Get your $8,000 HUD tax credit now

HUD tweaked stimulus tax incentive so first-time home buyers get instant assistance with down payment and closing costs.

By Les Christie, CNNMoney.com staff writer

Last Updated: June 1, 2009: 9:22 AM ET

NEW YORK (CNNMoney.com) — First-time homebuyers will now have access to quick cash to help them with their down payments.

On Friday, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs.

“We believe this is a real win for everyone,” said HUD secretary Shaun Donovan in a speech before the National Association of Homebuilders (NAHB). “Families will now be able to apply their anticipated tax credit toward their home purchase right away. What we’re doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.”

As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping on-the-fence buyers to take the home-purchase plunge. But buyers couldn’t collect the $8,000 credit until tax time, rather than at closing time — when it’s needed.

The delay created an obstacle to reigniting the housing market because most first-time buyers — the ones who would buy much of the available inventory — have only saved enough to cover 4% of the purchase price, according to the National Association of Realtors.

The mechanics of the new program, according to NAHB economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS. Homebuyers must still come up with FHA’s mandatory down payment of 3.5% on their own, but they can use the tax credit to lower their principal balance and save on monthly payments.

The initiative also authorized down payment help programs already offered in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee, Washington and other states. To quickly infuse cash into their housing markets, the housing finance authorities in these states created bridge loans to allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds.

There are also non-profit groups, such as ones affiliated with the National Home Ownership Programs for the community organizer Neighbor Works America, that offer bridge loans for down payment assistance that will be repaid with the tax credits.

There are also non-profit groups, such as ones affiliated with the National Home Ownership Programs for the community organizer Neighbor Works America, that offer bridge loans for down payment assistance that will be repaid with the tax credits.

Under the state and non-profit programs, the tax credit can provide the entire down payment; there’s no requirement that homebuyers put 3.5% down.

The first state to launch such a plan was Missouri, which rolled out its Missouri Housing Development Commission Tax Credit Advance Loan program on January 14 — a month before Congress approved the stimulus package. Since then, Missouri has approved applications by more than 360 borrowers and closed on 166 of them.

Lamar Cherry and his wife, Chrishanna, used the program to augment their down payment when they bought their home in Kansas City.

The couple purchased a four-bedroom, three-bath split-level home for $150,000, putting about 6% down. Much of that $9,000 came from the loan program, which they tapped so they wouldn’t have to drain their reserves.

“We had money saved up that we were going to use for the down payment,” said Cherry. “Now we can use some of that to buy some things we need for the house.”

At closing, the Cherrys, like all buyers in the program, signed for their first mortgage, plus a second mortgage issued by the state. The second note is good for 6% of the price of the home, up to $6,750; there is a $350 set-up fee, but no interest is charged if the debt is repaid by June 2010.

In Missouri, borrowers can only access $6,750 of the $8,000 credit for down payments. “We wanted them to have a cushion below that $8,000 in case other tax liabilities show up,” said Greg Spurgeon, the single-family homeownership administrator for the Missouri Housing Development Commission.

If borrowers don’t pay off the note, it becomes a 10-year fixed-rate mortgage with an interest rate one-half percentage point above that of their first mortgages. For example, borrowers paying 6% on their first mortgages would be charged 6.5% on the second.

So far, Spurgeon said, a significant proportion of participating homebuyers have repaid their loans. He expects most of the others to do the same before the deadline.

Cherry has claimed the federal tax credit on his 2008 taxes, but he hasn’t gotten his refund yet. He definitely intends to repay the loan before the 2010 deadline because, he said, not doing so would add about $75 a month to his house payments.

First Published: May 29, 2009: 2:37 PM ET

Honesty Is The Best Policy – When It Comes To Selling Your Home

Is This Practitioner Too Honest?
Jim Klinge, owner of Jim Klinge Realty near San Diego, has been making his living bad-mouthing properties.

“The unvarnished truth is what sells,” Klinge says. “People want the truth. They want to just see it the way it is and if you just give them that, that alone is a draw.”

He says he closed 43 deals last year, down from 61 transactions in 2004–his peak year. But he says it’s enough for him to make a good living.

The key to his business is his Web site: Bubbleinfo.com. When he lists a new property, he turns on his point-and-shoot video camera and creates a brutally honest portrait that includes all the property’s flaws.

The most important factor in home selling these days is price, Klinge says.

“In our “microwave society where people know within minutes that you are on the market,” if a property doesn’t sell in 10 to 14 days, it’s time to lower the price.

“Lower early and often,” Klinge advises. “You ought to be lowering 5 percent until you get people coming.”

Source: ABC News, Vicki Mabrey and Matt Stuart (04/16/2009)

Fed Officials: The Worst Is Over

Daily Real Estate News | April 20, 2009 | Share
Fed Officials: The Worst Is Over
The worst of the economic crisis is over, according to U.S. officials speaking at a financial conference Friday at Vanderbilt University.

