• The $7,500 tax credit is available for first-time home buyers only.
• The law defines a first-time home buyer as a buyer who has not owned a home during the past three years.
• All U.S. citizens who file taxes are eligible to participate in the program.

• Home buyers who file as single or head-of-household taxpayers can claim the full $7,500 credit if their adjusted gross income (AGI) is less than $75,000.
• For married couples filing a joint return, the income limit doubles to $150,000.
• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
• The credit is not available for single taxpayers whose AGI is greater than $95,000 and married couples with an AGI that exceeds $170,000.

• First-time home buyers would receive a $7,500 tax credit for the purchase of any home on or after April 9, 2008 and before July 1, 2009. To qualify, you must actually close on the sale of the home during this period.

• A refundable credit means that if you pay less than $7,500 in federal income taxes, then the government will write you a check for the difference.
• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $2,500 payment from the government.
• If you are due to receive a $1,000 tax refund from the government, your refund would grow to $8,750 ($1,000 plus $7,500 from the home buyer tax credit).
• Buyers can take the tax credit in their 2008 or 2009 tax return.
• If you purchased the home in 2008, the tax credit is taken on your 2008 tax return. If you buy in 2009, you have the option of taking the credit on your 2008 or 2009 tax returns.

• All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a home in the prior three years. This also includes newly-constructed homes.

• The tax credit essentially serves as an interest-free loan to be repaid over 15 years.
• For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. However, the buyer doesn’t have to start repaying the credit until two years after the tax year in which the credit is claimed.
• If the home owner sold the home, then the remaining credit would be due from the profit of the home sale.
• If there was insufficient profit, then the remaining credit payback would be forgiven.

The buyer places an offer on the property that’s significantly more than the asking price on the condition  that the seller kicks back all or some of the extra money.

The appraisal is obviously inflated.

Neither the buyer nor the buyer’s agent has ever seen the property.

The buyer wants to use a different title company than the one that the seller’s agent has chosen.

The buyer or buyer’s agent claims that the extra money will be used for home repairs or renovations or paid to a contracting company to handle the repairs or renovations.

 Losing your home to foreclosure is a reality many people have a hard time facing. The growing number of foreclosures in Canton, Plymouth, and the surrounding communities are accompanied by homeowners unwilling to face the facts. Instead of hiding, the best advice is to talk to your lender as soon as you can.

Call any lenders who have a lien against your home (a first mortgage, second mortgage, home equity loan, construction loan, etc.). Let them know your situation and how much you can afford to pay per month. Don’t exaggerate how much you can pay. Give a realistic estimate, and see what they have to say. Ask the lender’s representative to explain all of your options:

•   How long would they give you to sell the home and pay off the debt?

•   Would they be willing to negotiate a short sale – accepting less than you currently owe as “payment in full?”

•   How much would it cost to reinstate the loan – catch up on missed payments (plus any penalties and interest)?

•   Would the bank be willing to negotiate a forbearance, in which you could catch up on back payments in installments?

•   Is the bank willing to modify the mortgage – perhaps by increasing the term (stretching payments over a longer period of time), decreasing the interest, forgiving a portion of the debt, or adding missed payments on to the end of the mortgage?

•   Would the bank be willing to accept a deed in lieu of foreclosure, whereby you would provide the deed and keys for the home in exchange for having any remaining debt forgiven?

Once you have all of your options on the table, you can make a much better decision of how to proceed.

During the 2005-2007 correction:

Median household income grew by 5%

> 4 Million jobs were created

> 2 Million Legal Immigrations (4 Million IRS I-10 status)

> U.S. Population grew by 5 Million people

> House prices fell, so affordability is up

> 3 Million Family formations

> Retiring boomers abated sales or purchases

> Pent up demand from the correction will work off the inventory

> U.S. population growth by another 5-7 Million people to a total of 315 Million by 2010

> 1 Million + Legal immigrants/year

> X Generation 30 Million

> Y Generation 70 Million

Estimates are that about 100 Million people are growing into home buying age; youngest 20+, oldest early 30’s.   It’s estimated that only 5% own a home now. 

By 2010, we will likely be in a balanced market.  Enough inventory to meet demand; but not at the point where there are not enough listings. 

Builders will start to replenish new home supplies as there will be a demand for 129 Million housing units vs. 127 Million now built. 

