We are Realtors in the Phoenix Arizona and have been hit harder than most areas with foreclosures. It is difficult to find properties that are not lender owned (unless they are short sales which will soon be lender owned in most cases)
However, there is a silver lining in the market. Buyers are returning in large numbers and REO's are selling in a few days with multiple offers being the norm. I too believe that a new wave of foreclosures is due soon but, at least here, the savvy buyers are ready, willing and able.
It is an exciting time to be a Realtor in the Valley of the Sun. See more at http://RalphandTricia.com
Some Hot LInks
Saturday, July 4, 2009
Saturday, June 20, 2009
I should have--------------
I had a phone call the other from a person that was looking for a house to lease. He stated that he had great credit and a nice down payment in the bank. He went on to say that he plans to live in the area for several years. When I asked why he didn't want to buy he told me that he wants to see what happens with the market.
Now I admit that my opinion may be a little biased but I told him that if he plans to stay in the house for a few years a wise decision would be to buy.
Prices have begun to stabilize and the number of homes on the market has decreased over the last several weeks. This is due in part to programs that encourage the lenders to renegotiate with home owners that are having trouble paying their mortgages. Also, interest rates continue at record lows. (And yes if you have good credit and money down there is mortgage money available.) And then don't forget that mortgage interest is tax deductible. For a first time buyer its like giving yourself a raise.
Well to make a long story short he choose to sit on the sidelines and maybe someday join the group that will say, "I should have bought when . . . .!"
Now I admit that my opinion may be a little biased but I told him that if he plans to stay in the house for a few years a wise decision would be to buy.
Prices have begun to stabilize and the number of homes on the market has decreased over the last several weeks. This is due in part to programs that encourage the lenders to renegotiate with home owners that are having trouble paying their mortgages. Also, interest rates continue at record lows. (And yes if you have good credit and money down there is mortgage money available.) And then don't forget that mortgage interest is tax deductible. For a first time buyer its like giving yourself a raise.
Well to make a long story short he choose to sit on the sidelines and maybe someday join the group that will say, "I should have bought when . . . .!"
Thursday, June 11, 2009
Recovery around the corner??
by Kenneth R. Harney
If rising sales, rising consumer confidence, and rising new construction are keys to a
rebound ahead in the home real estate market, it looks like we're well into recovery
mode.
That's because this week, all three of those important indicators are strongly positive. On
top of that, we've got low mortgage interest rates…and an eight thousand dollar home
buyer tax credit - working as well.
Take consumer confidence if you really want proof: After six months in the doldrums,
consumers' attitudes about the national economy and their own personal financial
situations took a major jump to the positive side in the past month.
The Conference Board's national Consumer Confidence index soared to its highest level
in eight months, up 14 points in the span of just 30 days. That's crucial for future home
buying and selling behavior because when people are worried about their economic
futures, they stay on the sidelines.
Lynn Franco, director of the Conference Board's research center, said the latest numbers
show that consumers are now considerably more optimistic about everything from jobs
to their own finances - more so than they've been for most of this recession.
A second important indicator last week came with the National Association of Realtors'
monthly home sale report. Sales of single family homes, condos, townhomes and
cooperatives jumped nearly three percent in April -- with the biggest gains at the
lower-priced segments that appeal most to first-time buyers seeking the $8,000 tax credit.
In the Northeast, sales jumped nearly twelve percent, in the West by three and a half
percent, and in the South by two percent. Only the Midwest saw a decline -- by about
two percent.
New home building starts and permits are also on the upswing after months of negatives.
In hard-hit California, new home starts increased 21 percent in April over March -- the
most dramatic jump since last October.
Bob Rivinius, head of the California Building Industry Association, said "month to month
increases (in sales) indicate that builders are (finally) clearing out their inventories and
starting to build again."
Mortgage rates have hovered just under five percent, with the average thirty year fixed
rate loan going for 4.8 percent last week … and 15 year money stable at 4.4 percent. But
there are inflationary pressures at work in the market, so don't be surprised if mortgage
rates rise in the coming weeks.
