Below is the latest information on the $8000 tax credit for 1`st time buyers. There is much confusion caused by HUDs letter they sent out and pulled back. Industry expert od top blogger Jeff Belonger has done a great job of keeping us up to date. Please read his post below.
The first time homebuyers tax credit of $8,000 has been approved by HUD for all FHA loans. But don't get too excited too quickly. If you get a chance to read the mortgagee letter, ML 2009-15, it states that you can't use this tax credit for the required down payment of 3.5%.
HUD originally put out mortgagee letter 2009-15 on May 12th, but was rescinded the next day. