Welcome to 2010- The mortgage and real estate industry is currently going through some pretty significant changes, ultimately meant to improve the process for consumers.
We look forward to helping you understand this new environment and take advantage of the benefits that are available to you...
Tax Credit for Homebuyers
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs 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.
Current Owners: 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.
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.
Tax Credit Versus Tax Deduction
It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a 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 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 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 sale price of $800,000.
Although we are not back to the real estate market of 2006, we are starting to see positive signs and the beginning of a recovery. Multiple offers over asking price are common and sales are increasing. This indicates that there’s still demand for homes in this area. 1st time buyers and investors are taking advantage of real estate at great bargains compared to 24 months ago.
In addition to low rates, much of the incentive for 1st time buyers has been the ability to take advantage of the $8000 tax credit if you did not own a home in the past three years. This credit has JUST been extended through April 2010. A new $6,500 tax credit is available to homeowners who have lived in a home for 5 consecutive years out of the past 8, and are looking to move. In addition, income limits have been raised, so both tax credits will be available to those individuals earning up to $125,000 (currently set at $75,000), or up to $225,000 (currently set at $150,000) for couples.
Also, Congress passed a resolution that would extend the present conventional loan limits for Fannie and Freddie through the 2010 calendar year, up to a maximum of $729,750. This is huge for those needing to refinance or purchase and still having access to lower conforming rates. Recent improvements to the Fannie Mae and Freddie Mac programs have allowed more borrowers to refinance even if the property value has temporarily declined.
I will continue to keep you up to date in this ever changing real estate market in 2010. As always, if you have any questions about your specific situation or would like to discuss how you may benefit from these programs, please call me 408-626-1879 or email Michele@reenteam.com.
Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.
Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.
CONTINUED GOOD NEWS - MORTGAGE RATES ARE DROPPING!
By now I'm sure you've heard the stories about low, low rates. And they are low! Before I get into the good news, let me tell that there are many caveats. For example, loan amounts over $625,500 haven't benefited from these low rates. Loan amounts over $417,000 and less than $625,500 with cash out have rates much higher than you're reading about. (Cash out can include paying off a second or a line of credit even if you're not getting any cash in hand.) Cash out under $417,000 also has a "hit to rate", but at least it's not too bad. Likewise, credit scores under 740, self employed status, and a variety of other factors can impact the advertised rates. And you will pay a bit of a premium for loans with no points.Now the good news! Rates for many of you will be great. Some of you will try to pay points and who meet all other guidelines will be able to get an interest rate around 5%. Excellent!If you would like to have us check up on your loan and what might be possible give us a call at 408-626-1879 or send an email to me at michele@reenteam.com.
Here's hoping we can save you a sleighload of money to start the New Year off right!
AND HOME PRICES ARE RISING IN SOME HARD HIT MARKETS!One other bit of good news out there! Home sales in the hardest hit areas showed a third straight month of very strong sales activity. And in some markets, prices have started to rise. (One of our appraisers reports a 20% increase in the last few months in parts of Eastern Contra Costa County.) I've been saying for the last few months that now is a good time to buy in those markets and the numbers are bearing that out. Let me know if you'd like to pick up a bargain rental house in one of these markets, or invest with us in one or more. This is truly one of the great opportunities for investment.
HAVE A WONDERFUL HOLIDAY SEASON!With Christmas, Hanukah, Kwanzaa, and the Solstice right around the corner, I'd like to wish you all the best for The Holiday Season and a very Happy Healthy New Year!
Hello from the Reen Team!
I would like to give you an update on what is going on with the housing market, and how we will continue to fit into your "big picture".
First, a little about us. Mike and I are now part of Cedar Mortgage, a successful local company that has been part of Campbell for 27 years. You can learn more, and always find us at
An added benefit- we are still at our location at 3190 S. Bascom Ave, and there is a good chance we will remain here as part of Cedar Mortgage.
____
So, what is going on with the San Jose market? As recently as March, things looked pretty quiet as rates climbed and appreciation began flattening out- in certain neighborhoods, a lot worse...
In April, the Economic Stimulus Package brought us a little opportunity- they raised the conforming limit in most Bay Area counties so that loans are affordable up to $729,750 through the end of 2008. With the added benefit of HUD's FHA program, options became available for just about anyone that has 3% down on a loan up to $729,750. Loans under $417,000 remain even more accessible.
Not to say it has been a boon for everyone- because it hasn't... it continues to be hard for many people who's property continues to lose value while their equity lines are frozen or even eliminated. The situation today is unique to almost every individual borrower depending on their mortgage product, debt structure, property, and property location. Refinances became next to impossible as rates increased and equity decreased.
