Buyers

IRS Sets New Rules for Tax Credit

The Daily Real Estate News reported that the Internal Revenue Service (IRS) has published new guidelines for eligibility for the home buyer credit when there are co-borrowers purchasing the home.

When a parent of an adult child co-signs for the mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount. The parent does not qualify for claiming the tax credit, however, if the child has not owned a home in the last three years and qualifies based on income, he or she can claim the whole $8,000 credit.

When an unmarried couple co-purchases a home and only one of them is el...

President Obama signed today into law the extension of the $8,000 Tax Credit for first-time homebuyers. To qualify, buyers must contract the sale by April 30th, and close by June 30th, 2010.

In addition, the law expanded the credit to provide a $6,500 Tax Credit for buyers who have owned a primary home for over five years and who want to buy a new home.

This official document shows the differences between the existing and the new Tax Credit laws.

The $8,000 Federal Tax Credit has proven to be extremely popular. According to Realtor.com, the most visited real estate website in the U.S., 10.8% of buyers say that this and other state incentives are the most important reason motivating them to buy.  The IRS reports that about 1.14 million buyers have filed for the $8,000 first-time tax credit, and expect many more buyers to file paperwork to qualify for the credit when they submit their 2009 tax return.

However, tax credits don't deserve all the attention. More importantly, the key driver for first-time home buyers today is the improved affordability throughout the country. In July of 2009, the National Association of REALTOR®'s (NAR's...

The National Association of Realtors has sent us an interesting article answering many of the most common questions we are being asked about the Tax Credit for first-home buyers. I decided to copy it here to make it available to my clients:

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?
First-time home buyers who purchas...

This is the last part of our brief guide for first-time home buyers in South Carolina. Once you have closed on the purchase of your home, you will still need to take care of some very important details (in addition to your move):

1.Change all the utilities in your name. Usually sellers stop their accounts as of the closing date, sometimes they give you 1-2 days grace. The last thing you want is to get to your newly purchased home and find the power is off, and the temperature outside is 98F...

2.Re-key all exterior doors. Although the sellers may have seemed very nice, you never know who else has keys for the home. Don't forget to re-program the garage door openers!

3.If there was a tr...

The Real Estate Closing 

You have finished performing your Buyer's Due Diligence and everything's lined up for a closing on a specific date and time (usually at the attorney's office). What happens at this "closing"?

A "real estate closing" is the name given to a completion of the real estate transaction, including legal (title) and financial (loans & mortgages) aspects. It is an event that normally takes about an hour, in which normally all the parties are present (the sellers and their listing agent, the buyers and their buyer's agent, the closing attorney, and in some instances the loan originator). The parties each sit facing each other, and the attorney will explain the process and...

The A-Z of Buying a Home (Part 3)

You found a home, negotiated a favorable contract ("ratified" = signed & delivered). You are supposed to close in 30 days. What now?

This period from contract to closing (also known as "escrow" in some states) is critical for the buyers to do their due diligence. This means investigating everything they want about the home including the bricks and mortar, the title, the neighborhood, etc. to their satisfaction. It is also the time to formally apply for the loan (you may have shopped around with different lenders before you got pre-approved by one of them. You do not necessarily have to use the same lender, but cannot hesitate to submit a formal applicat...

The A-Z of Buying a Home (Part 2)

by Alan Donald, BuyHomesInCharleston.com

OK - so you've hired a REALTOR, discussed your needs and buying criteria and got preapproved by a lender. Now it's time to go see homes! Although it is a relatively small city, the Charleston Metro Area is very large, with hundreds of neighborhoods, areas and subdivisions each with a different style, construction, lot size and price point. 

Step 4 - The Home Search

The home search is a collaborative effort between you and your REALTOR. If you are comfortable "sharing the news", make sure that you mention to everyone in your sphere of influence that you are looking to buy a home. It is impossible to know where y...

This guide for first-time home buyers is intended to provide general information to help buyers be aware of the buying process, and to dispel any myths about buying a home. Please discuss your particular situation with the appropriate professionals before making any decisions.

So, You want to Buy a Home?

Since buying a home is a BIG financial commitment, many first-home buyers (and some repeat buyers) feel very intimidated by the whole process, which, in itself is rather uncomplicated, but it involves a lot of small steps, that, if not done right, can produce expensive mistakes.

In my 12 years in Real Estate I have dealt with many types of buyers and different scenarios, so I have deve...

The new Home Valuation Code of Conduct, or HVCC, became law May 1. This new law that forces Fannie Mae and Freddy Mac to follow new guidelines for appraisals has casued more trouble for the already beleaguered housing market, and has dampened the effect that the first-home buyers' tax credit has had on the demand for homes.