The main sobering news last week was on prices. According to the federal government's
home price index for purchases, prices were down by an average one half of one percent
in the first quarter, and by 7.1 percent when compared with the first quarter of 2008.
Published: June 2, 2009
www.realtytimes.com
If rising sales, rising consumer confidence, and rising new construction are keys to a
rebound ahead in the home real estate market, it looks like we're well into recovery
mode.
That's because this week, all three of those important indicators are strongly positive. On
top of that, we've got low mortgage interest rates…and an eight thousand dollar home
buyer tax credit - working as well.
Take consumer confidence if you really want proof: After six months in the doldrums,
consumers' attitudes about the national economy and their own personal financial
situations took a major jump to the positive side in the past month.
The Conference Board's national Consumer Confidence index soared to its highest level
in eight months, up 14 points in the span of just 30 days. That's crucial for future home
buying and selling behavior because when people are worried about their economic
futures, they stay on the sidelines.
Lynn Franco, director of the Conference Board's research center, said the latest numbers
show that consumers are now considerably more optimistic about everything from jobs
to their own finances - more so than they've been for most of this recession.
A second important indicator last week came with the National Association of Realtors'
monthly home sale report. Sales of single family homes, condos, townhomes and
cooperatives jumped nearly three percent in April -- with the biggest gains at the
lower-priced segments that appeal most to first-time buyers seeking the $8,000 tax credit.
In the Northeast, sales jumped nearly twelve percent, in the West by three and a half
percent, and in the South by two percent. Only the Midwest saw a decline -- by about
two percent.
New home building starts and permits are also on the upswing after months of negatives.
In hard-hit California, new home starts increased 21 percent in April over March -- the
most dramatic jump since last October.
Bob Rivinius, head of the California Building Industry Association, said "month to month
increases (in sales) indicate that builders are (finally) clearing out their inventories and
starting to build again."
Mortgage rates have hovered just under five percent, with the average thirty year fixed
rate loan going for 4.8 percent last week … and 15 year money stable at 4.4 percent. But
there are inflationary pressures at work in the market, so don't be surprised if mortgage
rates rise in the coming weeks.
The main sobering news last week was on prices. According to the federal government's
home price index for purchases, prices were down by an average one half of one percent
in the first quarter, and by 7.1 percent when compared with the first quarter of 2008.
Published: June 2, 2009
www.realtytimes.com
FHA Tax Credit Monetization Helps Home Buyers With Upfront Costs
RISMEDIA, June 11, 2009-First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.
The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.
“This is great news for thousands of families who want to take advantage of today’s low interest rates, competitive prices, great selection and the federal tax credit that is only available until Nov. 30, but could not save enough money for a down payment and closing costs,” said National Association of Home Builders Chairman Joe Robson, a home builder from Tulsa, Okla.
HUD also announced that FHA-approved lenders may purchase the tax credit from the home buyer in advance, so that the home buyer can use the funds for closing costs or to make a down payment in addition to the 3.5% minimum. Home buyers who go directly to FHA-approved lenders will still need to come up with the 3.5% minimum down payment that is required for an FHA-insured loan.
Home buyers previously would be able to use the funds from the tax credit only after filing their federal tax returns and had to come up with the pre-purchase costs on their own.
NAHB estimates that 40,000 more homes will be purchased due to the new FHA monetization program, in addition to the 160,000 sales already expected as a result of the tax credit.
The National Council of State Housing Agencies has a list of states offering first time home buyer tax credit loan programs on their website, www.ncsha.org.
For information on the $8,000 first-time home buyer tax credit, go to www.federalhousingtaxcredit.com [2].
The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages “monetizing” the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans.
“This is great news for thousands of families who want to take advantage of today’s low interest rates, competitive prices, great selection and the federal tax credit that is only available until Nov. 30, but could not save enough money for a down payment and closing costs,” said National Association of Home Builders Chairman Joe Robson, a home builder from Tulsa, Okla.
