Congress giving homebuyers a big new tax break

Congress giving homebuyers a big new tax break

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For real estate information in Orange County, please visit http://www.ocexecutives.com/

or http://www.ochomebuyer.com/

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Extracted on 11/05/09 on yahoo.com

WASHINGTON – Missed out on Cash for Clunkers? Congress has another deal for you: Buy a home before May 1 and collect up to $6,500 from the government. If you're a first-time homebuyer, get up to $8,000.
As part of the government's efforts to encourage people to spend money to help revive the economy, the House voted 403-12 Thursday to expand a popular tax credit for homebuyers. The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, now goes to President Barack Obama, who plans to sign it Friday.
First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November, the House voted to extend it into the spring — and to expand it to many people who already own homes.
Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers — or people who haven't owned homes in the previous three years — could get up to $8,000. To qualify, buyers have to sign purchase agreements before May 1 and close before July 1.
"It's huge. I think it's going to have a big impact," said Patti Ketcham, who owns a real estate firm in Tallahassee, Fla. "I hope I'm right. Golly, I hope I'm right."
Like housing markets across the country, Tallahassee's has been depressed since even before the nation's economy plunged into recession. There was no huge boom and bust like there was in many coastal areas, Ketcham said, "but ask anybody trying to sell a house and they'll tell you it's been no fun."
The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
Real estate agents say the first-time homebuyers' tax credit that's already in effect has boosted sales, much in the same way the Cash for Clunkers program increased auto sales last summer by paying car buyers as much as $4,500 for exchanging their old gas guzzlers for new, more fuel efficient models.
The agents hope the expanded housing credit will help stabilize housing markets during typically slow sales months in the winter. Today, many would-be buyers are still worried that home values could drop further, said Lawrence Yun, chief economist at the National Association of Realtors.
"Once the consumer fear factor disappears, then housing can move into a sustainable recovery," Yun said. "I think we will be there by the middle of next year."
Yun said the tax credit has helped to increase demand and reduce inventory, enabling sellers to get higher prices than they would have otherwise.
About 1.4 million first-time homebuyers had qualified for the credit through August. The Realtors estimate that 350,000 of those buyers would not have purchased their homes without the credit.
The real estate industry, including Realtors, home builders and mortgage bankers, have lobbied hard for the expanded tax credit. Lawmakers said the program will not be extended again.
Critics say the tax credit is poorly targeted because the vast majority of people receiving it would have bought homes anyway.
"Essentially we're giving money to people for doing nothing different," said Ted Gayer, co-director of economic studies at the Brookings Institution, a Washington think tank.
But Susan Marvin, who owns Marvin Windows and Doors in Warroad, Minn., near the Canadian border, said the economic benefits can be broad. She said, "If people are buying a home, they are far more likely to replace products or upgrade products."
Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes.
The credit is equal to 10 percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for others.
Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
Also on Thursday, the government-controlled mortgage company Fannie Mae announced a new program that could allow thousands of borrowers on the verge of foreclosure to have the option of renting their homes for a time from the company.
But the effort is likely to affect a relatively small number of people in comparison to the number of homes being repossessed.
The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that were included in a bill extending unemployment benefits for those without jobs for more than a year. The other tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years.
That break would help industries that have suffered big losses in the recession, including retailers, homebuilders and newspapers.
Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.
The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.
The bill is H.R. 3548

First-time home buyer tax credit

There's good news for first time home-buyers. In an effort to stimulate the economy and help the housing market, the federal goverment had enacted new legislation providing a tax credit of up to $8000 for first time homebuyers.Click on the link below for more details.

First-time homebuyer tax credit

To view a list of all the homes listed in Orange County in the MLS, please visit us at:

www.ocexecutives.com or www.ochomebuyer.com

What Is the Mortgage Protection Program*?

Through the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) Housing Affordability Fund Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month, for up to six months, to help make their mortgage payments.A qualified co-buyer also can participate in the program and receive a monthly benefit of $750 per month for up to six months.C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program, and estimates that as many as 3,000 families will benefit from the program this year.

For more details click here:

Mortgage Protection Program California

And to look at any homes in Orange County, please visit us at:

www.ocexecutives.com or www.ochomebuyer.com

Pending Home Sales Up for Three Months in a Row

This is an interesting article from Realtor.com published June 02, 2009 .For any questions you may have when buying your home in Orange County, always make sure to visit http://www.ochomebuyer.com/ or http://www.ocexecutives.com for a Free MLS access to the OC Real Estate database. Enjoy!———

Pending Home Sales Up for Three Months in a Row

Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index2 is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said. 1The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
2The Housing Affordability Index is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home, taking into account the relationship between median home price, average effective interest rate for loans closed on existing homes, and median family income. The higher the index, the better housing affordability is for buyers.
The calculation assumes a downpayment of 20 percent and a qualifying ratio of 25 percent of gross income for mortgage principle and interest payments. The index is a general gauge with conditions varying widely around the country. Affordability conditions are lower for first-time buyers with smaller downpayments and less income.
Monthly publication of the index began in 1981 with annual data calculated back to 1970.
Existing-home sales for May will be released June 23; the next Pending Home Sales Index will be on July 1.

