36.5% Increase in Indiana Real Estate Market!

BIG news from the Indiana Association of Realtors yesterday with a HUGE increase in home sales throughout the state. Read the full article from the Indianapolis Star below:

http://www.indystar.com/article/20091222/BUSINESS/91222011/Indiana-home-resales-jump-36-in-Nov

BIG Increase in Home Sales

Click on the link below to read a recent article by NAR about a record home sales increase. Good news, for once:

http://www.realtor.org/press_room/news_releases/2009/11/record_big

FAQ for the Homebuyer Tax Credit Changes

NAR Frequently Asked Questions

Homebuyer Tax Credit Changes

National Association of REALTORS® Government Affairs Division

500 New Jersey Avenue, NW, Washington DC, 20001

Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit

Question: Existing homeowner credit: Must the new house cost more than the old house?

Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who

meet all eligibility requirements will qualify for the $6500 credit.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a

new home. I have lived in my current home for more than 5 consecutive years and

am within the new income limits. I will go to settlement on November 20. If

President Obama has signed the bill by the time I go to settlement, will I qualify for

the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment

(when the bill is signed). There is no reference to the date of contract for the new credit. The

provision looks solely to the date of purchase, which is generally the date of settlement.

Question: I am a firsttime

homebuyer but was not within the prior income limits at the time I

entered into my contract to purchase on October 30, 2009. I will be covered,

however, by the new income limits. If the new rules have been signed into law by the

time I go to settlement, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill.

The income limit and other eligibility rules will look to your status as of the date of purchase,

which is the settlement date. So if the new rules have been signed when you go to settlement,

you should be eligible for the credit (or a portion of the credit if you're within the phaseout

range).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I

have found a home with a nonnegotiable

price of $825,000. Will I be able to use any

of the $6500 tax credit?

Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount

above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an

absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting

since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the

other eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you

will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000

and lived there until 2008 when he got a divorce. Whether John has been renting or bought in

the interim, he WOULD INDEED be eligible for the credit because he owned a home and

occupied it as his principal residence for 5 consecutive years out of the last 8 years. The

keyword here is "consecutive." As long as he lived in that house for 5 years straight what he

did since 3 years doesn't impact eligibility.

Question: I am an eligible firsttime

homebuyer. I entered into a contract to purchase on

November 1, 2009. Do I have to go to closing before December 1? How does the

extension date affect me?

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as

if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30

(or July 1, worst case), the purchaser will be eligible for the credit.

Homebuyer Tax Credit Passes Congress

Congress overwhelmingly passed an extension to the homebuyer tax credit. See link below for details.

http://www.cnbc.com/id/33673455/

Deed for Lease Program

	News Release
	November 5, 2009
	Fannie Mae Announces Deed for Lease™ Program
	WASHINGTON, DC -- Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender. "The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities." The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate. To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income. Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer. For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on www.efanniemae.com.

Homebuyer Tax Credit Extended?

Wow!! Click the link below to read the latest news on Congress extending the homebuyer tax credit. This could be huge, especially if you are an existing homeowner. Click the link to read more.

http://www.cnbc.com/id/33536082/

I'd love to hear your thoughts!

Short Sales

Modern homebuyers will inevitably come across one or more properties currently classified as a short sale. A short sale is an attempt by the current owner to sell a home in lieu of the bank taking it back through foreclosure proceedings, thus partially salvaging their credit rating and lifting the burden of heavy mortgage debt.

The entire short sale process hinges on the hope that the bank will take a loss now, approve the sale, and eliminate the costly process of foreclosing, clearing, and reselling a home. Obviously, this is a big hope on behalf of prospective homebuyers as well and they need to understand some things in order to lessen the chance for disappointment of unapproved short sales. This is what they should know:

1) Price is usually set by the agent & seller, not bank - The agent and seller often create a very low asking price in order to attract buyers. The bank is normally unaware of the asking price; however, the bank has the final say in what an acceptable offer will be. Since the bank has the power to ultimately accept or deny offers, their lack of price awareness often leads to the process taking longer than anticipated. The bottom line is that the buyer needs to remain positive and patient throughout the entire process, sometimes even for months.

