New Tax Credit Guidelines

 

TAX CREDIT Currently the government is offering a first time home buyers Tax credit of $8000k! To qualify you must be a first time home buyer-defined as anyone who has not owned a home in the last 3 years! The Senate has just voted to extent this program until April 2010. Repeat buyers who have had their homes 5 years would also get an incentive. Senators agreed on Wednesday to extend the tax credit for first-time buyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current home for at least 5 years. The tax credit will be available to buyers who sign purchase agreements by the end of April 2010. They would have until the end of June 2010 to close on there new homes. To see if you qualify click here!

If you are interested in taking advantage of the current low interest rates and low prices Irvine or Newport Coast please contact Mary either by phone 949-275-6544..  Or visit my web site and browse the many listings available on my Interactive Map Search program. I look forward to hearing from you!

 

What about Short Sales

Over the last couple of years we have been experiencing a new kind of home for sale product called a short sale. For those who don’t know what that is the description is basically a home on which more is owed against it than it is worth or can be sold for. The seller is asking the lender or lenders to accept a pay off for less than owed to sell the home and remove their obligation. Any seller considering this kind of transaction should consult their tax accountant or possibly a real estate attorney to find out just what their final obligation will be. The tax man cometh and there is no escaping him. Homeowners receive a 1099 for the amount of debt that was forgiven but currently the government is allowing them to file another form to take this tax burden away. How long this will go on is not clear so take all precautions when starting down this road. Not to mention “recourse” and “non-recourse” loans. Better get some help understanding this.

For buyers who want to pursue this type of purchase it can be a lengthy process of waiting. The seller and sellers agent will set an asking price on the property to try and solicit offers. Generally this price will be low as they need to attract an offer (ever heard of “come on” price?) to entice the bank to seriously respond to their short pay request. The process of negotiation with the bank should be started as early as possible but some banks don’t tend to respond until they receive that initial offer. So a price is set and offers are solicited often bringing in even lower offers than the asking price. Once the bank recieves the offer a negotiator or servicer is assigned. He or she will then determine the current value of the property either by appraisal, drive by appraisal or BPO. They will then use this information to determine the final offered price which is  pretty much on take it or leave it terms. Here’s a news flash: the bank can wait!  And it is not that they are greedy as some people may think. It is that this is a business and they must try and recoup as much as they can for the property. And from the stand point of value it greatly undermines everyone’s value to have these homes sell at so much less than they are worth.

Often the buyer that has been patiently waiting is lost at this point. Sometimes it is because they have not been patiently waiting and have moved on to purchase a home that is more readily available. Another reason is the price offered by the bank is often higher than the “come on” price and is not acceptable to the buyer. Remember they are looking for a “deal” and anything percieved as not a deal is not acceptable. Perception of “deal” -That is a subject for another day!

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The Short Sale offer. If you are not faint of heart and have a lot of patience then it is a good time to jump into these transactions. Apparently the banks are now getting a bit more interested and starting to respond a little quicker. Still could take 4-6 months but I am seeing some success stories with times closer to 3 months. However, come prepared. Bidding on a short sale is the same as bidding on a bank sale with respect to what documentation must be submitted to the bank in order to be considered. This is the important part-the bank won’t even look at your offer without the proper documentation which includes:

1. Prequalification from a lender-Best if you have a direct lender!

2. Credit scores: these can be included in your prequal lender or provided from a report you generate yourself. BEST is to have your lender provide them. Mortgage scores can be different from if you were buying a car or furniture.

3. Proof of funds for down payment. This is a must. You must be able to prove you have the down payment available. 

Also with inventory decreasing and with this trend forecasted to continue there will be much more competition from other buyers. Most of these homes receive multiple offers and only the best are even considered. This doesn’t necessarily have to do with price (but that is very important) but can also be about credit scores, down payment and the strength of the buyers ability to purchase. 

