Real Estate Information Archive

Some time back I posted an entry titled "If I Gave you $10,000  to Buy a House, would you do it?"  I was of course referring to the St. George / Washington County Home Buyer "grant" of $10,000. It was exciting news for sure.....at the time.

That news now pales in comparison of the combined incentives available for buyers in this current market, particlularly FIRST TIME home buyers (defined as anyone who has not owned a home in the past 3 years.)

Let's take a brief look at those options:

$8000.00 First-time home buyer tax credit - Detailed summary HERE.

You literally get either an $8000.00 check from the US Govt, or a credit in the same amount against your tax liability if you buy a home between Jan 1, 2009 and Dec 31, 2009. (Assume you owe nothing in taxes, you're getting $8k. Assume you owe say $4000.00, you're getting $4000.00)

Who gets it? First-time home buyers only. Does it have to be paid back? NO. The "old" tax credit (from way back in the pre-historic age of 2008 and President Bush) was $7500.00 and had to be paid back. Not this one, it is yours to fix your home up, go to Disneyland, stuff in a mattress, whatever.....forever. Income qualifications are broad and very few will make too much for this.

$10,000 Home buying grant in Washington County / St. George -Email us for Details

This is an income qualified "grant" and also depends on how many people in your household. If you are couple with no children, $32,000 is the cutoff. I believe it goes up $5000.00 per child thereafter. The key stipulation with this program is that is has to be paid back in full if you sell or refinance the home in the first 15 years after.

$6000.00 Utah "Home Run" New Homes Grant - Just signed into law LAST NIGHT by Governor Jon Hunstman. Detailed summary HERE.

There are only 1600 of these babies available and then the pot of gold is gone. The funding comes from President Obama's stimulus package and the $$ that was allotted to Utah. The premis is this: Offer a $6000.00 incentive to those who buy a vacant, never-been-lived-in home, so we can get some of this vacant inventory "mopped up.'

Unlike the Washington County incentive, this does NOT have to be paid back and income limits are HIGH: $75,000 for individuals and $150,000 for married couples.

Total Incentives to buy: $24,000

Kind of makes me wish I were buying....

Not only that, it has also upset alot of people who feel like their hard-earned tax dollars are being used to pay their neighbors an incentive to go buy a home. There is some truth to that I'm sure, but as a member of the industry who looks at vacant homes all day long I have to support these measures.

Additionally, we have actually arrived at a place where owning IS cheaper than renting for many people, and if not literally so, it is effectively the case based on all of the tax benefits of owning a home. (not to mention getting an $8000.00 check after closing!)

Sorry to sound like just another home-peddling realtor, but we are truly heading into the "Perfect Home-Buying Storm." I read a report this week that showed the following: Since they began tracking interest rates in 1971, obtaining a (legitimate) loan has never been more affordable....ever. Add to that (now) low pricing and these incentives and I can't see why a qualified individual would wait.....for what?!

In closing, let me illustrate how these incentives "hit home." I put a contract together on a foreclosed property with a young first-time buying family just yesterday. The home had been on the market JUST 1 day and will need several thousand in maintenance items to be really "livable" by most people's standards, (carpet, paint, some appliances, yard cleanup, etc).

Now the average family buying their first home will do everything they can to come up wtih their downpayment, but as for making alot of repairs, which almost all foreclosures require, most people don't have it!

As a young family with 1 baby and consistent, but "limited" income, that $8000.00 will come in very handy for them.

What say you?

The average US citizen looks at NAR (National Association of Realtors) as nothing more than another lobbying group that spends its' days and nights telling buyers that every day is the "right time to buy."

What people (this includes Realtors themselves) don't realize is that they are doing a CRITICAL work for the country in getting legistation passed that benefits us all. So what did they do this time? Nothing besides creating an opportunity for 1st-time home buyers to get $8000.00 of FREE MONEY from the government!

Yes, FREE, so long as you hold the home for at least 3 years. That is pretty easy since I am counseling ALL of my clients to buy for the long-term.