2) Loans owned by 1 bank usually better than 2 - If the seller has loans owned by two different banks it is a lot more difficult to approve the short sale. This is something the agent or the buyer cannot control; it simply depends on the willingness of the bank or banks involved. While the reasons are beyond the scope of this guide, buyers should know that when the seller only has loan(s) with one bank the short sale often becomes more buyer-friendly. A savvy Realtor can let you know this type of information.

3) Lowball offers get slow or no response - Remember that the bank is typically unaware of the pricing during a short sale. When lowball offers stream into the bank they are often scoffed at and rejected, giving the prospected buyers little or no feedback. Surprisingly, it may also take painstakingly long to hear back even on good offers due to the high volume of transactions lenders are inundated with these days.

4) Agent must check comparables before submitting offer - The agent must be sure to check recent home sales in the area to give buyers a better idea of the properties that are selling. This will give the agent and the seller appropriate grounds for an asking price that will be more likely to be approved by the bank. Checking comparables will also give the buyer a better knowledge of what price homes in the neighborhood are selling for and ultimately make them a more informed homebuyer.

5) Don't hang your hat on the property - Short sales aren't necessarily "short." It can sometimes be a very long process. Don't get your hopes up for just one property, keep your options open and continue to actively look at multiple properties. Buyers must remain optimistic, the right property will come along. In most areas it is completely legal and risk-free to have multiple offers out at any given time with the proper contingencies.

6) Sellers with other properties or too strong of financials may not qualify for short sale and/or may be asked to pay the difference - Sellers that own more than a handful of properties or have an extremely large net worth will probably not be eligible for short sale. In some cases the seller will be asked to pay the difference of the sale. The seller might even need to sign a promissory note stating that they will pay back all or most of the debt. This has virtually no effect on the buyer as long as the seller cooperates.

7) "Approved" prices are quickest - It is important to remember that short sales are not always timely; however, making an offer on an "approved short sale" can be a quicker process. An "approved short sale" has a price that has already been given the green light by the bank. This could be due to the fact that another interested buyer made an offer that was approved, but didn't end up buying the property. These types of short sales are some of the most highly desirable.

8) Some banks look want strongest buyers, some want strongest offers - The bank has all the power in approving short sales. The bank can pick the most appealing buyer, which may mean different things to different banks. Some banks may prefer the buyers with large down payments while others just want the highest price regardless of down payment. Many buyers want to know if they will get a deeper discount for an all cash offer. This is very hard to predict and one will never really know until they make an offer. As long as the buyer is surrounded by a good team we would advise them to do just that.

9) Repairs are seldom done, credit is more frequent - If there are improvements that need to be made on a home, even if they are necessary to get a loan, it is often unlikely that they will be done. Typically there is some sort of credit issued and the buyer must take the responsibility of fixing anything that is broken.

10) When you get approval, must close on time - During a short sale there is no leniency with the closing escrow date as there often is in a traditional sale. During a short sale, exceptions are rarely made and the buyer must close on time. Because of this, it is important to take care of all loan paperwork immediately after opening escrow. We'd advise buyers to be extra prepared and try to have the loan finalized a few days in advance of the closing date. If there is going to be an issue that will prevent closing on time, a request for an extension will need to be made immediately. If the request is made early enough, many banks will grant an extension but don't just assume it will happen.

Conclusion
Short sales can be a great opportunity to find your new home at a competitive price. A Short sale could also be a major headache that lasts for months. It is important to have a good understanding of the factors that lead to a successful short sale to make it an enjoyable and profitable experience. We hope that these tips will help you to remain positive and optimistic throughout the process.

Todd Foust is the chief marketing executive for the FOUST Team at C21 Discovery; one of the top-selling real estate teams in Southern California. He specializes in Orange and Los Angeles Counties and operates one of the areas most informative real estate websites. To contact him or learn more about Anaheim real estate, please visit FOUSTonline.com.

