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.)
Showing posts with label first time homebuyers. Show all posts
Showing posts with label first time homebuyers. Show all posts
Friday, August 22, 2008
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)
OR
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.
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)
OR
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.
Wednesday, July 9, 2008
Incredibly Lucky
Serendipity seems to strike every once in a while in real estate.
I was in the office making my open houses flyers and the front desk paged me. There was a walk-in customer that wanted to talk to an agent.
I was rushing to get to my opens and I did not have much time to talk. I went away with some doubts -- first time homebuyers, small budget, grand ideas. Not sure this was going anywhere, but I agreed to meet him next week.
I was really busy and scrambled to put together a couple houses to show them. I thought at least I could talk to them more and find out if buying was a possibility for them, or just a dream.
I showed them two houses in their price range - both foreclosures on the West Side. One was a grandpa house that needed a lot of work. The other was a beautiful house that had been overlooked for a long time because it was a foreclosure. It had just been reduced in price, and the buyers loved it. It was in great shape and just needed appliances.
It's unusual to find a beautiful house in a great neighborhood for dirt cheap, and my buyers knew it. They acted quickly, and found out that night that they were approved for $5,000 less than the list price.
We wrote the offer for $5,000 less than the list price -- exactly what the buyer was approved for. The next day I was sick with the flu, and the bank counters with a few thousand over the level the buyers can spend. I was demoralized and I told the list agent we would work with the lender to get my buyers approved to go to the new level, which might be hard. While I slept off the flu, I got an email that the list agent had simply re-submitted our offer and we got it!
I was thrilled. It's so rewarding when you have a buyer with a small budget and you can find them a beautiful house in a good neighborhood. We are all thrilled, I'm excited to see this one close.
I was in the office making my open houses flyers and the front desk paged me. There was a walk-in customer that wanted to talk to an agent.
I was rushing to get to my opens and I did not have much time to talk. I went away with some doubts -- first time homebuyers, small budget, grand ideas. Not sure this was going anywhere, but I agreed to meet him next week.
I was really busy and scrambled to put together a couple houses to show them. I thought at least I could talk to them more and find out if buying was a possibility for them, or just a dream.
I showed them two houses in their price range - both foreclosures on the West Side. One was a grandpa house that needed a lot of work. The other was a beautiful house that had been overlooked for a long time because it was a foreclosure. It had just been reduced in price, and the buyers loved it. It was in great shape and just needed appliances.
It's unusual to find a beautiful house in a great neighborhood for dirt cheap, and my buyers knew it. They acted quickly, and found out that night that they were approved for $5,000 less than the list price.
We wrote the offer for $5,000 less than the list price -- exactly what the buyer was approved for. The next day I was sick with the flu, and the bank counters with a few thousand over the level the buyers can spend. I was demoralized and I told the list agent we would work with the lender to get my buyers approved to go to the new level, which might be hard. While I slept off the flu, I got an email that the list agent had simply re-submitted our offer and we got it!
I was thrilled. It's so rewarding when you have a buyer with a small budget and you can find them a beautiful house in a good neighborhood. We are all thrilled, I'm excited to see this one close.
Wednesday, March 5, 2008
Get While the Gettin' is Good
I've had some conversations with some mortgage guys lately (yeah, somehow they are all guys) and lending rules are tightening up.
For the most part, it is making it much more difficult for first time homebuyers to make deals without a big downpayment. The zero down programs are drying up, and the entire Twin Cities area has been tagged a "decling market." (At least the declining market tag no longer just applies to my own ghetto address). The declining market designation means, to the buyer, that they will automatically need to put 5% down to get a conventional loan. (5% of $200k=$10,000!!)
There are still first time homebuyer programs that allow zero down, but they do have income restrictions. The limits are pretty high, but many of my first time homebuyer clients last year did not qualify.
I spoke to Todd Ingebretsen on the phone today. He works for Advisors Mortgage and is definitely very dedicated to knowing all of the little details of as many mortgage programs as possible. Since he is so dedicated to knowing the little details, the poor guy is on overload. Every day he gets piles of emails from the lenders outlining the changes in the mortgage programs.
All I can tell you all is that if you don't have a house now, and want one in the next couple years, do it now.
For the most part, it is making it much more difficult for first time homebuyers to make deals without a big downpayment. The zero down programs are drying up, and the entire Twin Cities area has been tagged a "decling market." (At least the declining market tag no longer just applies to my own ghetto address). The declining market designation means, to the buyer, that they will automatically need to put 5% down to get a conventional loan. (5% of $200k=$10,000!!)
There are still first time homebuyer programs that allow zero down, but they do have income restrictions. The limits are pretty high, but many of my first time homebuyer clients last year did not qualify.
I spoke to Todd Ingebretsen on the phone today. He works for Advisors Mortgage and is definitely very dedicated to knowing all of the little details of as many mortgage programs as possible. Since he is so dedicated to knowing the little details, the poor guy is on overload. Every day he gets piles of emails from the lenders outlining the changes in the mortgage programs.
All I can tell you all is that if you don't have a house now, and want one in the next couple years, do it now.
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