HUD also announced that FHA-approved lenders may purchase the tax credit from the home buyer in advance, so that the home buyer can use the funds for closing costs or to make a down payment in addition to the 3.5% minimum. Home buyers who go directly to FHA-approved lenders will still need to come up with the 3.5% minimum down payment that is required for an FHA-insured loan.
Home buyers previously would be able to use the funds from the tax credit only after filing their federal tax returns and had to come up with the pre-purchase costs on their own.
NAHB estimates that 40,000 more homes will be purchased due to the new FHA monetization program, in addition to the 160,000 sales already expected as a result of the tax credit.
The National Council of State Housing Agencies has a list of states offering first time home buyer tax credit loan programs on their website, www.ncsha.org.
For information on the $8,000 first-time home buyer tax credit, go to www.federalhousingtaxcredit.com [2].
Tuesday, June 9, 2009
Monday, June 8, 2009
Gilbert az Realtor
2020 W Washington Home for sale in Gilbert Arizona. Close to San Tan freeway. Close to San Tan Village Mall. Gilbert school district. Pebble tech heated swimming pool on a half acre lot. Ramada and Large Grassy Area completes outdoor living enjoyment. Island Kitchen boasts distressed, low-sheen Alder Cabinets, Gas Stovetop & wall Micro/Oven combo. Huge Great Room features custom Fireplace with 8 foot French door to patio. Roomy Master bedroom with French door to patio & huge walk-in closet. Lots of storage throughout house including Master Bath Linen Closet. Large Secondary Bedrooms with walk-in closets. Cherry wood floors in Kitchen, Dining & traffic areas. Crown molding in Kitchen, Great Room, Dining & Master bath. 8 foot Exterior and Interior doors Must see to love this custom home for sale in Gilbert Arizona!
Friday, June 5, 2009
Ups and downs of todays market
A Glendale home that sold less than two years ago for $259,000 sold again three months ago for $113,000. A Phoenix home that fetched $190,000 two years ago just went for $45,900. A Queen Creek home sold for nearly $275,000 when it was built in 2005. Last month's price: $78,000.
If there's an upside to the Valley's growing foreclosure problem, it's the number of home bargains now available.
Lenders saddled by a growing portfolio of foreclosed properties are selling homes for prices not seen in metropolitan Phoenix for a decade."I haven't seen pricing like this ever," said Beth Jo Zeitzer, president of the foreclosure real-estate brokerage Phoenix-based R.O.I Properties. "Valley foreclosure properties are plentiful and priced to sell."
Almost half of all Valley home sales last year were foreclosed homes resold by lenders, according to an analysis of sales data by The Arizona Republic.
Investors, first-time buyers, retirees and people moving up to bigger homes are all taking advantage. Deals can be found on nearly new homes on the Valley's fringes, fixer-uppers in historic neighborhoods in central Phoenix, new and old condominiums from Mesa to Glendale, and even luxury homes in Scottsdale.
There are some potential pitfalls to buying foreclosure homes: bidding wars, repair costs, financing and the risk that home prices will continue to fall. But foreclosures do offer an opportunity to buy Valley homes at prices unthinkable just a few years ago.
"There's a lot of properties to choose from, particularly in the $100,000 range," Zeitzer said.
Finding deals
Nearly half of Valley homes for sale are properties that lenders have taken back or that are about to go into foreclosure, according to the Cromford Report, which analyzes area real-estate data. Market watchers expect that number to increase in the next few months as the foreclosure moratoriums put in place by big lenders begin to expire.
Prospective buyers can find foreclosed properties on most Internet sites that list houses for sale and by contacting real-estate agents.
Before buying a foreclosed home, check out the neighborhood. Are there other foreclosures that might threaten your hoped-for resale price? Are there rentals that might drive down your rental income? Are there empty homes for sale that soon might become foreclosures themselves?