About the Author: Jennifer McNamara works as a creative marketing contributor/manager for the FOUST Teams public relations division. She is a Southern California native and specializes in translating complicated real estate knowledge into user-friendly information for local homebuyers.

The Magic of A Child's Laughter

Welcome to Autumn! It seems like we barely had a summer and Fall hits quickly. We hope you are enjoying the colors, festivals and, of course your favorite football team!

Thank you for everyone who has called and e-mailed to inquire about how Brigid is doing with her pregnancy. Today is the beginning of her 6th month and she is still doing well, uncomfortable some days, but well. Ana is 'preparing' to be a big sister and is reading books and playing 'big sister' with her dolls to assist in this 'preparation'. As if this weren't cute enough, she asked to have the ultrasound photos in her bedroom so she could 'get to know' the baby better. What I've learned about being a father for a very short four years is that children can certainly try every last nerve in your body, but more importantly, they create more laughter and smiles than you would otherwise have ever thought possible. Parents, does that ring any bells or truths for you? I've shared my most recent funny story about my daughter with you. Now, I'd love to hear some of your funny stories, which have made you smile. Please e-mail me at Steve@Welcome2Indy.com or post on our blog at www.Welcome2Indy.com.BlogSpot.com. I can't wait to smile some more!

Finally, who do you know who should be a first-time homebuyer, but they haven't taken the first step for whatever reason? Please encourage them to talk with a trusted real estate consultant who can take the time to get to know their wants and needs as well as their hopes and dreams and can counsel them effectively on their options. We would love to be that consultant for them as the tax credit expires November 30th, which means they have to CLOSE by November 30th. Time is running out, interest rates are at historic lows, sellers are motivated, and inventory is still plentiful. Our market is getting stronger every day, and the historic values will not last forever, especially in Indy. Please introduce us if we can help make a difference in someone's life. Below is a secure link to our October Newsletter. There is a lot of good and fun information and articles in there. Enjoy! As always, thank you for your loyalty and support!!

http://tinyurl.com/yfoenxr

$8,000 First-Time Buyer Credit Expires Soon!

Are you a first-time home buyer? Do you know someone who would be? You have until the end of October to find a house and get an accepted purchase agreement in order to take advantage of this historic tax incentive. It expires November 30th, which means if you have CLOSED on your new home, you will NOT be able to take advantage of the tax credit. There are many outstanding houses out there still and interest rates are still historically low. Take advantage of this free money while it lasts. For more resources, check out: www.Welcome2Indy.com.

The Media Finally Catches Up...

It's about time! After many months, the mainstream media has finally caught up and started reporting something those of us in the industry have known for many months--the real estate market is healing. Welcome to the party!

We are seeing multiple offers, homes selling in days, and in some instances, for more than asking price. The bad part is that appraisers are still making things difficult and, in my opinion being too conservative and killing deals by valuing homes too low despite a ready, willing, and able buyer and seller happily paying the agreed upon purchase price and easily defensible comparables. So, buyers and sellers beware! Just because you got a great price for your house, that doesn't mean you are going to get an educated appraiser who will properly value your home.

If you qualify for the $8,000 first-time home-buyer tax credit, you only have until November 30th to close on your new home. And, don't forget that if you are bringing $10,000+ to closing, your funds MUST be wiring to the title company-absolutely NO exceptions.

Watch out for low appraisals

OK, so there are many sources out there pointing to the fact that we are heading for a real estate recovery. Monthly inventory continues to decline, sales are going up, never before seen market conditions exist for first-time buyers, and multiple offers are becoming a regularity in many neighborhoods (out of seven pending homes in a Carmel, IN neighborhood, they all had multiple offers!).