Many thanks to one of my lending partners, Blake Bench of Countrywide Home Loans, for this timely breakdown of how the latest ("latest implying one of MANY bailouts...) multi-GAZILLION dollar (gazillion with a "g") bailout legislation.

This sign is posted on the doors of Congress....

The information is not only timely, but downright critical to not only those of us either working in the industry, or trying to buy or sell real estate right, but the greater populiation at large. Until we get the real estate markets more healthy, there will be major financial pain worldwide.

The only thing most of us hear about the bailout package is that GM and others want taxpayers to pick up the tab on a few million transmissions.....good to know, but not relevant to real estate. Here it is:

• Tax Credit: The tax credit for first time home buyers has gone up from $7,500 to $8,000. I also understand that this new amount doesn't have to be repaid. I have been helping buyers see that they could use this money to repay a gift from a relative. Maybe then they can come up with a down payment. (I wish that they had passed the $15,000 credit for any homebuyer but sometimes when you wish upon a star your dreams don't come true.) I have to add the disclaimer for all buyers to talk to their accountant or tax advisor about this since I am not licensed to give that type of advice.  Here is a breakdown of the tax credit:

Still not making sense? Here is a step-by-step explanation: 2009 Tax Credit Explained

• Help for struggling home owners: Many borrowers from the last few years put nothing down or very little down toward the purchase of their home. With home values now lower many are upside down and can't refinance. New legislation may allow them to refinance with LTV's up to 105% of the homes current value if they have stayed current on their payments. I am going to call all of my database and see if I can help them lower their payments.
• Modifications: Billions of dollars are set aside to help people modify their loans without refinancing. They do not have to have missed payments to qualify for this.
• Keeping Interest Rates Low: Bear in mind that current interest rates are "artificial" in nature and WILL NOT stay this low for ever. (This subject merits its' own discussion) These "artificial" rates are part of the government's plan to "prop up" the ailing economy. Treasury and Federal Reserve will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to ensure stability and liquidity. The Treasury will also provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can continue to stabilize markets and hold mortgage rates down

Departing from Blake's starter course on the bailout, let me add the following advice: Make sure you completely understand the rules, regulations and consequences (good and bad) of things like tax credits and local "grants" for home buyers.

In the meantime, chime in with any key information or ideas you have on this bailout business!

Am I the only person who has been asking this: "What in the world does this $700 billion bailout MEAN?!?!?"

I have been patiently waiting for some kind of summary that actually makes sense (and that a lowly Realtor can understand) on this $700 Billion bailout deal. The National Association of Realtors released a fairly concise (2 pages) summary this morning which can be found at the link below:

(click here) Summary of Rescue Bill 

I am not even going to TRY to explain it all in this post, but I would be more than happy to discuss it in the comments area below, or by phone.

I think the real key idea for the real estate world is that the bill had provisions for the Government to buy "troubled" loans from the banks, which would in turn give the banks short term cash to #1 - stay in business so Buyer can #2 - continue to get loans. 

The Government would, in turn, be able to not only renegotiate interest rates with troubled borrowers, but potentially LOWER their princpal balances based on current market values. That is a bizarre thought, isn't it?

SOME IMPORTANT QUESTIONS:

1. Should troubled homeowners be able to get loan balances lowered while those who aren't in trouble don't? What do you think?

2. Is all this stalling just so McCain & Obama can avoid looking like idiots if the bill fails and they are elected President?

3. Does Nancy Pelosi just generally tick you off every  time she opens her mouth, or does she bring back warm memories of your childhood when your mother scolded you for using a cuss word?

What I do know is this: I SHUDDER to think of a world where credit was no longer available. At first I was prone to only think of home loans and credit cards, but now I realize that this would extend to student loans and more...YIKES! 

AT THE SAME TIME, we continue to see Buyers obtain financing for home purchases without jumping through (in my perspective) too many proverbial hoops, so it is hard for me to really believe that credit is on the brink of totally drying up.

Stay tuned......