Investors Purchase Upside Down Mortgages

Last year at this time a huge surge of first time home buyers were trying to take advantage of the IRS tax credit of $8,000 to buy a home. Now the surge seems to be from savvy all cash real estate investors taking advantage of ultra low real estate prices.

First-time buyers purchased 32 percent of homes in October, unchanged from September, but down from 50 percent a year ago during the initial surge for the first-time buyer tax credit. Investors accounted for 19 percent of transactions in October; they were 18 percent in September and 14 percent in October 2009; the balance of sales was to repeat buyers. All-cash sales were at 29 percent in October, unchanged from September but up from 20 percent a year ago.

Year-to-date nationwide there were 4.149 million existing-home sales. Lawrence Yun, NAR chief economist, said the recent sales pattern can be expected to continue. “The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales. Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels,” he said. “Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year.”

It seems most economists agree that the real estate market has begun its recovery and investors are reacting. The national median home sales price is $170,500, statewide in Florida it’s $136,600 and here in Central Florida it’s $105,000. Without a doubt, there are a lot of real estate bargains out there.

Let me know if I can help you with your real estate needs.

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• Ask a friend to recommend an agent that they’ve worked with.  A happy customer says alot! 
• Go to open houses.  First impressions say alot, just listen to them.
• Check with your Local Board of REALTORS 
• Trust your instincts.  If you don’t feel well represented, talk to your agent.  If the situation is not improving, it’s time to find a new agent.

Along with accomplishing the buying and selling aspect, agents and brokers also help accomplish the financing portion. Since they deal with lenders on a regular basis, a buyer can benefit on the agents connections and knowledge.

Finding a REALTOR who will listen to your needs and meet them can be difficult, but not when you choose to “Leave it to Lynn“.  Finding a realtor today can be quite a tedious task!  Shuffling through the phone book, surfing the web, and even driving through neighborhoods looking for yard signs.  You’ll know when you’ve found the one that listens AND performs with your best interests at heart.  That’s when to start your home search, work the process and you’ll be happy with the outcome.  Patience, especially in this home market, is a virtue that definitely pays off in the end!

Last week, a new Homebuyers Tax Credit bill was signed into law.  The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy.  Even if you aren’t looking to purchase – pass on this article to anyone you think might be in the market to do so.  This is information that might benefit them greatly, and I’ll be happy to be of service to them.

Here is a brief overview of the Homebuyers Tax Credit – and its benefits – based on the new bill.

Tax Credit for First-Time Homebuyers

FTHB’s (people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHB’s is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Tax Credit for Current Homeowners

The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.

What’s So Great About a “Tax Credit”?

The benefit of a tax credit is that it’s a dollar-for-dollar benefit, rather than a “tax deduction”, or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sales price of $800,000.

Remember, the new tax credit program includes a number of details and qualifications. Call or email today if you have questions or would like to see if you can benefit from the tax credit…and share this article along to anyone else you feel it might benefit as well!

Needless to say, we would all like fewer problems, more transparent days and peace and love in the world, but in the end, no matter what’s on our plates, how many plates we’re spinning or if any of them fall, we will hopefully wake up tomorrow to start the process all over again and that’s the good news.  The news that makes us able to take the journey, smile at the highs and work a little harder at the low points.

OK, enough from me.  Tomorrow, back to real estate!

I am a firm believer that passing the mirror test is far to little to go on to qualify for a mortgage, but now buyers with 20% down, good jobs and great credit histories are being made to produce documentation of income they earned from a consulting business 5 months ago when they did some work for a company they used to work for and long before they thought of this real estate purchase.  This particular buyer has been asked to produce ATM receipts of deposits that were made by her, which are showing up on her monthly statements and proof of where the money came from.  Proof of payment for a car that was  a gift and her mother has been making monthly payments on since the car was purchased 2 years ago.  The lender has required that the seller reduce the price by $13,000 on a $113,000 purchase because of the appraisal (which the seller did) and has made the buyer and I get proof of the life expectancy of the roof, get a plumbing contractor to asess a bad gasket at the kitchen sink ($15 dollar repair) and the list goes on.  We are (were) supposed to close Friday (9/18), after our 3rd extension for “conditions”.   I thought it might work this time, but guess what…..our appraisal is now over 30 days old.

Yes, it is more challenging than ever so now, when I sell a house, it is cause for all to celebrate…..buyer, seller, appraisers, handymen, mortgage broker and the list goes on. 

I am sure I’m not the only one who is ready for whatever the next little bit of whatever the new norm will be to come along, as this nail biting to the finish……is it really necessary……there must be an easier way. 

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