"Look at other homes in the area, particularly on the same block," said Julie Bieganski, a real estate agent with 1st USA Realty. "Check out the schools, the shopping and the roads." In January, she and her husband paid $63,000 for a foreclosed home in Phoenix that they plan to sell or rent. More than $261,000 was owed on the home when it was foreclosed on last fall.
"Try to buy the ugliest home on the block," she said.
The most popular segment of the foreclosure market now is homes priced below $100,000. Many of the best deals can be found in the West Valley, south Phoenix and Pinal County, the areas hurt most by the housing-market downturn.
"You are going to find the real deals on the homes with the most (physical) damage in the neighborhoods with the highest foreclosure rates," said Realty Executives agent Brett Barry, who says 70 percent of his business now is listing foreclosures. "Those are the homes that draw the multiple offers."
He said lenders don't want to spend more than $15,000 to $20,000 to fix up a foreclosed home for a sale. So if a home has extensive damage, the price is discounted more. Some foreclosed homes have been stripped of appliances, light fixtures, tile and even toilets by former residents.
Bob Ortega bought a foreclosed home in Queen Creek for $90,000 late last year. Similar homes in the area that aren't in foreclosure were listed for more than $150,000. But he had to buy a new stove, refrigerator, washer and dryer and then repaint and carpet the house.
"The last owners must have been mad because they did some real damage," he said. "It was a big headache, but I think I ended up with a deal."
Unfortunately, he is seeing other foreclosed homes in his neighborhood now selling for $10,000 to $20,000 less than he paid.
If there's an upside to the Valley's growing foreclosure problem, it's the number of home bargains now available.
Lenders saddled by a growing portfolio of foreclosed properties are selling homes for prices not seen in metropolitan Phoenix for a decade."I haven't seen pricing like this ever," said Beth Jo Zeitzer, president of the foreclosure real-estate brokerage Phoenix-based R.O.I Properties. "Valley foreclosure properties are plentiful and priced to sell."
Almost half of all Valley home sales last year were foreclosed homes resold by lenders, according to an analysis of sales data by The Arizona Republic.
Investors, first-time buyers, retirees and people moving up to bigger homes are all taking advantage. Deals can be found on nearly new homes on the Valley's fringes, fixer-uppers in historic neighborhoods in central Phoenix, new and old condominiums from Mesa to Glendale, and even luxury homes in Scottsdale.
There are some potential pitfalls to buying foreclosure homes: bidding wars, repair costs, financing and the risk that home prices will continue to fall. But foreclosures do offer an opportunity to buy Valley homes at prices unthinkable just a few years ago.
"There's a lot of properties to choose from, particularly in the $100,000 range," Zeitzer said.
Finding deals
Nearly half of Valley homes for sale are properties that lenders have taken back or that are about to go into foreclosure, according to the Cromford Report, which analyzes area real-estate data. Market watchers expect that number to increase in the next few months as the foreclosure moratoriums put in place by big lenders begin to expire.
Prospective buyers can find foreclosed properties on most Internet sites that list houses for sale and by contacting real-estate agents.
Before buying a foreclosed home, check out the neighborhood. Are there other foreclosures that might threaten your hoped-for resale price? Are there rentals that might drive down your rental income? Are there empty homes for sale that soon might become foreclosures themselves?
"Look at other homes in the area, particularly on the same block," said Julie Bieganski, a real estate agent with 1st USA Realty. "Check out the schools, the shopping and the roads." In January, she and her husband paid $63,000 for a foreclosed home in Phoenix that they plan to sell or rent. More than $261,000 was owed on the home when it was foreclosed on last fall.
"Try to buy the ugliest home on the block," she said.
The most popular segment of the foreclosure market now is homes priced below $100,000. Many of the best deals can be found in the West Valley, south Phoenix and Pinal County, the areas hurt most by the housing-market downturn.
"You are going to find the real deals on the homes with the most (physical) damage in the neighborhoods with the highest foreclosure rates," said Realty Executives agent Brett Barry, who says 70 percent of his business now is listing foreclosures. "Those are the homes that draw the multiple offers."
