Debbie Brodie’s Chico Real Estate Blog

If you have not taken advantage of the $8000 first time home buyer credit, there is still time.

The Los Angeles Times released a story outlining the IRS release of guidelines for the home buyer tax credits.

The Internal Revenue Service (IRS) recently issued new guidelines and clarified documentation that taxpayers must submit to successfully obtain the federal tax credit for home buyers.

• The federal tax credit for home buyers was extended and expanded late last year.  Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010.  Repeat buyers may be eligible for a tax credit of up to $6,500. Click here for more information about the federal tax credit for home buyers, including eligibility requirements.
• To receive the tax credit, home buyers must comply with the IRS’s documentation requirements, including a fully executed IRS Form 5405.  On the form, which is available on the IRS’s Web site, taxpayers provide information supporting their claim of eligibility, such as income and home purchase date.
• The IRS also requires home buyers to submit a copy of the closing or settlement statement that proves the transaction took place.  The IRS previously said that the statement should show “all parties’ names and signatures, property address, sales price, and date of purchase.”  However, since closing or settlement statements vary by state, and in some cases the form does not include both the seller’s and buyer’s signatures, the IRS has revised this requirement.  As long as the closing or settlement statement conforms to prevailing local practices, the IRS will accept it.
• One stipulation for repeat buyers is they must provide documentation they lived in their former property for a consecutive five years out of the previous eight years.  Accepted documentation may include property tax records, hazard insurance records, or copies of annual mortgage interest statements filed with their federal taxes.

To read the full story, please click here.

Everyone is looking for the right strategy to buy or sell property in today’s changing real estate market.

Seller’s still want to wait until their property is worth the amount they established in their minds at the top of the market. Those numbers may not return for many years. So, what to do?

If you have considered moving up to a nicer property, or down sizing, there are many incentives in place to make it a very attractive time.

With a good Realtor to guide you, you can actually gain an advantage in today’s market. Remember, the “loss” is really only a paper loss if the next property you buy is also a bargain.

 The same rule applied if you bought a house at the very top of the market,and sold one at the top as well. The extra money you made on the sale of the first home offset the extra you paid for the new home. Bubble for bubble, bust for bust.

So, find the home you really really want. Make an offer. Put your current house on the market, subject to the new house closing successfully.  Apply for the $6500 tax credit. And be happy

We all know about the $6,500 or $8,000 federal tax credit for people who buy a home, and are in contract by April 30th. But there are more reasons not to wait. FHA buyers will not be able to get all the same benefits as new regulations are passed.

One biggie: the seller will only be able to contribute 3%, not 6% towards closing costs.  Another: not everyone will get the low 3.5% down payment.

New Rules for FHA Borrowers
The Federal Housing Administration (FHA) recently outlined future changes to the FHA home loan program.  The changes first were proposed last month by Secretary of Housing and Urban Development (HUD) Shaun Donovan.

Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels.  FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.

Policy changes include:

–Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent.  HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.
–Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA?s 3.5 percent down payment program.  New borrowers with less than a 580 FICO score will be required to put down at least 10 percent.  FHA expects this to take effect in early summer after it goes through the normal regulatory process.
–Reduce allowable seller concessions:  The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit.  FHA expects this to take effect in early summer after it goes through the normal regulatory process.
More info 
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-016

The first quarter of 2010 is a dynamite time to purchase a home! Low interest rates and once-in-a-lifetime tax credits are sweetening the pot. And you don’t have to be a first time home buyer for tax credits anymore.

The Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) was signed by President Obama on November 6^th, 2009.

This bill extended the $8,000 first time home buyer tax credit, which would have expired on December 1, 2009.

Home buyers now have until June 30, 2010 to close escrow on a qualifying home purchase. But, (and this is important) a binding contract must be entered into on or before April 30, 2010.

First time home buyers may receive up to $8,000 (or 10% of the home’s purchase price).

If you are not a first time home buyer, there is now a $6,500 credit available if you purchase a home as your residence.

There is a limit of $800,000 on the price of the home, and you must be over 18 in order to qualify. Income limits also apply. Eligibility phases out at $225,000 to $245,000 for married filing jointly.

It is best to check with your CPA or tax preparer to make sure that you can get the credit.

Then call me, and let’s find your dream home! There are still a few foreclosures and sales with great deals.

If you have missed a mortgage payment, a clock is ticking that can take your home away from you. Even with the extra safeguards put into place to help people keep their homes, foreclosures happen. Everyday.

As a Realtor, nothing is more frustrating than to get a call from a homeowner that has waited too long. “My house is set to be sold at a trustee’s sale this week. I need help.” At this point there is nothing a Realtor can do.  An attorney may be able to help stop the sale, but only if there is a good legal reason.

Make every attempt to talk to your lender before you miss a payment. Many banks have added additional staff.  New options may be available, even if you had called before.

If you have already missed a payment, chances are the bank will start calling you. Pick up the phone! Open your mail, return the calls.  The bank or lender cannot help you if you don’t communicate with them.

A Realtor can help you explore your options.  You can authorize a Realtor to speak to your lender on your behalf. Most Realtors do not charge a fee unless they facilitate the sale of your home. If you have no equity, the bank (not you) pays the Realtor fees on an approved short sale.

Communication is the key. Most foreclosures can be stopped if action is taken early on. Talk to your bank, talk to a Realtor, talk to an attorney. Don’t let the clock run out on your home.