• 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.

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.

If you leap right in to house flipping will you make big money or loose change?

How you plan a house flip makes all the difference.

There are lots of opportunities to make money on house flips in Canton, Plymouth, Northville and many more of the surrounding communities in the Detroit suburbs. We have seen our share of those who flip a house and make a grand profit, those who just make pennies, and those who lose their shirts.

•  Nights (or days if you work the night shift) and weekends off: Flipping houses is like moonlighting at another job. Part-time flippers, often called weekend warriors, can succeed as long as they are committed to treating flipping as another job.

•  Financial stability: You should be paying all of your bills on time, including the mortgage on your primary residence, before you consider taking on another financial burden. Don’t look at flipping as a way to solve your financial difficulties – you may end up digging yourself into a deeper hole.

•  Energy: Couch potatoes need not apply. You need plenty of energy to work on a home while fulfilling the responsibilities of your day job.

•  Ability to function in a crisis: Flipping a house is more complicated than it seems and always more of a challenge than it looks on TV. If you commonly feel overwhelmed already, taking on another burden may not be prudent.

•  Organizational expertise: With flipping houses, time is money, so you need to execute the flip as quickly as possible. This requires an organized mind. You have to act as contractor to make sure all materials are delivered on schedule and that your subcontractors aren’t tripping over one another.

•  Basic math skills: To be relatively certain that you will earn a profit, you need to be able to crunch some numbers. Overestimate expenses and underestimate profits to give yourself a safety buffer.

•  A supportive family: If you’re married, make sure your spouse supports this new venture. Otherwise, you will not only be fighting the world to flip houses for a profit, but you will also be fighting your partner. This often leads to failure both with the new venture and with the relationship.

You may notice that some skills have been omitted from the list, such as the ability to rehab a home or the ability to list and sell the home yourself. You do not need to have all the skills required to flip a home yourself. However, you do need to be able to fill the gaps with people who have the essential skills. For example, if you are not very good at estimating the costs of repairs, you may want to hire a contractor or professional home inspector who is aware of repair costs to inspect the home and provide you with detailed estimates. A real estate agent can often be indispensable in assisting you in determining how much to pay for a property and how much you can eventually sell it for.

The number of houses going to foreclosure each week in Wayne County is staggering. About 90 % of them are in Detroit and may not be the best bargains. Many however are in the suburbs and could present good buying opportunities.

Foreclosure is a long, drawn-out process that usually begins as soon as the homeowner stops making monthly mortgage payments on time and ends when the homeowner negotiates a solution with the lender, sells the home and pays off the mortgage, or has the home sold at auction and eventually leaves voluntarily or is evicted. As an investor, you can jump in at any stage of the foreclosure process:

•           Preforeclosure: Purchasing the home directly from the homeowners prior to the auction often results in the best deal for both you and the homeowners. Because the foreclosure notice hasn’t been published yet, other investors may not be aware of the situation, reducing the competition. To discover pre-foreclosure opportunities, however, you need to network with people in your neighborhood and let them know that you buy foreclosures, so homeowners who are having trouble making their payments will know how to contact you. It also helps to network with bankruptcy attorneys, divorce attorneys, mortgage brokers, real estate agents, and others who may hear about foreclosures very early in the process.

•           Foreclosure auction: The foreclosure auction is the next stage in the foreclosure process in which you can acquire a property. Foreclosure notices are typically posted in newspapers and county news publications, complete with the date, time, and location of the sale along with details about the property, its owners, and the attorney representing the bank. To successfully bid at a foreclosure auction, you really need to do your homework and know what you are bidding on and how much it’s worth. Otherwise, you can get stuck paying tens of thousands of dollars for a worthless piece of paper. Don’t let this scare you off. You can find great deals at foreclosure auctions as long as you know what you are bidding on and you set your bid limit before the bidding commences.

•           Post auction: Just because the auction is over does not mean that you lost the property for good. If an investor purchased the property at auction, you may be able to purchase it from the investor. If nobody bid on the property, the bank takes possession (after any redemption period), transfers the property to its REO (Real Estate Owned) department, and then hires a real estate agent to list the property for sale. By establishing a relationship with the REO manager, you may be able to get an early lead on the property. In areas that have a redemption period, you may also be able to work with the homeowner to buy back the property from the investor who purchased it at the auction and give the homeowner a little extra cash for helping you do this. (During a redemption period, the homeowner has the right to buy back the property from the investor.)

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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.

Reduced house prices in Canton, Plymouth, Northville, Novi most other Detroit, Michigan suburbs are presenting unusual opportunities for purchasing and flipping houses for profit.

During the housing boom, flipping houses was almost a national pastime. Shows like Flip This House, Flipping Out, and Flip That House attracted huge viewing audiences, and nearly every book in Amazon’s real estate top sellers category had the word “flipping” in its title.

If you mention house flipping to a real estate or law enforcement professional, however, they are more likely to think that you are talking about committing a crime. To them, the word “flip” is a nasty four-letter word. HUD (the U.S. Department of Housing and Urban Development) declared it so when it released its FR (Final Rule)-4615 Prohibition of Property Flipping.

So, is flipping good or bad? Legal or illegal?

Well, that depends which form of flipping you’re talking about. The illegal variety consists of selling a home multiple times over a relatively short period in order to artificially inflate the home’s value and cash out the inflated equity.

To begin, a con artist will purchase a home (typically a dilapidated property that costs very little). He or she will then obtain an inflated appraisal for the property – by finding an appraiser willing to go along with the scam, stealing an appraiser’s identity to forge a fake appraisal, or using a phony appraisal document. The con artist can then apply for a loan for the inflated amount. (Or, the con artist will apply for the loan and then, with the help of a cooperative loan officer, obtain the inflated appraisal to present to the lender.)

In either case, the con artist usually takes out the loan in the name of a straw buyer (someone who owns the home in name only) or by using a fake or stolen identity. Eventually, the house flipper either sells the home to somebody who is unaware of its true value or abandons the home.

That’s illegal flipping in a nutshell.

Legal flipping consists of buying a home for less than its true market value (usually at least 20 percent less), fixing it up, and then selling it at or near its true market value. This fix-and-flip approach is the type of flipping they do on TV shows like Flip This House and Flip That House. It is a shrewd and honorable way to earn a buck in real estate. As a consumer, knowing the difference between the two types of flipping is important.

Know the illegal form of flipping so you don’t break the law or get stuck with an overpriced piece of real estate that’s being used in a flipping scheme. Know the legal form of flipping, so you can fix and flip your way to wealth in real estate.

Author, Ralph R. Roberts, GRI, CRS is an experienced real estate investor and consultant and the author of Flipping Houses For Dummies (John Wiley & Sons).

Looking for a good house flip candidate can be tricky. Typically investors look for foreclosed or distressed houses. This can be dangerous however since such purchases are cash and full of "buyer beware" danger signs. Foreclosures for instance usually come with hidden title defects that the buyer is saddled with. 

To avoid getting into something that turns into a nightmare make sure you hire a good Realtor that is expert in investment strategies. It is always helpful to find a professional who has several properties of his or her own and is personally involved with the house flipping process.

You also want someone who will be a good negotiator. Experience makes the difference when they go to bat for you. This trait in a Realtor can make the difference between making a profit or ending up losing your shirt.

Don’t forget the other side of the equation…selling the house you just fixed up. Marketing is the key. Selling your newly renovated investment can take a long time unless the Realtor you choose has an aggressive marketing plan. Capturing Internet buyers is what’s most important. Before you hire a Realtor ask them to show you specifically how he/she captures buyers and how many they are currently working with. In this market the Realtor who controls the buyers controls the market.