10 Mistakes First-Time Home Buyers Make

This is an interesting article from Smart Money ( http://www.smartmoney.com/) published on April 2nd 2009.For any questions you may have when buying your home in Orange County, always make sure to visit http://www.ochomebuyer.com/ or http://www.ocexecutives.com for a Free MLS access to the OC Real Estate database. Enjoy!———

Deal of the Day by Lisa Scherzer

The declining home values that are plaguing homeowners are just one of the factors creating an opportunity for prospective home buyers.
Standard & Poor's latest Case-Shiller index, which tracks home prices across 20 major U.S. cities, reported that values dropped 19% in January from a year earlier.
Those depressed values, combined with near-record-low mortgage rates and government incentives (an $8,000 first-time home buyers' tax credit included in the stimulus bill), are luring more first-time home buyers into the market. Indeed, a recent Century 21 Real Estate survey found that more than three-quarters (78%) of potential first-time home buyers say now is a good time to buy.
If you agree, be aware that buying a home comes with plenty of potential missteps. Here are 10 all-too-common mistakes first-timers make.

1. Not knowing how much house you can afford.
Many novice home buyers spend a lot of time researching homes – comparing kitchen layouts and backyard square footage – but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage, says Claire Clark, senior vice president of business development at Prudential California Realty. Without first figuring out how much house you can afford, you risk falling in love with one you can't.

2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn’t mean it’s worth that much now. Values have slipped significantly, says Jay Michael, partner at Estate Property Group, a Chicago real estate brokerage, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you’ll likely reap by buying a lower-priced foreclosed home.

3. Letting your true feelings show.
No matter how much you've fallen in love with a house, don’t let the seller’s agent in on it. Otherwise, they will gain the upper hand in negotiations.

4. Failing to find a good buyer's agent.
Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order, says Michael. After all, buyer’s agents have a fiduciary responsibility to the buyer exclusively — and should be looking out for their best interests. Start your search at the National Association of Exclusive Buyer Agents, a nonprofit representing buyers. Or consider using an agent recommended by a relative or friend. Interview each candidate about their experience, if they’ve worked with first-time buyers before and what kind of service you’ll get from them.

5. Underestimating the costs of owning a home.
Whether it’s a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many home buyers don't anticipate the additional costs for repair and maintenance, or for an increase in utility costs, says Erin Baehr, CFP and president of Baehr Family Financial. Consider the age of your new home and how well it’s been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home’s purchase price annually for repairs and upkeep.

6. Failing to budget for property taxes.
Property taxes– and the likelihood that they’ll climb over the course of your time in the house – should be factored into any home-buying budget, says Baehr. To get an idea of how much you’ll be paying, call the local assessor’s office or talk to people in the neighborhood.

7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. “You can’t assume you’ll walk in there, make the offer and get it,” says Clark. Try not to get discouraged if you lose out on the first – or second – house you make an offer on.

8. Skipping the inspection.
Before signing anything, hire a professional inspector, says Justin Lopatin, a mortgage planner with American Street Mortgage Company. The seller isn’t likely to tell you there’s mold in the basement or the walls are poorly insulated. Lopatin advises buyers to find and hire their own inspector – independently of the realtor – to ensure there’s no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple web search with your zip code.)

9. Doing too much too fast.
Some buyers want to make the house their own right away, says Baehr. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that’s not always the case – especially in today's market. Instead, buyers need to exhibit patience and make changes over time.

10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in under the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house, says Lopatin.

(Corrected April 6, 2009: As originally published, we stated that a contingency clause protects home buyers if the appraisal comes in above the purchase price. In fact, protections kick in when the appraisal value is under the purchase price.)

How Much Mortgage Can You Afford?

So you're wondering exactly how much of a mortgage you can afford... or what the monthly payments of the homes you are looking at will be depending on the rates. Here's a good table and help for your loan needs: How Much Mortgage Can You Afford?

As usual, whatever questions you may have, just let us know.
Teresa Mihelic
http://www.ochomebuyer.com/
http://www.ocexecutives.com/

Spring Market update for OC Real Estate Market

Hello again! Spring is here! So what’s happening to the OC Real Estate Market?

We’ve seen lots of new information from President Obama’s Stimulus Plan. The effect this has had is a brief slow-down of what had been an increasingly active spring market here in Orange County as the markets try to figure out whether any of these programs might be helpful to housing.

Truth is, if you’re thinking of buying, or thinking of refinancing, or worried about the mortgage you’re paying on, there is something for everyone.