> 30-year fixed-rate mortgages at 6% on average, they are down from 6.3% a year ago — lower rates mean buyers can afford more

 

> As a forward-looking factor, mortgage interest rates continue to hover just above the 40-year lows — there is mortgage money available at some of the lowest rates in history

> Excellent homes-for-sale selection, both new and resale

> Great value - homes priced to sell

> More affordable housing and lower monthly payments

> Owning a home offers good tax benefits

> Homes are still a great investment and are increasing in value in most markets

> Build incentives and promotions available

Yes there are reasons to celebrate in what seems to be a down market. Keep in mind these statistics are for the country as a whole but here in the Detroit market we are experiencing a significant increase in sales activity right now. Could it be that we may recover faster than the country as a whole? As I mentioned, we went into a slump at least a year or two ahead of the country.  Maybe it’s our turn to lead the country out of this home sale slowdown. 

Here’s more evidence of this. Our partner website for searching homes, www.bestmichiganhouses.com , has been registering record traffic. What’s more interesting is the people that have been coming to this site are coming back in record numbers on a daily basis. The return is probably because the site is so user friendly, but it also seems there is so much more interest in finding a home. People are requesting more from the site than they have in the past few months.

Now you may be asking yourself how to take advantage of the surge in home buying interest that is occurring. Our website www.thebittingerteam.com is designed to be a resource site for people interested in buying, selling, and investing in real estate. Although we do have information on our team and how we work, the main function of the site is to provide resources to you the consumer to help you understand all aspects of the real estate market.

Here is an example of how the site can help you. The two buzzwords you hear in the real estate market today are "Foreclosures" and "Short Sales".

The tab labeled "Foreclosure Help" takes you to pages that explain in detail how foreclosures work, how they are different in Michigan as opposed to the other states, online resources for further information, and a wealth of other pages that are being added to further your knowledge of the Foreclosure market.

Similarly the "Short Sale Help" tab takes you to pages concerning Short Sale FAQ’s, the effect short sales have on appraisals, helpful hints to see if you qualify for a short sale, and a host of additional information on the process and what it may mean to you as a buyer or seller.

There are lots of reasons to buy a house right now. With interest rates and house prices so low there is no reason to wait. If you currently own a home and it fulfills all your needs then the best advice is to stay where you are. If however you have been contemplating moving because the home no longer fits your needs, an upgrade to a house that does may make  a lot of sense. While you may take a financial hit on your current house you could stand to make a windfall on a bargain you will buy to replace it.

If you would like advice on your situation don’t hesitate to call us at 734-459-2600. We can help you over the phone to decide which way is best for you and your family.

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Home buyers are, for the most part, honest and law abiding. We have been approached by some over the years that could not afford a home they intended to buy but were ill advised to fudge their application to get them into the house.

Fraud for housing may include any of the following attempts to deceive the lender into approving a mortgage loan:

 > Claiming on a loan application that you earn more money than you actually earn.

  > Presenting counterfeit paycheck stubs to verify employment or income.

 > Intentionally overestimating the value of your assets on a loan application.

 > Claiming on a loan application to work for a particular employer when you do not.

 > Adding someone to the loan application as a co-borrower who does not intend to live in the home with you or assist you in making payments.

 > Signing a loan application that contains blanks you know the loan officer will fill in for you later with false information that will help you qualify for the loan.

 > Getting a friend or relative who owns a business to say that you work there.

 > Fudging the numbers on a document, such as a tax return, to make it look like you earn more than you do.

 

Whenever you apply for a mortgage loan, you must sign the application – technically referred to as a 1003 (ten-oh-three) or Uniform Residential Loan Application. Just above the space for your signature is a statement worded something like this:

I/We fully understand that it is a federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.

In other words, it is a felony to lie on a loan application, whether for profit or housing.

Homeowners in Canton, Plymouth and all Michigan cities may be able to breath a little sigh of relief. The state housing authority and lenders have joined forces to offer new tools to help some families save homes from the ravages of foreclosure.

Yesterday, April 2, 2008 Governor Jennifer M. Granholm signed legislation aimed at preserving the American dream of home-ownership for Michigan families in jeopardy of losing their homes to foreclosure.  The governor was joined by lenders from the Michigan Credit Union League, the Michigan Bankers Association, and sponsoring legislators from across the state for bill signings in Grand Rapids, Jackson, and Detroit.
 
"These new tools will help protect families from losing their homes and work to stabilize Michigan’s housing market," Granholm said.  "I applaud the leadership of our legislators and our many partners in the lending community, including bankers, credit union lenders, and mortgage lenders, for making these tools a reality." 
 