He said lenders don't want to spend more than $15,000 to $20,000 to fix up a foreclosed home for a sale. So if a home has extensive damage, the price is discounted more. Some foreclosed homes have been stripped of appliances, light fixtures, tile and even toilets by former residents.
Bob Ortega bought a foreclosed home in Queen Creek for $90,000 late last year. Similar homes in the area that aren't in foreclosure were listed for more than $150,000. But he had to buy a new stove, refrigerator, washer and dryer and then repaint and carpet the house.
"The last owners must have been mad because they did some real damage," he said. "It was a big headache, but I think I ended up with a deal."
Unfortunately, he is seeing other foreclosed homes in his neighborhood now selling for $10,000 to $20,000 less than he paid.
Facing Foreclosure? Here Are Do's and Don'ts
Facing Foreclosure? Here Are Do's and Don'ts
It's a situation facing hundreds of thousands of people - and the numbers are growing rapidly.
Foreclosures aren't just happening to people who over-leveraged themselves and got into risky loans. They are happening to homeowners who are getting divorced, facing health issues, needing to relocate for a job, and numerous other reasons. Regardless of how you may end up falling behind on your mortgage, knowing what to do next is critically important.
The Douglin Group and Foundation gives free seminars and workbooks to the public for homeowners facing foreclosure. Carla Douglin is the founder and CEO. Here's a Q-and-A with her.
Q: There's a lot of information out there about foreclosures, but one thing the news media tend to tout as being the first action step should actually be postponed. Why?
A: "A lot of the news media are talking about the first thing you need to do is contact your lender. However, if [homeowners who are] facing foreclosures contact their lender first, the first person they interact with is the customer service agent, who may threaten them and tell them 'We're going to foreclose on your home right away' and scare them into not taking action. If they get to a loan mitigation person and they are talking to them, they may agree to a workout that they cannot afford just to get the phone calls to stop. However, if they agree to a workout they cannot afford and they miss a payment, [the homeowners] have essentially lied to their loan agency. And that's not something good."
Q: Homeowners generally fall into a panic mode shortly after they realize the severity of their foreclosure circumstances. What do you recommend they do first?
A: "People need to back up, really stop panicking. … [They need to] look at their finances, look at their income, look at their expenses, and any liquid cash and then call their lender with that information so that they can work out something that's really going to help them and not break them."
Q: What can homeowners say to their lenders to help influence them to work out a mutually beneficial arrangement?
A: "If you have gone through the steps of understanding what your deadlines are and then facing your finances and you still see that you're short, that's where you do need to communicate with your lender and say, 'I need to work out some other agreement with you because right now I don't have it.'"
Q: How receptive are lenders when homeowners say they can't pay their mortgage?
A: "What people are finding is that lenders are willing to work with them. It will take a whole lot of persistence on the part of homeowners. They really need to make sure that they're not intimidated by the conversation they need to have with their lender. But they need to step up and say, 'I am not going to be able to make this. What can we do to suspend the payment, lessen the payment or modify the payment until I get back on my feet?'"
Q: Homeowners should also look for other sources of money. Where can they find this help?
A: "There are some employers who have a $5,000 loan that they are able to give their employees with low interest. They can pay it back through their pay over time; that's one. Two, there are grant programs through housing counselors like HUD; there are grant programs that are available to people who are going through foreclosure. [Homeowners] can reach out and be able to get some money that way."
Q: You advise homeowners to also think outside the box to help come up with money; what are those creative strategies?
A: "A lot of people are taking in boarders and renting out rooms. Some people are renting out their entire house and they are staying with family so that they can make the mortgage payment. These are all things that homeowners need to do - think a little bit outside the box when it comes to a solution.
"There are plenty of other alternatives, and people just need to look for them and apply them as quickly as possible."
Looking for solutions to an emotionally and financially draining situation such as a foreclosure is fatiguing and frustrating. However, if you realize there are options, you can begin to build momentum to rectify your situation.