As of last weekend, the US government has gone ahead with their plan to take control of Fannie Mae and Freddie Mac, which has had a huge impact on rates. It has been enough of a positive change to allow refinances to move forward, and has made for some very happy new homeowners as well!
Today, the stock market plummeted on all the "Wall Street" news, and rates shifted down slightly again.
Where does it go from here? I believe it will continue to evolve differently in different areas. I would recommend a quick conversation in the next week or so for a review of your particular scenario. Let me tell you more about what is happening, and where things are going for you!
Sincerely,
Michele Morse Reen
Happy New Year!
I hope this letter finds you well after a wonderful holiday with your family and friends. It was great to see so many of you at our 9th Annual Client Appreciation Party, Breakfast with Santa. As the years have passed, it has grown into a major event for children of all ages, including our oldest “kid” on Santa’s lap at the young age of 92. I encourage everyone to join us for the 10th Anniversary, it should be quite special!
On the home front, we finished our home remodel in 2006 and the landscaping by May 2007. It was quite a trying experience and although it cost lot more than we planned, it was so worth it! We still have some things to do but for now, hanging pictures on the walls is a big enough project. We also have new additions to our family, as we adopted two kitties to help wear in the new furniture and carpets! The kids convinced us that it just wasn’t a home without a pet or two.
Our summer was eventful; Ryan played league soccer, Rachel developed a desire and talent for singing and speaking with a microphone (we think the stage will be in her near future), while both Ryan and Rachel took racing lessons at Baylands Quarter Midget Racing facility. In the fall, we had a chance to get the cousins together for a reunion at Lake Tahoe. The family has spread far and wide, so we really cherish the time we spend together.
One of the things we are excited about this year is family goal setting. The kids learned about goal setting and resolutions at school, so we all agreed that this year it would be a family project.
A few highlights of our 2008 goals: Ryan proposed family game night and Rachel wants to add family “exercises” on Saturday mornings. Mike and I are exploring a charity that the whole family can participate in. If you have any suggestions for kid-friendly charities or volunteer work, I would love to hear about them.
If I can help you with any of your goals, you know I am here...
We wish you all the best in 2008, and I hope all your goals and dreams are realized!
Every now and then a friend shares a story with me that I just have to pass on to the people I care about. This is one:
A water bearer in India had two large pots. Each hung on an end of the same pole, which he carried across his shoulders. One of the pots had a crack in it, while the other pot was perfect and always delivered a full portion of water at the end of the long walk from the stream to the master's house. The cracked pot arrived only half full.
For two years this went on daily, with the bearer only delivering one and a half pots of water to his master's house. Of course, the pot that was not cracked was proud of its accomplishments, perfect to the end for which it was made. But the cracked pot was ashamed of its imperfection, and miserable that it was able to accomplish only half of what it had been made to do.
One day at the stream, after two years of what it perceived as a bitter failure, the cracked pot spoke to the water bearer. "I am ashamed of myself, and I want to apologize to you." "Why?" asked the bearer. "What are you so ashamed of?" "I have been able, for the past two years, to deliver only half my load because this crack in my side causes water to leak out all the way back to your master's house. Because of my flaws, you do all of this work, and you do not get full value from your efforts," the pot said.
The water bearer smiled, and in his wisdom said, "As we return to the master's house, I want you to notice the beautiful flowers along the path." Indeed, as they went up the hill the cracked pot took notice of the sun warming the beautiful wild flowers on the side of the path, and this cheered it some. But at the end of the trail, it still felt bad because it had leaked out half its load, and so again the pot apologized to the bearer for its failure.
The bearer said to the pot, "Did you notice that there were flowers only on your side of the path, but not on the other pot's side? That is because I have always known about your flaw, and I took advantage of it. I planted flower seeds on your side of the path, and every day while we walk back from the stream, you've watered them. For two years I have been able to pick these beautiful flowers to decorate my master's table. Without you being the way you are, he would not have this beauty to grace his house."
This story helps me remember that each of us has our own unique flaws - we are all cracked pots. But, if we recognize it we can use our flaws to grace others and ourselves. Nothing goes to waste. So don't be ashamed of your flaws! Acknowledge them and you, too, can be the cause of beauty.
I tend to look at my cracks and miss my flowers. This story reminded me to focus on what good things I am doing along the way.
The Reen Team
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3190 South Bascom Ave, Ste. 100, San Jose CA 95124
408-626-1879 michele@reenteam.com
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