The bills signed today create two new refinancing options to protect home ownership - an adjustable rate mortgage (ARM) refinancing option that will help citizens get into fixed-rate mortgages and a "rescue" program that helps those who have been behind in their payments in the past, but are current now.  The new tools are part of the "Save the Dream" initiative that makes housing counselors available to homeowners and raises awareness about avoiding foreclosure.  The Save the Dream products and programs are operated and funded entirely by the Michigan State Housing Development Authority (MSHDA).
 
"We believe our Save the Dream program will help curtail the foreclosures happening throughout our Michigan communities," MSHDA Director of Homeownership Mary Townley said. "This new legislation gives us an important tool to add to our existing home-ownership counseling and foreclosure prevention activity.  Putting the counseling together with the ability to refinance home loans for safer, more secure long-term, fixed-rate mortgages offers a sense of real hope to some very desperate homeowners."

The new Save the Dream tools are:
 
-  The Adjustable Rate Mortgage (ARM) Refinance Program that will assist homeowners who have an ARM in refinancing to a 30-year,  lower-interest, fixed-rate conventional loan; 

-  The Rescue Refinance Program that will assist individuals who have a delinquency on their mortgage and who are at risk of losing their home will have a chance to get into a more affordable 30-year, fixed rate, conventional loan.

Fed rate cuts should boost house sales in Canton, Plymouth, Northville, Novi and the rest of the Detroit Suburbs.

There was major news news out on each of the first three days of the week. The net effect of the ups and downs was a significant reduction in mortgage rates.

 Two stories surprised investors Monday morning: 

  In an uncommon emergency meeting over the weekend, the Fed decided to lower its discount rate to 3.25% from 3.5%

The other major announcement was the sale of Bear Stearns, a large investment bank, to avoid bankruptcy. Bear’s stock, which had been trading around $80 per share in January, would be sold for just $2 per share. Investors took the news to mean that the risks to the credit markets were even greater than they thought, and they embarked on a flight to relatively safe investments, which lowered mortgage rates.

 Big news on Tuesday: 

 Fed cut the Fed Funds rate by three quarters of a point to 2.25%, as expected by many investors, although two of the ten voting Fed members were in favor of a smaller rate cut.

Stocks rallied on the news, and the Dow closed higher by a whopping 420 points, but the Fed’s emphasis on the risk of higher inflation hurt mortgage markets. Overall, the Fed’s statement described reduced economic growth and higher inflation expectations. The Fed believes that inflation should moderate over coming quarters, but that the uncertainty over the inflation outlook has increased. Mortgage investors require higher yields to offset future inflation, and mortgage rates rose, offsetting some of Monday’s reduction.

 Another big news story hit the wires on Wednesday:

OFHEO, the regulator for Fannie Mae and Freddie Mac, relaxed the capital requirements for the two firms. Early estimates are that the changes will enable Fannie and Freddie to make an additional $200 billion in loans. The additional capacity for mortgage investments boosted mortgage markets, and mortgage rates fell again.

 What has the Detroit Builders show got over the 2008 Home Improvement Expo at our Summit in Canton, Michigan?

Not much when you consider there are over 120 local businesses representing the best of their products that can help you with building projects and save you money.

 Summit on the Park Building at 1150 Canton Center Road, Canton Michigan

This year’s expo will be a one-stop-shop for home improvements, project financing, decorating and planning, and a host of other services. Whether you’re interested in decorative tile, garage interior design, kitchen remodeling, siding, outdoor awnings, patio & deck design and install, decorative concrete, or just about anything else you can dream of to do around your home this Home Expo is the place to be.

All this and admission is FREE to all.

The event will take place from 9 a.m. to 5 p.m. Saturday, March 1, and from 11 a.m. to 5 p.m. Sunday, March 2, at Summit on the Park, 46000 Summit Parkway, Canton Michigan. The two-day event is sponsored by the Canton Chamber of Commerce, the Canton Building Department and the Observer & Eccentric Newspapers.

How-to workshops will be held all weekend on a variety of topics from landscaping to installing brick pavers, patios and ceramic tile. A hands-on children’s project center will also be available for kids of all ages to construct projects made from wood donated by Home Depot.

 A special guest appearance will be made by Murray Gula, Host of Murray Gula’s Home Improvement Team on WXYZ-TV Detroit and Joe Gagnon “The Appliance Doctor” will be broadcasting his 1600 WAAM talk radio program live from the Expo.

In addition to multiple raffles held throughout the weekend, Canton Construction along with the Michigan Regional Council of Carpenter’s Union local 1234 Detroit Division will be making planters, benches and picnic tables to raffle off. 

For more information or to view a complete list of vendors, log on to www.canton-mi.org or call Canton’s Building and Inspection Services Division at (734) 394-5200.

By …Lee Bittinger