When it comes to the active inventory, it has had little variation since the beginning of the year. Compared to last’s year inventory at this time, we are at a 33% less homes for sale. Last year, it took a home an average of 8.14 months to sale, and this year we are averaging 4.41 months. So the ‘market time’ has come down almost 50%. Also, the number of homes that are in escrow now is the highest since 3 years ago and more than 60% of it is composed of distressed properties.
The demand is higher in the lower price ranges – where detached homes under $500k take an average of 2.4 months to be sold.

Also on the news, according to the Mortgage Bankers Association, applications for mortgages jumped 11.3 percent during the week ending March 6 due to the rates being at historic lows. That would make us believe we are headed toward some ‘very active’ months.

I’m here to help you with any questions you may have about homes in Orange County, and for all active inventory, including pictures and details, please visit my website http://www.ocexecutives.com or www.ochomebuyer.com

President Obama on Tuesday signed the $787 billion stimulus package, a measure he called the most sweeping financial legislation enacted in the nation's history. How is that going to affect our local Orange County Market?

Here's an extract from the California Association of Realtors newsletter on February 19, 2009:

• The historical American Recovery and Reinvestment Act of 2009 contains a provision to increase the Fannie Mae, Freddie Mac, and FHA loan limits in every county in the state to 2008 levels. C.A.R. has long advocated for higher conforming loan limits, and believes this stimulus package is a step in the right direction for California’s homeowners. The conforming loan limits in high-cost areas will be increased from $625,500 to $729,750, enabling more home buyers to purchase at favorable interest rates.

• The bill also increases the first-time home buyer credit from $7,500 to $8,000, and removes the requirement that the credit be paid back if the buyer stays in the home for at least three years. It also extends the expiration date for the credit from July 1 to Dec. 1, 2009. Home buyers must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009, to be eligible for the $8,000 credit.

• The stimulus package also contains $308.3 billion in appropriations spending, including $120 billion on infrastructure and science and more than $30 billion on energy-related infrastructure projects. It also allocated an additional $267 billion for direct spending, including increased unemployment benefits and food stamps; and provides $212 billion in tax breaks for individuals and businesses.

When it comes to your home search, you can always go to http://www.ocexecutives.com/ and check all the latest listings in the Orange County Market. And for any questions, we are here to help.

View every Home for Sale in Orange County MLS

Have you ever wondered where can you see ALL MLS Listings in Orange County, including those that are shortsales and foreclosures? Our website http://www.ochomebuyer.com/ offers all that, plus more. Users can see all properties without needing to register, plus, they can save homes in a personal file, set alerts for when bargain homes come in the market, or when a new Bank Owned REO and Short Sale is just listed. Other valuable services are area Map searches of all homes listed for sale. In addition, a user can also obtain a no cost and no obligation evaluation of the current market value of their home.
For other information regarding the area, visit http://www.ocexecutives.com/ There you can find valuable information about San Clemente, Laguna Niguel, Dana Point, San Juan Capistrano, Mission Viejo, Newport Coast, Laguna Beach and more.
If you have any questions regarding the local real estate market conditions, home prices, or to view some homes for sale, please feel free to drop us an email at helpdesk@ochomebuyer.com or give us a call at: 949-888-6788. We are licensed realtors, and serve all of Orange County, Ca.

Happy New Year everyone. Here’s my report for the beginning of 2009… I usually just give you the numbers, but I want to give you 3 good reasons why you should consider buying a home these days:

First : The rates
-The 30-year fixed-rate mortgage (FRM) averaged 5.14 percent for the week ending Dec. 24, 2008.
-The 15-year rate averaged 4.91 percent.
-Five year hybrid adjustable rate mortgages (ARMs) were higher at 5.49 percent, but 1-year ARMs were below 5 percent at 4.95 percent nationwide and even lower 4.75 in the Northeast and Southwest.
Good news: Interest rates are as low as they been since Freddie Mac started tracking them !
Second: Obama’s stimulus package
Earlier this week, Fed Chairman Ben Bernanke reported that the newly proposed Obama stimulus package could help boost economic activity.Obviously The Fed as well as the incoming Administration and Congress need to come to the plate and make it happen.
Third: Inventory is moving!

So if you are in the market to buy a home, now is a very good time.The good deals are out there and we are here to help you find them.Feel free to check out our website www.ocexecutives.com or call our helpdesk ar (949) 888-6788. We are happy to help!

First-Time Home Buyer Tax Credit: How It Works

The first-time homebuyer tax credit passed last fall, and many of our clients were wondering how it works. Here is an explanation provided by the National Association of Realtors:

The definition of first-time homebuyer is generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.
The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.
If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.
The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit
Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.

If you are a first-time homebuyer interested in taking advantage of this tax credit, visit our website, www.OCExecutives.com or give us a call. We will be happy to guide you through the process of buying your dream home!