However, due to new appraisal guidelines known as HVCC, we are seeing low appraisals on home sales. This is affecting up to 50% of sales for some lenders and real estate agents. It is getting so bad that appraisers are the ones setting home values, not the market-buyers and sellers. This is just the beginning of this problem and it will continue to get worse. If you are thinking of selling your home, consider getting an appraisal before it goes on the market so you have an expectation of what to see after you find a buyer. It is a mess!

Housing Is Moving...

Wow! Things have really picked up in the last 45-days or so. I have shown over 60-homes to 4 different buyers in the past month and many homes in northern Marion County and southern Hamilton County are selling in under 30-days! Several are generating multiple offers and some still are selling for above asking price, including a listing of ours in Butler-Tarkington. The spring market is here and there are a lot of buyers taking advantage of the the low sales prices, motivated sellers, record inventory and selection, super-low interest rates, and the $8,000 first-time homebuyer tax credit.

This is all good news for everyone. That may be the light at the end of the tunnel we are seeing...

Recovery in Sight?

Is a housing recovery in sight?  No one has a crystal ball, but there are some very strong signs pointing in that direction.  Such as: 1) Home sales were up 5.1% in February, which is the largest single month increase on record, 2) Housing inventory is going down and is below 6 months of inventory in many areas of Indy, 3) Many homes are receiving multiple offers, 4) Many homes are selling in under 30-days, especially in Carmel, IN, 5) Buyer activity is WAY up for most real estate agents, 6) Showings for listings are increasing significantly, 7) Many buyers are asking about the $8,000 first-time homebuyer tax credit and the record low interest rates.

I think we hit bottom in February and things are turning around--finally.  Are you in a position to buy a home in 2009?  My guess is that 2009 will go down in history as one of the best years of all-time to buy a home.  I did.  Will you?

Foreclosure Information

Excerpted from Real Trends Newsletter-March 6, 2009

Mortgage rates hold steady
Fannie Mae/Freddie Mac launch new initiatives
11% of homeowners in mortgage trouble

Mortgage rates hold steady

A lousy week on Wall Street didn't have much effect on mortgage rates, according to Bankrate.com. Stock prices fell to 12-year lows. Normally, a giant slide on stock prices is met by a plunge in mortgage rates-not this time. The benchmark 30-year, fixed-rate mortgage was unchanged, at 5.41 percent, according to the Bankrate.com national survey of large lenders. Source: Bankrate.com

Fannie Mae/Freddie Mac launch new initiatives

Two new initiatives from Fannie Mae-Home Affordable Refinance and Home Affordable Modification-are now available to its servicers and borrowers as part of the Obama Administration's "Making Home Affordable" program. The two initiatives hope to significantly expand the numbers of borrowers who can refinance or modify their mortgages to a payment that is affordable now and into the future. For more details about the programs, goto http://www.fanniemae.com/homepath/homeaffordable.jhtml Freddie Mac launched its new REO Rental Initiative giving qualified tenants and former owners the option to lease their recently foreclosed properties on a month-to-month basis. Freddie Mac also will continue to suspend all eviction actions until April 1, 2009 to ensure there is ample time for current occupants to learn about the options available to them under the new initiative.

11% of homeowners in mortgage trouble

Over 11 percent of all American homeowners are either delinquent or in foreclosure, according to a report from the Mortgage Brokers Association (MBA). The percentage of mortgage borrowers at least one month behind in their payments-but not in foreclosure -rose to nearly 8 percent during the fourth quarter of 2008, according to the MBA National Delinquency Report. That is the highest rate of delinquency ever recorded by the survey, which began in 1972, and reflects a record 13 percent jump compared to the third quarter. The number of homes in the foreclosure process rose to 3.3 percent, an increase of 0.33 percentage points from the quarter before and up 1.26 percentage points from a year earlier. That represents nearly 1.5 million homes at risk of sliding all the way through foreclosure. Combined, the number of frequencies and loans in foreclosure came to 11.18%, the highest ever recorded by the MBA.

The Credit Crisis Explained

Take a look at this very good, non-biased, straight-forward explanation of how we got into this credit mess we now face. It is very interesting:

http://www.crisisofcredit.com

Indianapolis Ranked Nation's Most Affordable City...Again!

