$8000 tax credit extension?

Let me preface this with a quick disclaimer. I am not a tax professional and I am not giving tax advice here….

As we near the November 30 deadline for the $8000 tax credit the looming question as to whether it will be extended is, well looming. With the possibility of an extension is also the idea of an "expansion" that would open it to buyers beyond the "first time" buyer. It seems that everyone wants their name on the bill that will extend the credit and so there are plenty out there trying. Both Obama and Congress are talking about it as the deadline approaches.
It has made a difference in our market. The feeding frenzy that started in about July/August I believe was due to the fact this deadline was driving buyers out. This assumption is based purely on the simple fact that every call, since mid-summer, I have received from a new buyer wanting to be pre-qualified for a home loan mentioned, "I need to buy before Nov 30" or "I want that tax credit". It's driving buyers to get in the game. And why not? Where else are you going to pick up a quick $8000? Most of these first time home buyers are used to getting a little a tax refund at the end of the year but this is a significant amount of money. The buyers I know plan to use the money to fix the house up, (as many of these foreclosures, need a little work) or they plan to replace their savings. Imagine you buy something for $300,000.00. Going FHA, you put down 3.5% ($10,500) of your hard earned money. Now imagine by using that money to buy a house you could potentially put 75% of it back in the bank? It's a great incentive to buy…now. Truth be told if you're not in escrow by this weekend your chances to get that credit are getting slim. So will they extend it? The house has unanimously passed an extension that would give buyers who served overseas in the military a 6 month extension, (measure H.R. 3590). It still needs to go to the senate. And the National Association of Realtors, (NAR) testified last Wednesday to the US House of Small Business Committee that an extension was critical in reducing the amount of inventory the housing market currently has. They also are suggesting an expansion on the tax credit. They even posted a video on You Tube.
NAR's website also has a quote from House Speaker Pelosi (D-CA), on October 8th, where she said, "Yes, there is under consideration whether we extend the first time homeowners credit. And the question is, would that be just first time homeowners or would you open it up to other purchasers of homes?"
The California Association of Realtors, (CAR) put out this "call to action" on their website: "The federal tax credit for first-time homebuyers is set to expire November 30, 2009. Since its inception earlier this year, the tax credit has brought 1.2 million new buyers into the market nationwide, according to NAR. In California, nearly 40 percent of first-time homebuyers reported they would not have purchased a home without the tax credit, according to a C.A.R. survey."
The website further explains CAR's views and gives you step by step instructions on how to contact your congressional representative.
So, while the Feds are going to keep us on the edge of our seats possibly right up to end, there are things you can do to help the cause. If you believe the tax credit should be extended check out the CAR or NAR websites to see how you can help.Get more information about the current 2009 tax credit from NAR here. And, you can get more information about buying a home or getting pre-approved by emailing me at davejcummins@gmail.com. You can also get daily updates by becoming a fan here on FaceBook too

California Association of Realtors, (CAR) supports tax credit extension

Here's a post from C.A.R.'s facebook page:


The federal tax credit for first-time homebuyers is set to expire November 30, 2009. Since its inception earlier this year, the tax credit has brought 1.2 million new buyers into the market nationwide, according to NAR. In California, nearly 40 percent of first-time homebuyers reported they would not have purchased a home without the tax credit, according to a C.A.R. survey.

C.A.R. supports an extension of the federal tax credit through 2010 and to include all homebuyers—not just first-timers. Historically, housing has led the nation out of economic downturns, and can do so again.

As the expiration date for this successful program looms, it is imperative that all REALTORS® take action by contacting their congressperson and urging them to extend this vital home-buying incentive.

Call your congressional representative immediately!

1. Dial 1-800-961-3302.
2. Enter your NRDs i.d. to be directly connected to the office of your representative.
3. Ask your representative to vote for extending the first-time homebuyer tax credit.

see it here:
http://www.car.org/governmentalaffairs/federal/call4actiontaxcredit/

To loan mod or not to loan mod

To loan mod or not to loan mod

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Why do you need title insurance?

Title Insurance. It's a term we hear and see frequently -- we see reference to it in the Sunday real estate section, in advertisements and in conversations with real estate brokers. If you've purchased a home before, you're probably familiar with the benefits and procedures of title insurance. But if this is your first home, you may wonder, "Why do I need another insurance policy? It's just one more bill to pay."
The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and your mortgage lender, want to make sure that the property is indeed yours lock, stock and barrel and that no individual or government entity has any right, lien, claim to your property.

Title insurance companies are in business to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly and that your interests as a homebuyer are protected to the maximum degree. Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders and others who have an interest in a real estate transfer. Title companies routinely issue two types of policies -- "owner's," which cover you, the homebuyer; and "lender's," which covers the bank, savings and loan or other lending institution over the life of the loan. Both are issued at the time of purchase for a modest, one-time premium.

Before issuing a policy, however, the title company performs an extensive search of relevant public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using either public records or more likely, information gathered, reorganized and indexed in the company's title "plant."

With such a thorough examination of records, any title problems usually can be found and cleared up prior to your purchase of the property. Once a title policy is issued, if for some reason any claim which is covered under your title policy is ever filed against your property, the title company will pay the legal fee involved in defense of your rights, as well as any covered loss arising from a valid claim. That protection, which is in effect as long as you or your heirs own the property, is yours for a one-time premium paid at the time of purchase.
The fact that title companies work to eliminate risks before they develop makes the title insurance decidedly different from other types of insurance you may have purchased. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen event, say a fire, theft or accident. The purpose of title insurance, on the other hand, is to eliminate risks and prevent losses caused by defects in title that happened in the past. Risks are examined and mitigated before property changes hands.