Ultimately, it's critical to consult with experts on this matter, to be open about your financial dilemma, and to seek help immediately. For instance, real estate agents can either help you sell your home in a short sale, if necessary, or rent it out to help you pay your mortgage. Trying to do it alone can be a painfully disastrous experience - seek the help you need.
It's a situation facing hundreds of thousands of people - and the numbers are growing rapidly.
Foreclosures aren't just happening to people who over-leveraged themselves and got into risky loans. They are happening to homeowners who are getting divorced, facing health issues, needing to relocate for a job, and numerous other reasons. Regardless of how you may end up falling behind on your mortgage, knowing what to do next is critically important.
The Douglin Group and Foundation gives free seminars and workbooks to the public for homeowners facing foreclosure. Carla Douglin is the founder and CEO. Here's a Q-and-A with her.
Q: There's a lot of information out there about foreclosures, but one thing the news media tend to tout as being the first action step should actually be postponed. Why?
A: "A lot of the news media are talking about the first thing you need to do is contact your lender. However, if [homeowners who are] facing foreclosures contact their lender first, the first person they interact with is the customer service agent, who may threaten them and tell them 'We're going to foreclose on your home right away' and scare them into not taking action. If they get to a loan mitigation person and they are talking to them, they may agree to a workout that they cannot afford just to get the phone calls to stop. However, if they agree to a workout they cannot afford and they miss a payment, [the homeowners] have essentially lied to their loan agency. And that's not something good."
Q: Homeowners generally fall into a panic mode shortly after they realize the severity of their foreclosure circumstances. What do you recommend they do first?
A: "People need to back up, really stop panicking. … [They need to] look at their finances, look at their income, look at their expenses, and any liquid cash and then call their lender with that information so that they can work out something that's really going to help them and not break them."
Q: What can homeowners say to their lenders to help influence them to work out a mutually beneficial arrangement?
A: "If you have gone through the steps of understanding what your deadlines are and then facing your finances and you still see that you're short, that's where you do need to communicate with your lender and say, 'I need to work out some other agreement with you because right now I don't have it.'"
Q: How receptive are lenders when homeowners say they can't pay their mortgage?
A: "What people are finding is that lenders are willing to work with them. It will take a whole lot of persistence on the part of homeowners. They really need to make sure that they're not intimidated by the conversation they need to have with their lender. But they need to step up and say, 'I am not going to be able to make this. What can we do to suspend the payment, lessen the payment or modify the payment until I get back on my feet?'"
Q: Homeowners should also look for other sources of money. Where can they find this help?
A: "There are some employers who have a $5,000 loan that they are able to give their employees with low interest. They can pay it back through their pay over time; that's one. Two, there are grant programs through housing counselors like HUD; there are grant programs that are available to people who are going through foreclosure. [Homeowners] can reach out and be able to get some money that way."
Q: You advise homeowners to also think outside the box to help come up with money; what are those creative strategies?
A: "A lot of people are taking in boarders and renting out rooms. Some people are renting out their entire house and they are staying with family so that they can make the mortgage payment. These are all things that homeowners need to do - think a little bit outside the box when it comes to a solution.
"There are plenty of other alternatives, and people just need to look for them and apply them as quickly as possible."
Looking for solutions to an emotionally and financially draining situation such as a foreclosure is fatiguing and frustrating. However, if you realize there are options, you can begin to build momentum to rectify your situation.
Ultimately, it's critical to consult with experts on this matter, to be open about your financial dilemma, and to seek help immediately. For instance, real estate agents can either help you sell your home in a short sale, if necessary, or rent it out to help you pay your mortgage. Trying to do it alone can be a painfully disastrous experience - seek the help you need.
Monetize New home buyers Credit
Eligible purchasers who apply for mortgages insured by the agency may soon be able to get bridge loans or cash advances -- up to $8,000 -- that they can use for the down payment or closing costs. By Kenneth R. Harney
May 24, 2009
Reporting from Washington - The $8,000 federal tax credit for first-time home buyers is about to morph into a ready-cash down payment source, thanks to a new federal policy change.