Bank Owned properties (foreclosures) The same rules apply but in this case you will not have to wait long for an answer. It is almost always highest and best but cash or a big down payment can sometimes trump offers that are monitarily close. Very competitive so no sense in underbidding! Most of these sell for close to or above the price asked.

Remember, Interest rates are still historically low! A rise in interest rates can easily change the cost of the home per month and over the length of the loan. If you are thinking of purchaseing a home in this great buyers market please call Mary Burke -LifeStyles Realty-949-275-6544 for assistance.  

Seasonal Versus Distress?

Hello World! Time for another update from your realtor Mary Burke in Irvine California! I hope everyone had a wonderful summer and it ready to start looking ahead to fall. Today I would like to discuss Seasonal Real Estate versus Distress Real Estate

It is no surprise to anyone that we have been going through a most difficult time and our real estate prices have declined around 30%. Now this is a serious hit to homeowners but they seem to be adjusting very well and are pricing homes to sell in the current market conditions. However, this is not good enough for most buyers today! They are looking to cash in on future decreases in price. Unfortunately without a crystal ball no one can predict what will happen to prices in the future. We can only deal with the here and now. I have been in California most of my life and consider myself a native. I am no expert but I have been following trends since the 70’s. If you must compare I could buy a home in the mid 70’s for what people now pay for a car! The rise in prices was quick and steady and everyone can see where we have ended up. There is no going back to the good old days! Every 7 years or so we have an adjustment and this time it is a big one! But the free market being what it is it is necessary to sometimes bring back the balance of our world.

So that being said I would like to speak about Seasonal Trends. Besides the every 7 years cycles that so many people talk about there are the year in and year out cycles as well. Every year the cycles are the same. Spring and Summer are the busiest selling seasons. This is due to school schedules and families need to relocate at the optimal time for their children to settle into new areas and make friends. The next best season would be fall. For some reason there are many people who don’t make it by September and are still around usually until October or specifically Halloween. After that we are looking towards Christmas and this is a great time to move into a new home-I have done this-and this magical season with its festive decorations can be a major factor in appealing to home buyers. But make no mistake From December until March is definitely off peak time and there is generally much less to choose from. If you are looking for a bargain this is usually the time to find it. In the past it has mostly been the left over inventory that was either overpriced or not as desirable so not exactly the best picks. Of course there are always exceptions but overall inventory will mostly be less “fabulous” homes.

Currently we are seeing a decline in inventory that is not typical in any year. We are seeing record sales with no replacing inventory. Homeowners who do not need to sell will not list their homes in this time of decreased prices. And, even though we have been promised by many analysts a boat load of foreclosures this also has not materialized. But I believe even if it does it will not further depress the market. Buyers are so hungry for these types of sales they will out bid each other. And with banks not being so willing to under price these homes I believe it will actually help the market numbers overall. So to summarize time of year can be just an important a factor and this year may be more important due to lack of homes for sale. If you are looking to find a home and want to take advantage of the first time home buyer credit you must purchase and close escrow by December 1st. So the clock is ticking! Please let me know if you need any assistance and would like to schedule a time to discuss your future real estate plans! I am happy to help you in any way I can. Please visit my web site IrvineVillages.com to view current listings and for more information! I look forward to hearing from you!

Closing Delays?

We have a new requirement that is part of the Mortgage Disclosure Improvement Act (MDIA). This implements new loan procedures to protect borrowers and foster greater transparency in mortgage lending.  For loan applications submitted Starting July 30, 2009

  •  If the APR quoted on an initial Good Faith Estimate is no longer accurate (within a 0.125% range) at close of escrow, a lender must generally provide a residential borrower with a new disclosure
  • If a new disclousre is generated it also begins a  new three-day recission period and borrowers have a right to rescind before consummating the loan. 

Be aware that if you are in escrow and anticipating a predetermined close day there could be an additional three days added to your closing date due to this additional waiting period.  A lender’s failure to timely provide corrected disclosures has the potential of delaying funding of the loan and close of escrow. 

