Free Money From Uncle Sam

The $8,000 First Time Home Buyer Tax Credit got better. Now you can take the credit from your 2008 taxes instead of waiting to file your 2009 tax return in 2010.

The $8,000 tax credit from the federal government is a great incentive to buy a home these days. It has had a very positive effect on the home sales market as more buyers are looking to take advantage of this free help from Uncle Sam.

To reiterate, the credit is a gift from HUD to help first time home buyers with the down payment and closing costs for FHA insured homes. To qualify, the buyer must not have owned a home in the last three years and must buy and close on the home by December 31, 2009. To access the money now instead of waiting for 2010 he/she would need to file an amended 2008 return. While this is better than waiting for next year it will still take time to file and receive the money from IRS.

HUD went one step further and allowed FHA lenders to provide the buyer with a bridge loan in the amount of the credit until a return can be filed and collected on.

This incentive from our government is one that should be taken as soon as possible. We have helped many young families and single first time home buyers take advantage of this credit but there is no guarantee it will be around forever.

Already we are hearing a rumor HUD is considering rescinding the credit.

Gift of money for home buyers

Canton and Plymouth, Michigan home buyers recently learned the $7,500 tax credit can now be a tax free gift and is extended to other buyers as well as first timers.

Originally the bill was passed last summer, as a part of the Housing Recovery Act, to encourage first-time home buyers to purchase homes within a certain amount of time, hoping to boost the housing market. That legislation required that the $7,500  tax credit be repaid over 15 years, making it more of a no-interest loan. The stimulus bill now under consideration would make that tax credit a true credit that doesn’t need to be repaid at all! Additionally the rules for  who qualifies have been greatly relaxed.

The news is spreading fast among the Canton, MI home buying community. The combination of this money incentive and great house values from short sale houses is prompting people to spring into action!

To be eligible, buyers cannot have owned a home for the past three years, and the new home has to be used as a primary residence. The credit slowly phases out if income rises above $75,000 for singles and $150,000 for couples. It disappears entirely at $95,000 for singles and $170,000 for couples. To apply for this credit, you must claim in on your 2009 tax return. It is that easy! As long as buyers do not sell for at least 36 months, they keep the $7,500. The credit is also refundable, meaning if your total tax bill came to $4,000 you can still qualify for a full $7,500 refund!

Timing is also critical. The current proposed bill requires that you must have purchased the home between April 9, 2008 and July 21, 2009. Newer proposals have that date stretch out to August 2009. The point is take advantage of this gift before you forget about it and it disappears!

The Bittinger Team is optimistic that the Stimulus

 Bill and other financial incentives are creating

the best home buying opportunities in months.

The Bittinger Team

When Trust and Experience Matter!

(734)-459-2600

Bittinger Team - Short Sale Experts

Canton, Michigan home buyers and sellers are enjoying the excellent new reports which indicate the falling of interest rates, as well as learning other optimistic news about the Real Estate Market! 

Currently interest rates are declining for most fixed-rate mortgages, which are the most popular and make up nearly 75% of all mortgages. These types of mortgages are very commonly used by first time home buyers, as well as those who would like to know what their monthly budget of expenses will be.  They are also frequently used for home buyers who plan on keeping their homes for longer periods of time.  Fixed-rate mortgages seem to benefit buyers in today’s market because buyers are purchasing what they can afford. Many buyers have gotten into trouble with adjustable-rate mortgages because they are able to buy more expensive homes, and ultimately when their mortgage rate increases, they can get in over their head. Often times people in these situations end up in Foreclosure and their credit tarnished for an extended period of time. Fixed-rate mortgages are much safer, and with the decline in interest rates we are hopeful that the future of our economy will continue to grow steady, while our home values increase at the same time.

Here’s the great news: A 30-year fixed-rate mortgage averaged 5.47% for the week ending December 11, 2008, down from the prior week’s 5.53% average and 6.11% a year ago. The rate hasn’t been lower since March 25, 2004, when it averaged 5.40%. With the recent new reports of interest rates dropping to 4.91% as of December 16, 2008, we should be very optimistic that our housing market is on a path to recovery.

Another beneficial reason that right now is a great time to buy a home is due to the tax credit that will only be offered until July of 2009. First time home buyers can take advantage of up to $7,500 in tax credits.  But you must act fast to take advantage of this added incentive!

 Call The Bittinger Team today, and let us walk you through the necessary steps of buying and/or selling a home in today’s market.  We guarantee results.

THE BITTINGER TEAM : When Trust and Experience Matter

Office: (734) 459-2600, Email: Team@Bittinger.com

• 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.