Buyers eligible for the credit who apply for mortgages insured by the Federal Housing Administration may soon be able to get bridge loans or cash advances -- up to $8,000 -- that they can use for the down payment, closing costs or other loan expenses pending receipt of their tax credit check from the Internal Revenue Service.
Housing and Urban Development Secretary Shaun Donovan announced the FHA change May 12 in a speech to the National Assn. of Realtors. The idea, he said, is to "monetize" -- turn into immediately spendable cash -- a tax credit that often is not received until months after the settlement date.
As many as half of all would-be first-time buyers do not have enough cash on hand for a down payment and closing costs, according to building and real estate industry estimates. By advancing these consumers as much as $8,000 at closing, many more would be able to afford the purchase.
Officials at the National Assn. of Home Builders say the bridge loan feature could double the total number of home purchases stimulated by the 2009 tax credit program to more than 300,000, depending on how many private lenders and state housing agencies participate.
Under guidance drafted by the FHA, all lenders approved to do business with the agency will be authorized to provide bridge loans at closing -- secured solely by the tax credit that the borrower anticipates receiving from the IRS. State and local government agencies and nonprofit organizations approved by the FHA will be allowed to offer either bridge loans or second mortgages secured by the house.
Although the $8,000 tax credit carries the name "first-time home buyer," eligibility extends to anyone who hasn't owned a principal residence during the last three years. The credit amount from the IRS is the lesser of 10% of the purchase price of the dwelling or $8,000.
Donovan's announcement came as a small but growing number of states have begun bridge loan programs on their own to help stimulate home purchases. California has even created its own state-funded tax credit program -- a 10% credit payable to the buyer over three years -- but has limited it to newly built houses.
Bob Rivinius, president and chief executive of the California Building Industry Assn., said the new FHA credit monetization program "should provide a great combination" with the California credit. Some first-time buyers using FHA loans could even qualify for what he called "a trifecta": They could claim the 10% state credit, file for the $8,000 federal tax credit, then turn the federal credit into instant cash for use on a down payment or for closing costs.
Rivinius said funding for the state tax credit was being depleted fast, but legislation pending in Sacramento would add $200 million -- and that "should allow buyers to receive credits" through the end of the year.
The federal $8,000 credit only covers purchases closed by Nov. 30. Unless Congress extends the credit, it will disappear Dec. 1.
The new bridge loans and cash advance features of the federal credit may not be available immediately through private lenders, mortgage industry leaders say. Among the key questions yet to be answered: Where will non-depository mortgage companies get the $8,000 in advance money to provide upfront to buyers? Although most major banks offer second mortgage programs, the FHA guidelines stipulate that the tax credit advances cannot be secured by a lien on the property but only by the tax credit to be received by the buyer.
Many mortgage companies, which do not have banking deposits to tap, will need a few weeks to prepare documentation for what will essentially be secured personal loans. Plus they'll need to locate a source of funds for their advances.
In the meantime, however, would-be buyers who believe they are eligible for the federal credit shouldn't sit around. They should shift into high gear shopping for a house -- the Cinderella date of Nov. 30 is looming -- even if they'll need a bridge loan or cash advance to complete the deal.
The odds are good that by the time they're ready to get a mortgage and go to closing, at least some local FHA-approved lenders will be actively in the market with bridge loans.
May 24, 2009
Reporting from Washington - The $8,000 federal tax credit for first-time home buyers is about to morph into a ready-cash down payment source, thanks to a new federal policy change.
Buyers eligible for the credit who apply for mortgages insured by the Federal Housing Administration may soon be able to get bridge loans or cash advances -- up to $8,000 -- that they can use for the down payment, closing costs or other loan expenses pending receipt of their tax credit check from the Internal Revenue Service.
Housing and Urban Development Secretary Shaun Donovan announced the FHA change May 12 in a speech to the National Assn. of Realtors. The idea, he said, is to "monetize" -- turn into immediately spendable cash -- a tax credit that often is not received until months after the settlement date.