Frank Nothaft, the chief economist for Freddie Mac, said housing sales have just about hit bottom and a third of home sales are now foreclosed properties.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that the declining commercial real estate market still poses a risk to the economy.

New York Fed chief William Dudley complained that the programs the government has put in place are being undermined by public perception that they are unfair to average taxpayers and that has made some potential investors fearful that they would be the focus of public outrage if they profit from the programs.

“It is worth emphasizing (that) actions that lead investors to shun taking risk, especially in this environment, are ultimately detrimental to the ability of households and businesses to secure credit at reasonable borrowing rates,” Dudley said.

Source: Reuters News, Ros Krasny and Kristina Cooke (04/18/2009)

Positive Signs Economy Improving

Signs Point to Improving Economy
Economic observers point to several factors that indicate the economy in general and the housing market in particular may be on the mend.

Positive signs include:

● Sales of single-family homes in March remained flat compared to January and February at $358,000, the U.S. Commerce Department reported.
● The Labor Department reported claims were down in the week ending April 11. While some argued this could just reflect the shortened Easter/Passover holiday, others took the optimistic view that some segments of the economy are stabilizing.
● New-home construction remains low because there is so much inventory—but the situation doesn’t appear to be worsening.

“The economy is still very weak, but there are some encouraging signs that support cautious optimism,” Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech Thursday.

Source: The Wall Street Journal, Sudeep Reddy (04/17/2009)

Foreclosures Take Time to Close

Buyers Say Foreclosure Deals Taking Too Long
Banks are quickly accepting bids and writing contracts for foreclosed homes, but buyers are complaining that settlements are taking too long.

Real estate pros say purchasing a bank-owned property is different than dealing with a regular home owner, considering that banks have to check claims on the property and problems can arise at closing. Plus, in some states, banks also need court approval of the foreclosure.

Although banks are swamped by the record number of foreclosures, the bank-owned homes will have to be sold to help stabilize residential prices and boost the housing market.

Source: Washington Post, Dina ElBoghdady (04/13/09)

© Copyright 2009 Information Inc.

Neighborhood by the Numbers – Portland Monthly Magazine

Have you picked up the most recent copy of Portland Monthly Magazine yet? The April 2009 edition features Portland Neighborhood Real Estate information.

Click on the following link to get the numbers:
http://www.portlandmonthlymag.com/real-estate/articles/neighborhoods-by-the-numbers/

VIEWS IN OREGON CITY ~ $399,900 ~ 8.86 Acres

Gorgeous Views from this ranch style home on 8.86 acres/2 tax lots. Beautiful property with a creek and forest defferal. Room to roam, paved drive for RV or more. Horse Barn w/3 stalls, fenced arena. Home has upgrades: Newer roof, newer windows, New garage doors, New Shaw flooring. Pre-Inspected!

See our Featured Listings page or go to www.rmls.com and look for ML# 9017186. Just call if you want more information on this great property!

Do you Qualify for Mortgage Relief?????

If you are curious as to whether you qualify for financial relief by refinancing your mortgage – check out this link
http://www.financialstability.gov/makinghomeaffordable/
Also: Check out our latest updates on articles and websites by going to our Resources Page and then click on Reports and News.

The Portland Real Estate Market

As most of you may have heard, it is a buyer’s market right now in Portland.  We have a 19 month supply (as of month-end January) of homes on the market so the buyer’s have a lot to choose from.  That over-supply (a 6-month supply is “balanced”) causes prices to stay a little lower.  New listings are down 15% from Jan of 08 but are up 123% from Dec 08 | pending sales are down 26.1% from Jan 08 but rose 52.2% over Dec 08 | and closed sales are down 32.5% from Jan 08 and are down 25.8% from Dec 08.

What does this mean if you are a buyer: rates are still very low for loans right now, there is the new $8,000 tax credit  for first-time home buyers, there are lots of homes to choose from, prices are more reasonable than they have been in years – it is a buyer’s market.

What does this mean if you are a seller: homes are still selling, they have to stand out from the competition and be in great shape, we suggest having a home inspection before you list, be realistic with pricing, know your competition, be ready to negotiate.

We are entering the peak of the housing market (Spring) with open arms.  Let us know if you would like an analysis of your neighborhood.

Regards,
Heidi and Heather

Mortgage Applications Up 45%

Mortgage loan application volume increased 45.7 percent from one week earlier and is up 5.2 percent compared with the same week in 2008, according to the Mortgage Bankers Association. According to MBA’s study, covering approximately 50 percent of all U.S. retail residential mortgage applications, the average contract interest rate for 30-year fixed-rate mortgages (FRMs) decreased to 4.99 percent from 5.19 percent, for 80 percent loan-to-value (LTV) ratio loans.