Lisa Barton

Breaking News!!! Congress overwhelmingly passed a bipartisan measure this week extending the $8,000 home buyer tax credit to April 30, 2010. The legislation, which is part of a larger bill that also extends unemployment benefits, was signed into law by President Obama today. More people are now eligible to take advantage of the law, which includes a $6,500 tax credit for buyers who are current home owners and have lived in their home for five of the past eight years. Income limits for eligible home buyers were also expanded to $125,000 for single buyers and $225,000 for couples, up from $75,000 for individuals and $150,000 for couples. Qualifying home prices are capped at $800,000.

For a great explanation of the tax credit click here.

Buyers and sellers:  Having property challenges?

A high percentage of homes on the market right now are listed as “short sales” or “foreclosure” (bank-owned) properties——and with those can come issues——neglected homes in need of repairs such as new roofs, flooring, windows, etc. Banks selling these properties typically don’t want to invest any money into improvements, but lenders on the other side of the transaction often won’t accept the property in its current condition (a.k.a. “as is”). Even in normal resale listings, sellers are often financially distressed and can’t afford to make additional improvements to sell the home. Unless the buyer has a “cash” offer, those homes have few options to get sold. In response, Wells Fargo Home Mortgage has developed an innovative and easy to understand program to solve these issues. Named the Remodel Express, it’s a simplified version of the popular (yet complex) FHA 203k loan, and offers buyers a turn-key solution to homes in need of repair.

If you’re considering the purchase of a new home, you may be concerned with the issue of finance. Attaining the right mortgage is a key step in the home buying process, but it doesn’t have to be a stress-inducing one. Most lenders offer prequalification, pre-approval or both to help you know where you stand. Here’s the difference between prequalification and preapproval:

A year after the financial collapse of 2008, the housing market is very different than it was before the foreclosure crisis. A great article in The New York Times gives new home buyers some guidance from economists and financial planners when contemplating a home purchase:
Here are the highlights:

FHA home loans are not just for first time homebuyers anymore! FHA home loans can offer easier qualification standards, lower down payment requirements, and lower monthly payments than comparable conventional loans. What is an FHA loan you ask?  It’s a home loan from a federally qualified lender that is insured by the govt. via the Federal Housing Administration. It’s only allowed for primary homes (no vacation or investment properties), and can be used for properties with up to four units. Manufactured homes are also allowed.

As of May 29, 2009, the U.S. Department of Housing and Urban Development (HUD) gave FHA-approved lenders permission to develop programs that will allow first-time home buyers to use the federal tax credit (which can be up to $8,000) to help cover closing costs or to buy down the interest rate on a mortgage. The lenders can also develop programs such as bridge-loans that will allow new buyers to put down a larger down payment on their mortgage. Right now the minimum down payment on an FHA loan is 3.5% of the loan. It’s important to note that these bridge loans cannot be part of the initial 3.5%—first-time buyers have to come up with that money on their own.

Remember, the first-time home buyer tax credit is available to individuals who’ve never owned a home and to those who haven’t owned a home in at least three years. This tax credit does not have to be repaid and is worth up to $8,000 (depending on the purchase price of the house and the buyer’s annual income). For more information go to the National Association of Realtors.

Okay—-we’ve all heard that it’s a great time to buy a home—-plenty of inventory, (still) dropping prices, and low, low mortgage rates. Well, believe the hype. And for the silver lining, first time homebuyers are being rewarded with an $8,000 tax credit from the IRS for 2009 in an attempt to boost prices and stabilize the market. It’s important to recognize that this is a true credit towards your income taxes, not just a deduction from your taxable income—-big difference.

Good news on the home lending front!  Mortgage rates have dropped over the past year and are dropping even further now that the Fed has slashed key interest rates.  In addition, the Fed indicated that they would buy securities that are backed by mortgages.  Both actions should mean lower consumer interest rates—particularly for mortgages.

Credit scoring has long been associated with obtaining loans. Recently, however, one’s score is more relevant than ever as borrowing money is becoming tougher and tougher. Conventional home loans are now adding price adjustments for any scores below 720. Having a higher score can potentially save you thousands of dollars in interest over the life of a loan!