You may be surprised to see how many days are available to close a transaction by November 30, 2009 in King County when you factor holidays and furloughs.
Count Down to November 30th and the First Time Home Buyer Tax Credit
October 26, 2009 by Leave a Comment
Mortgage Companies are Protecting Themselves from December 1, 2009 Closings
October 19, 2009 by Leave a Comment
I am seeing disclosures from wholesale lenders advising that they will not be held responsible for transactions that do not close in time for the first time home buyers tax credit which is currently set to expire on November 30, 2009. Here’s an example from a memo I received this morning from one of the lenders we work with:
Currently, the American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. For purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
“Wholesale Bank” is providing this notice to our Correspondents and Brokers that “Wholesale Bank” cannot guarantee that the mortgage closing will take place prior to December 1, 2009 and therefore it is possible that your Borrower(s) will not qualify for the first-time homebuyers tax credit because of the date of purchase deadline.
“Wholesale Bank” strongly recommends that you use the attached form, or any similar from that includes this information to inform your Borrower(s) of the tax credit guideline…
In anticipation of the deadline nearing and the recent increase in loan volume, please plan ahead and get your loans in underwriting, closing and funding in ample time to meet the above deadline.
“Wholesale Bank” will not be responsible or liable for the purchase of the home failing to meet the deadline requirements of the first-time home buyer’s tax credit program.
Mortgage Master has adopted a similar disclosure which is being provided on our purchase transactions.
As I’ve mentioned several times here at Mortgage Porter, if you’re counting on receiving the $8,000 First Time Homebuyer Tax Credit, and if you’re buying a home in the Seattle/King County area, please try to close no later than mid-November due to the holidays and county closures due to the furlough dates (and the increased volumes of transactions).
Don’t risk closing the day after November 30, 2009.
Quick Video on November’s Real Estate Closings in King County
August 28, 2009 by Leave a Comment
In the Seattle area, many home buyers may be trying to purchase their first home before the tax credit expires. I highly recommend not waiting until the end of November to do so. Here's why…
Click here for a larger image of this video.
For King, Snohomish and Pierce County Recorder's office closures, click here.
First Time Home Buyer Tax Credit
August 6, 2008 by 41 Comments
Update February 17, 2009: The American Recovery and Reinvestment Act has modified this tax credit posted here. If you're a first time home buyer who purchased January 1, 2009 – December 31, 2009; click here. If you purchased from April 9, 2008 – December 31, 2008; this post still applies to you.
Please check with your CPA or tax advisor to see how this impacts you.
With the recent passage of HR 3221, people who have not owned a home for the last
3 years may qualify for an interest free loan from Uncle Sam of up to $7,500. Here's a quick skinny on how this works:
First time home buyers may receive a tax credit of up to 10% of the purchase price of the home (not to exceed $7500). This is a "tax credit" meaning that you receive the credit (if you want it) after you file your income taxes. For example, this means that when you file your taxes in 2009 and you owe $5,000 to Uncle Sam and you qualify to have a tax credit in the amount of $7,500; you would receive a refund of $2,500. However, this is a refundable credit (aka interest free loan) that must be paid back each year to the IRS (when you file your taxes) over the next 15 years.
If you sell your home before the tax credit is repaid to Uncle Sam, then the full amount is due or if your property that you received the tax credit for is no longer your primary residence (i.e. you convert your home to a rental).
This credit does not apply if the first time home buyer is buying a home from a relative.
This tax credit is only available for purchases made between April 9, 2008 and July 1, 2009 for adjusted gross incomes of up to $75,000 ($150,000, if married, filed jointly) and phases out up to $95,000 ($170,000, if married, filed jointly).
Should you take advantage of this opportunity?
Sure! Who wouldn't want a $7,500 interest free loan? Two things I would consider using this credit for if I were a first time home buyer:
- investing into an interest bearing savings account to build my "emergency fund".
- pay off a nasty high interest credit card (freeing up a monthly cash flow).
- fund your IRA.
Just understand that this is essentially an interest free loan. This is not "down payment assistance". You will be paying this back over the next 15 years (or sooner if you sell, rent out the property or convert it a second home)…but you just can't beat "interest free".
For more information, click here.
Friendly reminder: I am not a tax professional, I am a Mortgage Planner assisting families who need mortgages in beautiful Washington State. Always consult with your CPA, financial or tax advisor.
Watch for more posts on the effects of HR 3221.
Now is the time to buy a Seattle home
June 8, 2008 by Leave a Comment
Or at least haggle according to Aubrey Cohen’s front page article in Friday’s Seattle P-I. Would I buy a home right now in Seattle if I were in the market? Quite possibly…especially if it’s a home that I desire and if it’s priced fairly. The article states these factors for reasons home buyers interested in Seattle (I would include Bellevue/Redmond as well) should get into the market now:
- Gas Prices. Homes located near where jobs are will have stronger values. Fewer people are going to want to commute thanks to how much it is to fill the tank.
- Mortgage interest rates are rising. Glenn Crellin, director of the Washington Center for Real Estate Research at WSU states "waiting for the prices to get to their absolute lowest point while interest rates are rising doesn’t mean that the purchasers are going to be saving much of anything on the monthly payments".
- High inventory. There are a lot of homes to chose from at lower prices.
According to this article, home prices in Seattle are only down 2.7% from a year ago; King County is down 6.2%. The further away from "the city" you look for homes, the more the values have been impacted.
Here are some additional reasons (not in the article) to consider "getting into the market" as a home buyer.
- The Conforming-Jumbo and FHA jumbo loan limits are only effective through the end of this year. On January 1, 2009, the conforming limit will roll back to $417,000 and FHA (for King County) will be $362,950. (Unless Congress passes an extension to the loan limits, which they may do at a reduced amount. The fact is, at this time, we only know that the current loan limits are valid until December 31, 2008). If you want a "non-jumbo" rate and your loan amount is $417,001-$567,500…your time is limited.
- Underwriting guidelines continue to get tougher with lenders and private mortgage insurance companies. Plus, the possibility of having your area declared a declining market will make financing even more challenging.
- If you’re sitting on the fence, you are not alone. There are many home buyers who are getting preapproved waiting for prices to reach their "price point". As prices lower, more and more will be hopping off the fence and jumping into the market which will also prevent in-city home prices from declining as much as other areas.
- Sellers are contributing towards closing costs. I’m seeing more offers with sellers contributing towards closing costs for the buyer. Buyers can use the funds to buy down their rate are reduce their closing costs.
If you are considering buying a home within the next 6 months, I strongly encourage you to begin the preapproval process now. The more time you have to prepare, the better position you’ll be in to make an offer. Plus, I’ve heard that some in-city homes, when priced right, are having multiple offers–buyers should be armed with a preapproval letter to present a stronger offer.
It’s also very important to work with an experienced real estate agent who will look out for your best interest (I do not recommend going directly to the listing agent for any home you wish to buy…they represent the sellers interest–not yours). If you need a referral to a real estate agent in King, Pierce or Snohomish counties, contact me, I’m happy to help.
PS: I help Washington State home buyers with preapprovals and mortgage planning, too! (My husband thinks I should remind my readers of this point more often…and I like to keep him happy).
Just for grins, here is a lesson in how to haggle (if you work with a professional real estate agent, you can leave the haggling to them), compliments of Monty Python, The Life of Brian.
