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$8000.00 Tax Credit used as a Down Payment?

by Blake Bench

Don't you just LOVE the $8000.00 first-time home buyer tax credit? I'm sure I will get a variety of answers to that question. If you are buying you SHOULD love it and if you aren't your answer will vary based on your political opionons. Regardless, it is a really great tool that has been instrumental in the "jump-start" of real estate again in the good old USA.

There is a lot of buzz out in the real estate world right now about the first time home buyer tax credit being used as a down payment.

 As things are right now, you don't get the tax credit until after you close so you can't use it as a down payment unless you can get mom and dad to "float" you the money for a few weeks. This is completely legal and ethical, and we are seeing many home buyers do just that. Those that don't need the money as downpayment are spending it on home repairs and upgrades.  

Essentially, your family would have to give you a "gift" and then have you pay them back with the money from the tax credit.

There are plans in the works to change that rule and provide a way for buyers to used the tax credit as a down payment, applicable at closing. It would have to work in a similar fashion, since Uncle Sam is not going to send you 8 grand until you prove that you have purchased a home, but may provide a way for buyers to cut the "gifter" out of the picture. 

I want YOU to buy a house!

There are some kinks yet to be worked out because lenders don't want to be left holding the bag if the buyers don't repay them with the tax credit. I don't blame them...

In whatever form it comes it will be a welcomed addition and hopefully provide many more first time home buyers the means to not only purchase a home, but to do so in a more "cautious" manner than we saw in the previous hyped-up, $0-down-driven real estate boom.

Thoughts? Questions?

Blake Bench is a professional mortgage planner with Bank of America in St. George, UT. He can be reached at (435) 705-4128 or blake.bench@bankofamerica.com.

Big Lenders Deciding to assist "At-Risk" Borrowers

by Jeremy Larkin

I know what you're thinking....."Hey I'm an at-risk borrower!" Aren't we all?

That said, with defaults mounting, big-time lenders including Citigroup, JPMorgan and Bank of America, have also become more aggressive about modifications to mortgage agreements.

What took them so long? Most likely optimism....the hope and assumption (based on historical data) that it would all just "get better."

From the article on Yahoo: Citigroup says it is imposing a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers remain in their homes — making Citi the latest big bank to announce sweeping efforts to try to curtail losses from souring mortgages.

Citi said late Monday it won't initiate a foreclosure or complete a foreclosure sale on any eligible borrower who seeks to stay in a home if it is the borrower's principal residence, the homeowner is working in good faith with Citi and has sufficient income to make affordable mortgage payments.

So let's have some fun and I will translate for you some of the comments made by Citi Executives and PR people:

Sanjiv Das, chief executive of CitiMortgage, said, "It is in our interest that borrowers stay in their homes and actually make the payments."

Translation: "If we take on another foreclosure while hiring new people to process it we are going to go broke"

Das also said: "There is a huge amount of anxiety among borrowers," he said. "We will reach out to them before they become delinquent."

Translation: I'd like to THUMP these people for screwing up my vacation, yacht and 7th  home plans...can't they just pay their "&$@#* mortgages?

Steve Curnette, President of InsBank Mortgage in Nashville, TN said: "It's nearly an insurmountable undertaking. The number of bad loans that they can modify using their resources is being quickly outstripped by the number of new loans that need to be modified."

Translation: I wonder if Costco is hiring?........"

All joking aside, I am VERY pleased to see this happening. Homeowners need it, the banks need it, the ENTIRE COUNTRY needs it. It is all fun and games to see the foreclosed homes hit the market and figure out a plan to buy them for investment purposes, but at some point it will bankrupt the very institutions we rely on for credit.

 Additionally, (and I may get in trouble with homeowners), we all like to beat up on the big banks but when you truly understand the situation you see that THEY are the biggest losers. The average home-owner ruins their credit, feels stupid around their neighbors, then moves on to an equal or better home for LESS money as a rental.

I'd like to get some opinions from you people out there in OR out of my industry as to whether you like the idea of loan "workouts" or not. 

In the meantime PLEASE contact us if you or someone else you know is in a "bad spot" with their house. We work full-time with these issues and may be able to propose or find a solution to the problem. 

Carry on!

 

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Photo of Jeremy Larkin - The Larkin Group Real Estate
Jeremy Larkin - The Larkin Group
Keller Williams Realty
50 E 100 S, Suite 300
St. George UT 84770
435.767.9886
Fax: 435-359-5085

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