Indianapolis and New York City bookend the most affordable-least affordable list. Lower homes prices and interest rates fail to push sales higher.

By Les Christie, CNNMoney.com staff writer, Last Updated: February 23, 2009: 2:17 PM ET

NEW YORK (CNNMoney.com) -- Crashing home prices have led to the most affordable housing market in at least five years, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index released Thursday.

More than 60% of all U.S. homes sold during the last three months of 2008 were affordable - meaning that a family making the national median of $61,500 a year would pay 28% or less of their total income toward housing expenses.
At 62.4% affordable, the figure is up considerably from 56.1% in the previous quarter and 46.6% at the end of 2007, according to the report.

Topping the list of most affordable U.S. metro areas, which ranks areas with more than 500,000 in population, was Indianapolis. This is the city's 14th consecutive quarter in first place; it boasts a full 93% of all homes sold being affordable to median family households.

The least affordable was the New York City metro area, where only 13.9% of homes sold met the criteria.
In the fourth quarter, the national median home price fell to $190,000 from $205,700 in the previous-year period, according to a report issued last week by the National Association of Realtors. That combined with falling mortgage rates has made home buying the most affordable it has been since early 2002.

"Falling home prices and very favorable mortgage rates both contributed to the housing affordability gains we saw in the fourth quarter of 2008," NAHB Chairman Joe Robson, a homebuilder from Tulsa, Okla., said in a prepared statement.

That still wasn't enough to get moribund housing markets moving again. Existing homes sold at an annualized rate of 4.74 million in December, according to the National Association of Realtors, down from more than 7 million during the boom.
And a government report revealed that new home sales crashed to an annualized rate of 331,000 in December, the lowest since record keeping began in 1963.

"Worsening economic conditions, historically low consumer confidence and uncertainty about future home prices kept many qualified buyers on the sidelines," Robson said. Still no buying push

That affordability has improved so much does not necessarily make people go house hunting, according to Mike Larson, a real estate analyst with Weiss Research.

"You could argue that house affordability indexes are improving but that may not be the best way of defining whether it's a good time to buy," he said. "Concerns about the economy and whether they're going to still have a job have kept many homebuyers from stepping up to the plate."

During the boom, when house affordability plunged, buyers came out in droves. They were confident in the economy and afraid that home prices would soar out of reach. Today, just the opposite applies.

"Affordability is going to get even better," said Larson. "Home prices are not done falling. Buyers recognize this. There's no sense of urgency, and rightly so."

Indeed, according to Nicholas Retsinas, director of Harvard University's Joint Center for Housing Studies, affordability, which was a major factor in homebuying during the boom, no longer matters very much. In most parts of the United States, affordability has returned to where it was in 2002 or 2003.

"The new barrier is willingness to buy," he said.

That's why one major goal of President Obama's housing-rescue plan involves slowing foreclosures to stabilize housing markets and foster consumer confidence.

"If that happens, maybe people will start thinking, 'Hey, maybe prices won't go down tomorrow,'" said Retsinas.
Most and least affordable
Affordability in Indianapolis, the 33rd largest metro area in the United States with 1.7 million people, was buoyed by fairly high median income of $65,100 and rock-bottom home prices. The median price for a home sold during the quarter was just $103,000, according to the National Association of Home Builders report.

Those prices, combined with reasonable mortgage interest rates, make home-buying in the area a snap. A buyer of a median-priced home putting 20% down would pay only about $450 a month in mortgage expenses.
But even though house buying costs are reasonable, the city's weakening economy meant it did not escape the foreclosure plague. More than 20,000 homes, representing nearly 3% of the city, received a foreclosure filing of some kind in 2008, the 26th highest rate in the nation.

Other most affordable towns were: Warren, Mich. (89.6%); Youngstown, Ohio (89.4%); and Detroit (89.3%).