It is best to read your Good Faith Estimate very closely and remember that interest rates are always changing and your loan is susceptible to these fluxes until your loan is locked. 

Tax Credit Towards Down Payment for FHA!

Just out: The Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment. This will enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment

Previously, most buyers wouldn’t receive the funds until after they filed their tax return, and that deterred some people from using the credit. 

We are hearing that FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

If you are planning on purchasing a home with an FHA loan and are a first time buyer that qualifies for this tax credit -please call your mortgage company or loan officer for details. This of course is brand new so nothing happens quickly in government! Still, this is a great step in the right direction! Let’s hope for more good news as time goes by. If you would like some assistance please visit my web site Email  or phone 949-275-6544 directly. I am happy to take your call and assist you in any way I can.

Catch the Wave?

Here we are in May already! Time flies quickly by! The stock market is doing better this week, Chrysler is going Bankrupt and housing sales in Irvine has been hitting its stride.

You may have heard many people describe real estate as cyclical but I would compare the ups and down of real estate to catching a wave. It seems like you must “catch it” at just the right time! We have already seen a huge inventory of bank foreclosures come and go. There are very few of these right now and who knows if there will be another “wave” in the future. The optimal time may or may not have passed but it is still a very “good” time.  Inventory of homes for sale in Irvine is disappearing at a very fast rate. Albeit mostly in the under the Million price range it still is amazing to see homes so quickly disappearing fromt he mls “active’ list! The governement is offering incentives and interest rates are very low. How long will they stay this low-You might ask? Many economists are predicting we are getting close to the end of the recession and now they are worrying about inflation. This usually follows a recession! Some people mistakenly believe that when interest rates go up-prices go down. But sadly that is not the case! History has shown us double digit interest rates on mortgages when the prices were rising. In fact, since it is “inflation” it makes everything rise! If youi would like to hedge your bet against this possibility you would do well to buy real estate. Of course paying cash would be a great hedge against the future but if not, finance with a 30 year fixed low interest rate and get ready to ride out the next wave. 

Remember, no one has a Crystal Ball so everything is subject to interpretation. There are many indicators you can use to time the market and interest rates, supply and demand, decreasing foreclosures, are just a few. Several areas in California are still leading the foreclosure list including Riverside/San Bernardino and some other counties like Merced. But unless you are interested in buying in those areas you would do well just to look at the “local market activity”. Real estate is always LOCAL. If you would like more information on buying a home today please give me a call at 949-275-6544 or just send me an Email  . You can visit my web site and view all the homes for sale in Southern Orange County! I look forward to hearing from you!

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Why It’s a Good Time to Buy

Many of the recent market reports are reporting that the housing market is improving. Here are a few reasons to get into the market now!


1. The Government wants to help!  First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and loans are increasingly becoming more available. Plus the new California Mortgage protection plan offers 6 months assistance if you should lose your job. Call Mary for details!

 

2. Leverage your investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000. Market trends show real estate cycles are about 7 years. This is a long down cycle but when it comes back it may rise fast.


3. You have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that we will always have a need for additional housing! Even if the economy doesn’t recover as quickly as we would like there will be a lot of new families looking for homes.  Compare Rent versus Buy programs to see if it makes sense for you.  When interest rates get this low you can sometimes buy for about the same price per month!

 

4. Prices will go back up eventually! You could have instant equity!  In many parts of the country where foreclosures and short sales have driven down prices we are close to the bottom. If the market continues to improve the price of the home you buy right now could rise quickly.


5. Mortgage payment stays the same: As long as you get a fixed rate mortgage! This is the most advised today since adjustable loans have been detrimental to many homeowners. You want to make sure your monthly payment stays the same while everything else go up. Don’t forget the tax credit. Not only the first time buyers tax credit but the deduction you will take on your income tax every year for mortgage interest and taxes.


