Friday, August 22, 2008

Newsflash: Caron NOT to be Obama's VP Pick

At this late hour, I can now announce that I will NOT be Barak Obama's VP pick.

While friends, family and neighbors have speculated that I was speaking with Obama's campaign during my extensive and furtive cell phone conversations, it was simply clients, loan officers, other realtors and the occasional robo-caller.

My Sunday "open house schedule" has also been suspect, with family assuming I was spending time at Obama's Raymond Avenue Minnesota HQ. I was actually in St Paul and nearby suburbs, holding open houses.

With my extensive experience with the local real estate market, the foreclosure crisis, my credentials as a board member of the Lexington Hamline Community Council and prestigous Bachelor of Fine Arts, I was a must-call for the campaign.

However, I have decided the campaign trail would simply take too deep of a toll on The Annoying Cow Dog and The Brown Dog.

I have referred the campaign to other Famous LexHam/St Paul Bloggers. We'll see how they respond to Mr. Obama's inquiries.

Petit Flower
LexHam Rand
The Pirate
The Dork
Little Latin Lupe Lu
Blacktop Desciple

On the Other Side of the Shell Game

My last post talked about the death of the last $0 down program.

However, the bill passed by Congress also had some interesting angles for first time homebuyers.

One of them is a tax credit. If a first time homebuyer buys a house between now and next summer, you will get a $7,500 tax credit on your next tax bill.

You don't get a check when you close your house -- you get a giant refund check when you file your taxes.

What's the catch? Oh yeah, there is a pretty big catch.
This tax credit must be REPAID. Yep, the IRS giveth and the IRS taketh away.

What it means is that each subsequent year you file your taxes you will pay back (interest free, mind you) a few hundred dollars to the IRS for that $7,500 tax credit.

No, you cannot use the tax credit for your house downpayment, but you will get a fat check come next year. You can buy whatever you want with it.

I would buy cartons and cartons of Camel Lights and 50 pounds of prime rib.

(And no, I don't smoke. I just think the idea of buying cigarettes is funny.)

It's Now or Never, People

The party is officially over. A few weeks ago Congress and the Senate passed a big housing bill to help the flailing housing market. Some of what they did helped, some of it could hurt.

The biggest news: last $0 down "program" in the mortgage world is kaput as of October.

It was a funny deal -- called a Downpayment Assistance Program, it allowed a home seller to give a "gift" to a nonprofit who would turn around and give a buyer that money to use as a downpayment on the house purchase. My lawyer client called it legalized money laundering, but it is (was) legal. And now it is almost gone.

Sooo.... if there is anyone out there that wants to buy a house -- they can use this program now (and I mean, like, today, time is ticking) or they can save up 3.5% for a downpayment next month.

The difference is more than dramatic, to be frank.

Think of it in these terms:

You are a renter. You want to buy a house. You make, say, $50,000 a year. Or you're a couple and make $80,000 or so a year.

You can buy a house NOW for $0 down (well, you do need a few hundred dollars for the inspection and whatnot)


Next month, you will be required to put down 3.5% of the purchase price. On a $200,000 house, that would be $7,000.

All I know is when you are 25 years old and buying your first house, it is not an easy thing to scrape up $7,000.

But you protest:
I already own a house! Why would I care?

Because housing is a trickle down (trickle up?) kind of situation.
People sell $200,000 houses to buy $350,000 houses.
People sell $350,000 houses to buy $500,000 houses.

So if there are no buyers for a $200,000 house, that seller can't turn into a buyer for the next bracket up.

It's really tough out there and it just got tougher.

And -- if you are renting and want to buy something relatively soon and don't have $10,000 sitting in your bank account -- call me today. For reals, today. The house needs to be found, the offers need to be written and at the mortgage office by Friday August 29.