In the New York City metro area, home prices took a steep dive during the quarter, to $455,000 from $500,000 three months earlier. But even that was not enough to dislodge the city from its rank as the most unaffordable metro area in the land.
Median income in the area is $63,000, less than in Indianapolis and, with home prices more than four times higher than in the Midwestern metropolis, only 13.9% of the homes sold there were affordable to median income families.

That was still a major improvement from two years ago, when only 5.1% of homes sold during the fourth quarter of 2006 were affordable. And New York households have been barely brushed by foreclosure so far with only 0.71% receiving some kind of foreclosure filing during 2008.
Other least-affordable metro areas included San Francisco at 20.6%, where affordability improved greatly from 5.7% during the second quarter of 2007; suburban Long Island, where 25.5% were affordable; and Los Angeles, where 26.9% were.

First-Time Homebuyer Tax Credit Form

Looking for the IRS Tax Form 5405 to include the First-Time Homebuyer Tax Credit? E-mail me at Steve@Welcome2Indy.com and I'll send you the .pdf.

Homebuyer Tax Credit Further Explained

The following is information Lisa Hammond of Landmark Title (my favorite title company!) found through the Active Rain website:

"Any first-time homebuyers who believe they are eligible for all or part of the credit can modify their income tax withholding (through their employers) or adjust their quarterly estimated tax payments. Individuals subject to income tax withholding would get an IRS Form W-4 from their employer, follow the instructions on the schedules provided and give the completed Form W-4 back to the employer. In many cases their withholding would decrease and their take-home pay would increase. Those who make estimated tax payments would make similar adjustments."
WITHHOLDING EXAMPLES:
Note: The impact of estimated tax payments would be the same.
Situation 1: Sally plans her withholding so that her withholding is as close as possible to what she anticipates as her income tax liability for the year. When she fills out her 1040, her liability is $6000. She has had $6000 withheld from her paycheck. She also qualifies for the $8000 homebuyer credit.
Result: Sally's withholding satisfies her tax liability and reduces it to zero. She will receive a refund of the full $8000.

Situation 2: Nick and Nora file a joint return. Nick is self-employed and makes estimated payments; Nora has taxes withheld from her salary. When they compute their taxes, their combined withholding and estimated tax payments are $11,000. Their income tax liability is $9800. They also qualified as first-time homebuyers and are eligible for the $8000 refundable tax credit.
Result: Ordinarily, their combined estimated tax payments and withholding would make them eligible for a refund of $1200 ($11,000 - $9800 = $1200). Because they are eligible for the refundable tax credit as well, they will receive a refund of $9200 ($1200 income tax refund + $8000 refundable tax credit = $9200)

Situation 3: Charlie and Mary both have income taxes withheld from their salaries and file a joint return. When they file their income tax return, their combined withholding is $5000. However, their total tax liability is $7200, generating an additional income tax liability of $2200 ($7200 - $5000). They also qualify for the $8000 first-time homebuyer tax credit.Result: Charlie and Mary have been under-withheld by $2200. Ordinarily, they would be required to pay the additional $2200 they owe (plus any applicable interest and penalties). Because they are eligible for the refundable homebuyer tax credit, the credit will cover the $2200 additional liability. In addition, they will receive an income tax refund of $5800 ($8000 - $2200 = $5800). If they owed penalties and/or interest, that amount would reduce the refund.

Put the MLS on your cell phone

PUT THE MLS ON YOUR CELL PHONE AND IN YOUR POCKET

CENTURY 21 Realty Group has GONE MOBILE - CALL - CLICK or TEXT

Get ALL homes for sale 24/7/365 Anywhere - Anytime

Instructions to Download Application
Simply go to http://www.GoRealtyGroup.com or http://www.thinkrealtygroup.com
Click on the "Go Mobile" Application IconDownload our new "Go Mobile" Application to your phone

(Note: If your phone is not currently available, check back -- all will be available in 90 to 120 days)

Details on New Homebuyer Tax Credit

First-Time Home Buyer Tax Credit FAQ'S
Congress Enacts Bigger and Better Home Buyer Tax Credit

Provided Courtesy of CENTURY 21 Realty Group February 17, 2009, 4:57 PM

A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, the new credit does not have to be repaid. The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

Who is eligible to claim the tax credit?