6. Home Sweet Home: Homeownership provides the kind of freedom, stability, and security that is attainable in few other ways. Wealth accumulation through homeownership is the key to financial independence and self-sufficiency. A home is worth more than money- there’s also the heart.
Most people would still rather own their own home!

New! California Mortgage Protection

This program just rolled out! Only for first time buyers who purchase between April 2, 2009 and December 31,2009. Please use the link below for more details!  

http://www.car.org/media/pdf/Beyondtheheadlines_040209.pdf

Sales Up in the West

Is the West leading the way back?  Latest report of the Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.7 percent to 80.4 from a downwardly revised reading of 87.1 in December, according to National Association of Realtors latest report. Every area is down except the WEST which is rising! As a realtor working in Orange County I can definitely see the surge which started right after Super Bowl Sunday!

 

Breakdown By Region

Here’s how the PHSI fared across the country:

·     Northeast: dropped 12.7 percent to 57.8 in January and is 19.7 percent below a year ago.

·     Midwest: declined 9.2 percent to 72.6 and is 13.8 percent below January 2008.

·     South: fell 11.9 percent to 82.2 in January and is 9.1 percent below a year ago.

·     West: rose 2.4 percent to 103.6 and is 13.5 percent higher than January 2008.

In conclusion if the West is leading the way we can certainly hope to see a turn around by spring or summer and it has obviously started here. History has shown that sales can go up even in times of high unemployment if affordability increases. Couple the increased sales with decreasing inventory and it time could be running out for the fence sitters. No one has a crystal ball but anyone who has studied OC real estate knows this area does not conform to the rest of the state or the rest of the country. If you have thinking about purchasing a home in Orange County it might be time to start getting serious. Call Mary at 949-275-6544 if you need any help or would like to discuss the current market conditions.

Increased demand? Multiple offers?

One of the Key Indicators of the rules of investing is supply and demand. Refer back to my previous blog in December!

DEMAND? Demand is surging!Some local Orange County areas have doubled their sales numbers compared to last year. Multiple offers are becoming common place and the surprising new development is how many offers are cash! If history repeats itself, and it usually does, when stock markets go down people look for someplace else to put their money. Combine this with the instability of banks right now and where can you put your money? Real estate has been a proven asset for the long term investor. It will not disappear and it can provide income! What more could you ask for!

SUPPLY? Supply of available homes for sale is decreasing. Several factors are contributing to this such as the moratoriums on foreclosure, sellers unwilling to sell in adverse market conditions, and banks are more willing to help troubled borrowers stay in their homes. Supply is at an average of 4 months in the low to mid price ranges.

Last week’s newly revealed stimulus plans haven’t even factored into the market yet. Impact is hard to predict but this is the basics as I understand them so far. More details will be revealed when the programs officially launch but here is how the President’s Economic Stimulus Plan for 2009 is shaping up so far!

Tax Credit - $8,000 tax credit for anybody that purchases a home and  is a “first time home buyer” technically anyone who has not owned a home in the prior three years.  This credit is good on any primary residencere from January 1st through the end of November, 2009.  Income limitations do apply and the tax creditt begins to phase out for two income families above $150,000 and individuals above $75,000.  Another requirement is to live in the home for two years.

Conventional Loan Limit - the conventional loan limit for high cost areas will increase for high cost areas to last year’s $729,750 level.  The limit had dropped to $625,500 on December 31, 2009.  This should restore buying activity in the $700,000 and $800,000 price range.

California New Home Tax Credit. In our newly signed California budget -finally!-there is a provision for a tax credit up to $10,000 good on the purchase on any new home-defined as never before lived in! No details as yet, and I am sure there will be some restrictions-there always are- but watch for news on this tax credit. Builders are already sitting out this maarket which is why we have the news reporting a decrease in builder starts. Frankly it seems like a good idea considering the amount of inventory that needs to be sold. Still this will definitely help home builders to clear out standing builder inventory which is stagnating and on their books! 

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