This risk elimination has benefits to both you, the homebuyer, and the title company: it minimizes the chances adverse claims might be raised, and by so doing reduces the number of claims that have to be defended or satisfied. This keeps costs down for the title company and your title premiums low.
Buying a home is a big step emotionally and financially. With title insurance you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed. Isn't sleeping well at night, knowing your home is yours, reason enough for title insurance?

This article was published by the California Land Title Association...and provided to me courtesy of Rosa Rhea of American Coast Title & Escrow, 8304 Clairemont Mesa Blvd. Suite 206, San Diego, CA, 92111, Office (858) 505-9985.

Hope(less) for homeowners: is HARP more of the same for San Diego homeowners?

Hope(less) for homeowners: is HARP more of the same for San Diego homeowners?

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Should you pay points?

Regardless of whether you are buying a home or refinancing an existing mortgage and whether you are using a broker or going directly to the bank; you have a choice when it comes to paying points. The cost of a point is one percent of your loan amount and is added to your closing costs. For a long time “points” have had a negative connotation amongst the general public. So, first time buyers in San Diego, looking to take their first step towards a now affordable home purchase may be confused on what to do. But, the truth is, points directly affect the interest rate on your mortgage. The higher in rate you go, the lower the points and the opposite applies.

So, a lower closing cost scenario can end up costing you more in the long run as a result of a higher interest rate. In today’s market, where a home is once again a long term investment and with the 30 year fixed rate as low as it is, paying a point to get the lower rate can makes sense.

When you are deciding what makes the most sense it's all about “recouping”. How will the point or cost affect the rate and how much will be saved over the long term? In short, how quickly can the fee be recouped from the savings of the lower rate? Using today’s rate as an example, let’s see:

Today the 30 year fixed with no points is at 5.625%. But by paying one point we can get the interest rate down to 5.25%. If we took a $300,000 loan amount 1 point is equal to $3000. Now let’s look at the difference between the two rates. A $300,000 loan at 5.625% will equal a payment of $1727 a month. If we paid the point and got the rate down to 5.25% it lowers the payment to $1657. So for a $3000 investment we will save $70 a month. Then divide that savings, ($70) by the cost to get it ($3000) and we get 42 months. In just 3.5 years we will have recouped that point in our monthly savings. Obviously if you are planning on staying in the home for over 3.5 years then the savings is worth the investment. (It’s also unlikely that you will refinance the mortgage within 3.5 years.)

There can be many different options to fit your closing costs and interest rate needs. You can pay just a half a point or pay more; buy down the rate further with 2 points. Always ask your loan officer for the rate with and without points and have him/her show you how quickly you will recoup that fee. As a general rule of thumb if you can recoup the cost within 3-4 years it’s probably worth it, depending on your long term plans with the home. (Be warned however of loan officers that offer “no points” and then charge 1% origination. One percent is a point regardless whether it is called “origination” or a “point”.)

More Hope for Homeowners coming in the form of HARP

Hope(less) for Homeowners.....Is HARP More of the Same for San Diego Homeowners?

The Hope for Homeowners, (HFH) was a plan that went into affect last summer to help stop the amount of foreclosures taking place. The program relied on the lenders willingness to take a reduction in the loan amount. They were asked to refinance the home at 90% of the property’s value thus writing off a large portion of principal. Then the homeowner had to be willing to split their future equity with the U.S. Government. So no one participated. In fact, an article on CNN.com from May pointed out that, after 7 months, the HFH program had only helped 1 person! A far cry from the 400,000 homeowners the plan claimed it would assist.

So, will the Home Affordable Refinance Program, (HARP) end up as useless as HFH? Well, not as bad. I know I have done 2 HARP loans in my office alone since April so already that’s one more than the national average for HFH. But the HARP program is not without issues. It does reward borrowers who have kept current on their mortgage with an opportunity to refinance out of an adjustable or higher rate and into today’s lower fixed rates even if they are upside down in equity. Yesterday it was announced that the property can now be up 25% negative or 125% loan to value. This is an increase from the original 105%. As property values decline most homeowners in San Diego found they couldn’t use the program because they were more than 5% upside in value. The S&P Case-Shiller Home Price Index shows a 20% drop in San Diego home prices from April 2008 to April 2009.

However, other issues are still making it difficult for the homeowners who were supposed to be helped by this program. For example, lenders are adding their own guidelines and restrictions to the program. Plus, the newly enacted Home Valuation Code of Contact, (HVCC), which restricts conversation between loan officers and appraisers, is causing further problems. The other quirk is the home loan has to be owned by either Fannie Mae or Freddie Mac. Many homeowners who need help have loans that were never sold to Freddie or Fannie. In addition, technical issues in how the loan was recorded can keep homeowners from accurately knowing if there loan is owned by Fannie/Freddie. So, wrong information can result in an eligible property owner becoming ineligible for the program.

Overall the program has been more effective than the Hope for Homeowners, but there are still a lot of kinks to be worked out before it will be the saving grace the administration hopes it will be.