Thursday, February 19, 2009

Final score: $8,000 for homebuyers

First-time purchasers get a tax credit windfall if they buy before December
NEW YORK (CNNMoney.com) -- There's a nice windfall for some homebuyers in the economic stimulus bill awaiting President Obama's signature on Tuesday. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.

A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a
lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking: "I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"

The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:

Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll withholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll withholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

WHAT KIND OF PROPERTY CAN YOU BUY WITH A LOW DOWN PAYMENT LOAN?

There are a few restrictions on the type of home you may buy with a low down payment loan. In addition, low down payment loans may be used with a wide variety of mortgages.
Besides price range, there are many other factors to consider when purchasing a home. It’s in your best interest to take care in selecting a home that will have lasting value as well as provide shelter. Be sure the neighborhood and house meet the needs of your family. If you have children, you may want to know if there are other children in the neighborhood and what schools or playgrounds are nearby. Also consider the availability of public transportation and how far family members will have to commute to work or school.

Check the condition of the plumbing, heating and electrical systems and whether they are up to regulatory codes. The best and easiest way to do this is through a home inspection from a certified inspector.

If you are like most people, a home is the single largest purchase you will ever make. It is important that you select a home that will meet your family’s needs and keep you happy for years to come. And most important, you must be able to afford to remain in that home for as long as you please.

TWO KEY FACTORS IN QUALIFYING FOR A HOME LOAN
In attempting to approve home buyers for the type and amount of mortgage they want, lenders basically look at two key factors: the borrower’s ability and willingness to repay the loan. Ability to repay the mortgage is verified by your current employment and total income. Generally speaking, lenders prefer for you to have been employed at the same place for at least two years, or at least to have been in the same line of work for a few years.

The borrower’s willingness to repay is determined by examining how the property will be used. For instance, will you be living there or just renting it out? Willingness also is closely related to how you have fulfilled previous financial commitments, thus the emphasis on the credit report or rent and utility bills.

It is important to remember that there are no rules carved in stone. Each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, perhaps one of your stronger points will make up for the weak one. Everyone involved in real estate is in the business of selling homes, in one way or another. Therefore, if the loan makes sense, lenders and insurers will do their best to see that you qualify.

By its very nature, mortgage insurance is an aid to affordability, because it allows families to buy homes with less cash on hand. The industry plays a central role in helping low- and moderate-income families become homeowners.

More and more borrowers are taking advantage of low down payment mortgages and becoming homeowners with less than 3 percent down. For more information on how you can take advantage of the benefits of a low down payment home loan with mortgage insurance, contact your local lender or real estate agent. For general information on purchasing a home, contact the county extension office of the U.S. Department of Agriculture, listed in the government pages of your telephone book.

Wednesday, February 4, 2009

Survey Finds Grass Is Greener on the Other Side

Daily Real Estate News February 4, 2009

The results of a survey exploring attitudes related to where Americans would like to live show that the grass is definitely greener on the other side of the fence.About 46 percent of people would prefer to live in a different type of community from the one they live in now, the survey by the Pew Research Center's Social & Demographic Trends found. That sentiment was most common among urban dwellers.But the desire to move elsewhere doesn’t stop people from appreciating their current locale. About 80 percent rank their current communities as excellent, very good or good. Both the 63 percent who have moved at least once and the 37 percent who have lived in the same place all their lives are equally satisfied with their current locations.

Other findings include:
Americans are all over the map in their views about their ideal community type: 30 percent say they would most like to live in a small town, 25 percent in a suburb, 23 percent in a city and 21 percent in a rural area.

About 75 percent of Americans say they prefer living where the pace of life is slow, not fast. A similar majority prefers a place where neighbors know each other well to one where neighbors don't generally know each other's business.

About 65 percent say they prefer to live in a hot-weather climate rather than a cold one.
Fast food gets the nod with 43 percent preferring to live in a place with more McDonald's outlets vs. the 35 percent who would rather have more Starbucks shops.

Asked to rank cities where they would live if they could, nearly everyone chose warm weather locations in the South or the West.

Here are their top 15 picks:

1. Denver, 43 percent
2. San Diego, 40 percent
3. Seattle, 38 percent
4. Orlando, 34 percent
5. Tampa, 34 percent
6 San Francisco, 34 percent
7. Phoenix, 33 percent
8. Portland, Ore., 31 percent
9. Sacramento, 29 percent
10 . San Antonio, 29 percent
11. Boston, 28 percent
12. Miami, 28 percent
13. Atlanta, 26 percent
14. Washington, DC, 25 percent
15. New York, 24 percent