First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

What is the definition of a first-time home buyer?

The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?

The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

What is "modified adjusted gross income"?

Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.

If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?

Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.

Can you give me an example of how the partial tax credit is determined?

Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?

The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.

How do I claim the tax credit? Do I need to complete a form or application?

Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.

What types of homes will qualify for the tax credit?

Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

I read that the tax credit is "refundable." What does that mean?

The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit. For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?

Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax advisor to ensure you file this return properly.

Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?

Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009. In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.

Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?

Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.

I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?

No. You can claim only one.

I am not a U.S. citizen. Can I claim the tax credit?

Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

Is a tax credit the same as a tax deduction?

No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS. A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?

Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties. Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.

If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

For further information click on this link: http://www.federalhousingtaxcredit.com/2009/faq.php

The 'New' Homebuyer Tax Credit

OK, there is now a new homebuyer tax credit just passed by Congress and signed into law by the President on Monday. It is $8,000 now and goes from January 1, 2009-December 31st, 2009. It is for first-time homebuyers (someone who hasn't owned a home for at least 3-years) and there are still income limits such as $75,000 for singles and $150,000 for couples. It is a true tax credit meaning you don't have to pay it back, unless you sell your home within 3-years and then you have to pay a portion of it back.

This is yet another reason to buy now, especially if you are a first-time homebuyer. Interest rates are still around 5% for a 30-year fixed conventional mortgage with a credit score of 740+. Sellers are giving great deals and there is plenty of inventory. If you are at all interested in looking into whether your situation is right or not, or if you can qualify for these incentives, please give me a call or e-mail. I'd love to help.

$7,500 Homebuyer Credit Explained

Have you heard about the $7,500 home buyer tax "credit"? There has been a lot of talk lately about it and with the proposed changes in Congress, it could get even more confusing. Currently, if you purchased a home from April 1, 2008-June 30, 2009, you are eligible for this "credit". There are some stipulations, however:
1. You cannot have owned a home as your primary residence in the past 3 years.
2. You cannot make over $75,000/year if you file your taxes as an individual or $150,000 if filing jointly.
3. This "credit" is in fact a loan--interest-free from the government. It is payable over the next 15-years on your taxes each year in $500 increments. If you sell your house before then, you have to pay the remaining balance back on your next tax return.

That last one is a pretty big difference from just being "given" $7,500 in free money. You get the credit on the next year's tax return and begin paying the following year. It can be a great help to people, but also must be repaid and many people are not a fan of this program as a result. The upside, is it can dramatically help first-time homebuyers afford that first home in time, which may go down in history as one of the best times ever to buy a home.

Congress is tossing around some bills now that would double the credit to $15,000, eliminate the income restrictions, and the 3-year rule, as well as the re-payment requirement. Needless to say, this would be huge to homebuyers.

For more information visit: http://www.federalhousingtaxcredit.com/faq.php

As always, feel free to e-mail or call me with any questions. Good luck in your home search!!

Activity Picking Up

Goodbye 2008 and welcome 2009! I don't think many people are sad that 2008 is behind us. Unfortunately, it holds many records, which no one wanted to see, however 2009 is here most experts are predicting the housing market nationally should have started to recover by 3rd quarter 2009. Indianapolis is still predicted to start its comeback in the spring of 2009.

Personally, I've seen activity marked pick up already this year for the first time since the fall market. Interest rates are lower still with a 30-year conventional fixed rate with no points and 5% down of 4.75% on Thursday of last week.

Clearly, these are unprecedented times. First-time homebuyers are getting unbelievable deals with some of the largest inventory, very motivated sellers, and low interest rates--all at the same time. That is typically unheard of. If you are a first-time home or move-up buyer, this is the time to get in the market and take advantage of a market most-likely none of us will see again.