alive! So let's change our attitudes a little bit this winter, and make it a little warmer.

I started volunteering this year for the Salvation Army for the first time in a long time. I have never felt so warm on such a cold day. I'm going to do it again next week. Come visit me if you want to out at the Hy-Vee on 156th & Maple next Thursday. I'll be the guy ringing the bell, makin' a fool out of himself.

What does this have to do with the economy? and my poor financial situation? Watch "The Secret" and you'll know what I'm talking about. Happy Holidays everyone! Safe travels!

Oh By the way... I'm never too busy for any of your referrals!

Time's running out!

Listen up potential buyers! Have you been thinking about buying a home, but want to wait for this economy to turn? If you are planning on obtaining a loan to purchase your new home, you may want to get off the bench and in the game! If you are short on cash in your pocket, but can still afford the monthly mortgage, insurance, and tax obligations, an FHA loan may be perfect for you. But beware, your down payment minimum is changing as of January 1, 2009. Until then, you will only need 3% of the purchase price as a down payment toward your purchase. As of the beginning of next year, that will change to 3.5%. So on the purchase of a $150,000 house, your down payment would change from $4500 to $5250. It may not be much, but every little bit counts when making such a huge purchase. For more information, call or email me anytime.

Oh By the way... I'm never too busy for any of your referrals!