Archive for February, 2009

Tax Credit for Home Buyers

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phase-out Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phase-out means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: 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 homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2:
Assume that an individual homebuyer 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.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Higher Loan Amounts
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

February 24, 2009 at 11:00 pm Leave a comment

Chandler Homeowners Block Builder from Building Cheaper Homes

A Feb. 18, 2009, story from The Chandler Republic tells about homeowners in Fulton Ranch, an affluent community in South Chandler, at least temporarily stopping the builder from building and selling homes that would be significantly lower in price than their homes.

The current homeowners argue that Fulton Homes did not fully notify them of such changes about their plans and that the low-priced homes will devalue the half-million- to million-dollar priced homes they were sold earlier. These homeowners successfully convinced Chandler’s City Council to stop the construction of more affordable homes to finish off the development until further hearings.

Truthfully, the situation that these Fulton Ranch homeowners are facing is no different than those in any other new developments in Metro Phoenix. The only thing that separates them from the others is that they are rich and therefore, have more power. They may have gotten a preliminary nod from the City Council, but that does not mean that their argument of declining home values will stand — something the mayor hinted at, according to the paper’s coverage. I don’t think that Fulton Homes guaranteed a minimum sale price for homes in the community to previous buyers, regardless of the market at the time.

Also, these homeowners don’t have to dwell on home values NOW if they are not selling NOW. They would only be in danger of potentially losing money when and if they sold their homes in a down market.

The homeowners would actually be better off completing the development rather than the builder walking away, leaving the current residents there to take care of the HOA dues and the condition of the community themselves. If Fulton Homes left, it would mean raising the HOA dues of current homeowners to make up for unoccupied homes and unbuilt lots. Therefore, their request to stop the builder from selling low-priced homes in the community may hurt them more than help them.

For the full text of the above-mentioned article, visit

February 20, 2009 at 12:06 pm Leave a comment

Obama Housing Plan Question and Answer

Obama’s Housing Plan to contain foreclosures was unveiled yesterday among a cheering crowd of people. He outlined four steps included in the plan. They are as follows;
1. Fannie Mae and Freddie Mac to refinance loans to low fixed rate for more than 80 % loan to value.
2. Establish clear guidelines for lenders in two weeks to modify loans to no more than 31% of borrower’s income
3. Keep mortgage rates low.
4. Set reforms to avoid foreclosures and allot two billion to communities who help in keeping foreclosure down.

It is good news that the new administration is outlining ways to stop foreclosures. The specific guidelines for lenders will come out in two weeks. Those borrowers who are good candidates for loan modification should receive a letter from their lender regarding this option. In my opinion, we should be seeing a positive turn on foreclosure bleeding sometime in the next few months.

For a full text of the Obama housing plan question and answer, click on

February 19, 2009 at 1:50 pm Leave a comment

Obama’s recovery plan to assist home buyers and home owners

The National Association of Realtors (NAR) on Saturday, Feb. 14, reported the following changes in the housing stimulus package of President Obama’s economic recovery plan:

1) Loan limits will be raised to $727,000 in high-cost areas
2) The first-time home buyers tax credit will be raised from $7,500 to $8,000 with NO payback (a true credit).
3) Interest rates have come down 125-150 basis points
4) The bill has over $50 billion in it for foreclosure mitigation, with Geitner’s Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200- to $300 billion of mortgage paper from the GSES’s, thereby freeing them up to do the same with new mortgages, and Fannie Mae has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

These changes will help stimulate more buying of homes. But the real test will come with how the Obama administration will stop the foreclosures. If people can keep their homes, foreclosures will be contained and home values will stabilize. At the same time, interest rates should stay at the low 5 percent range (or lower) to increase sales. If the foreclosure trend decreases and the buying trend increases, supply and demand will balance out, making way for a stable housing market that will ultimately be the leading contributor to a stable economy.

February 15, 2009 at 6:54 am Leave a comment

Realtor Helps FSBO in a Buyer’s Market

There are still homeowners who think they can sell their home on their own in what is overwhelmingly a buyer’s market amidst an ailing economy.

Honesty, those folks are wasting their time and money. It’s hard to sell your home if you don’t have the resources to market your home correctly. If you do not have the tools and expertise to find out the true value of your home or do not have the networking experience needed to sell your home, the journey will be a very long one. It is also hard to sell your home yourself without having some emotional attachment, which can make the process difficult.

Many of the so-called “For Sale By Owner” (FSBO) home owners do not have respect for what Realtors do. That’s why they attempt to sell the house themselves, not knowing that 85 percent of FSBO’s end up with a Realtor before they sell anyway.

I have encountered around 20-plus FSBOs in my career as a Realtor. I can only remember two of those FSBOs’ owners selling the home on their own. And it was largely because their home was priced lowest in the neighborhood or in the city. One of the successful FSBOs came through with the help of a buyer’s Realtor.

There are many great Realtors out there who can do a much better job for you than a FSBO outfit. If you are looking to sell your home, get the expertise of a reputable Realtor. She or he can sell your home for a higher value in less time and you can focus on things that you are an expert on.

Selling your home on your own to save 6 percent commission will not do you any good if you aren’t able to sell your home in the first place. It is a long journey without success and one that will cost you a lot of money in a declining real estate market.

February 13, 2009 at 3:57 pm Leave a comment

FREE Home Buyers’ Seminar


Hosted by Maria Hass of Realty Executives
Saturday, March 7, 2009, 9:00 to 10:30 a.m.
Realty Executives Chandler Office
920 W. Chandler Blvd., Suite 1 (NE corner of Alma School and Chandler Blvd.)
Chandler, AZ 85225

Learn How to:

* Save money using government down payment assistance or generous home buyers’ incentives

* Improve your credit to get the best mortgage rate possible

* Take advantage of First-time Buyer loan programs to suit your needs

* Get a great deal on a short sale or foreclosure property

A Question & Answer session will follow.

Speaker: Linda Wintersteen, Loan Consultant
Prospect Mortgage Co.

RSVP to Maria (480) 650-0075 to reserve your seat not later than Wednesday, March 4,2009.

February 12, 2009 at 9:08 pm Leave a comment

Expanded First-Time Home Buyers’ Incentive

There has been much talk recently about modifying the current $7,500 first-time home buyer tax credit by making it available to any home buyer and increasing it to $15,000. This change to the home buyer incentive is in the works – it is not a LAW.

In my opinion, if and when the doubling of the incentive is approved by Congress, this is going to stimulate home buying – especially for those who are on the fence or are attempting to time their purchase to when the real estate market “hits bottom.”

Along with low interest rates kept at below 5 percent levels and very low prices, an increased tax credit will give home buyers a strong reason to dive into the real estate market despite the difficult overall economy.

To learn more about how the current $7,500 home buyer tax credit works, go to:
To learn more about the expanded home buyer tax credit go to

February 9, 2009 at 7:57 am 2 comments



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