As many as half of all would-be first-time buyers do not have enough cash on hand for a down payment and closing costs, according to building and real estate industry estimates. By advancing these consumers as much as $8,000 at closing, many more would be able to afford the purchase.
Officials at the National Assn. of Home Builders say the bridge loan feature could double the total number of home purchases stimulated by the 2009 tax credit program to more than 300,000, depending on how many private lenders and state housing agencies participate.
Under guidance drafted by the FHA, all lenders approved to do business with the agency will be authorized to provide bridge loans at closing -- secured solely by the tax credit that the borrower anticipates receiving from the IRS. State and local government agencies and nonprofit organizations approved by the FHA will be allowed to offer either bridge loans or second mortgages secured by the house.
Although the $8,000 tax credit carries the name "first-time home buyer," eligibility extends to anyone who hasn't owned a principal residence during the last three years. The credit amount from the IRS is the lesser of 10% of the purchase price of the dwelling or $8,000.
Donovan's announcement came as a small but growing number of states have begun bridge loan programs on their own to help stimulate home purchases. California has even created its own state-funded tax credit program -- a 10% credit payable to the buyer over three years -- but has limited it to newly built houses.
Bob Rivinius, president and chief executive of the California Building Industry Assn., said the new FHA credit monetization program "should provide a great combination" with the California credit. Some first-time buyers using FHA loans could even qualify for what he called "a trifecta": They could claim the 10% state credit, file for the $8,000 federal tax credit, then turn the federal credit into instant cash for use on a down payment or for closing costs.
Rivinius said funding for the state tax credit was being depleted fast, but legislation pending in Sacramento would add $200 million -- and that "should allow buyers to receive credits" through the end of the year.
The federal $8,000 credit only covers purchases closed by Nov. 30. Unless Congress extends the credit, it will disappear Dec. 1.
The new bridge loans and cash advance features of the federal credit may not be available immediately through private lenders, mortgage industry leaders say. Among the key questions yet to be answered: Where will non-depository mortgage companies get the $8,000 in advance money to provide upfront to buyers? Although most major banks offer second mortgage programs, the FHA guidelines stipulate that the tax credit advances cannot be secured by a lien on the property but only by the tax credit to be received by the buyer.
Many mortgage companies, which do not have banking deposits to tap, will need a few weeks to prepare documentation for what will essentially be secured personal loans. Plus they'll need to locate a source of funds for their advances.
In the meantime, however, would-be buyers who believe they are eligible for the federal credit shouldn't sit around. They should shift into high gear shopping for a house -- the Cinderella date of Nov. 30 is looming -- even if they'll need a bridge loan or cash advance to complete the deal.
The odds are good that by the time they're ready to get a mortgage and go to closing, at least some local FHA-approved lenders will be actively in the market with bridge loans.
Friday, February 15, 2008
bad news or Not?
Recent headlines tell us that new home sales and new home permits have reached almost record lows. Two major builders have consolidated into one and another builders parent company has filed for bankruptcy.
How can this be good news for the resale housing market?
In last months newsletter I had an article that gave the seven things that have to happen for a market recovery. A slow down in housing starts and major players in the new home market pulling out were two important ones,
Real estate prices are controlled by supply and demand just like everything else in our free market.
Resale home sellers could not compete with the oversupply of new homes and the huge price discounts that went with it.
While many factors have contributed to the housing slowdown this is one piece of the puzzle and individuals will soon not have to compete with this artificial surplus.
How can this be good news for the resale housing market?
In last months newsletter I had an article that gave the seven things that have to happen for a market recovery. A slow down in housing starts and major players in the new home market pulling out were two important ones,
Real estate prices are controlled by supply and demand just like everything else in our free market.
Resale home sellers could not compete with the oversupply of new homes and the huge price discounts that went with it.
While many factors have contributed to the housing slowdown this is one piece of the puzzle and individuals will soon not have to compete with this artificial surplus.
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