Although the principle behind the law is sound (to prevent collusion and fraud between appraisers, lenders and investors), the practical application of it creates the following problems:

• Lenders are prevented from ordering appraisals directly. Instead, they now have to use "appraisal management" companies who handle all communications with the appraisers. If the mo...

As a first time home buyer, you need to maintain a balance between money and lifestyle in a way that makes sense for you and your family. Buying a home comes with great benefits, but also with added responsibilities. Many first home buyers are very apprehensive and fearful of the process of buying a home. They need not be. Although the process is not complex, it includes a myriad of steps that have to be done in the right order to avoid problems. Hiring a Realtor who can recommend the right team of inspectors, attorneys, lenders, surveyors, insurance agents, painters, handymen, etc. will save buyers lots of time and headaches.

I recommend to all my first-home buyer clients that they foll...

FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.

Read more...

Extra Costs When Buying a Home

When you are buying a new home, there are many costs on top of the purchase price that you need to be aware of, because they may factor into your future affordability, and your ability to close the transaction. Some of these expenses are one-time charges, others are monthly or annual fees.

Here is a list of some of these costs:

Property Taxes - paid in arrears (at the end of the year) and prorated as of the date of closing. Your lender will normally collect monthly 1/12 of the estimated annual property tax, place it in your escrow account, and pay the taxes for you at the end of the year. The closing attorney will collect some prepaid taxes at closing to...

Every day when you drive to work you see a beautiful home with a "For Sale" sign on a busy road. Given the size and quality of the home, you think it must be priced well above your price range. After months of curiosity, you call for information and you find out it is surprisingly affordable, priced much lower than similar homes on quiet streets! You schedule a showing, and you love the home...

Homes located on busy streets may represent great value for the money. Some buyers who are very sensitive to noise, have young children or pets, may automatically rule out homes on busy streets. If the sellers have made pricing concessions to reflect the location of the home and you are not bother...

Before you start shopping for a home, it is essential to get pre-approved by a lender. This does not mean that you cannot keep "shopping around" for the best loan while you look at homes. Once you have a signed (or "ratified") contract, you will need to choose a lender, submit a formal application and many times pay a fee (usually the cost of the appraisal) to the lender.

So, how do you choose the right lender?

It is important to choose a reputable lender, but also one that has the right loan program to fit your particular situation. It is important to carefully compare rates, origination and processing fees, terms, conditions and restrictions before making a final decision.

Some lend...

THE PERFECT STORM FOR BUYERS

The sub-prime mortgage troubles of 2006-2008 has left the mortgage industry limping - causing the failure of a number of well-known banks.

The Federal Government stepped in early September, 2008 to rescue Fannie Mae and Freddy Mac, the two giant, quasi-governmental companies that buy the bulk of the mortgage loans from commercial banks and were experiencing difficulties. This "rescue" signalled the intention of the government to shore up the mortgage industry and help the housing market lead the economy out of the doldrums.

With the economy stalling, the Federal Government has stepped in to provide a stimulus to help the housing market. A combination of fac...

MAKING "CLEAN" OFFERS

You are in the market to buy a home and you found a house that's ideal for you - it is in the right location and meets all your "needs" and "wants". The price is the only thing that is keeping you from making an offer, because you feel that it is more than you can afford... how can you improve the odds of the Seller accepting your offer (that is much lower than their asking price)?

In addition to a market justification for a low offer (which your REALTOR can provide) an important strategy you should use is to make your offer as "clean" as possible by not asking for special conditions or contingencies.

• Avoid making demands on the sellers for minor repairs, such as ...

BUY NEW, OR EXISTING?

One of the big decisions that a buyer must make, is whether to buy a new home, or an existing one. While new homes tend to have higher prices than comparable existing ones, there are other factors to consider:

TIMING - new tract homes can take 4-6 months to build (up to 12 months for custom-built). If you need a home sooner than this, you may look at inventory homes (or "specs") that new home builders may have available or in advanced construction, or existing homes.

PRICING - while new homes are generally more expensive, when a market is over-supplied, new home builders tend to offer larger incentives for buyers than those an existing home owner may be able to give. In...

The $8,000 tax credit is a great incentive for a first home buyer (or someone who has not owned a home in the last three years). I have already sold three homes to families that will benefit directly from this incentive.

If you are currently renting and "thinking about" buying, please note that you MUST purchase the home BEFORE November 30th, 2009 to qualify for this tax credit.

Don't miss out! The tax credit, low mortgage rates and low home prices form a very special and favorable set of circumstances.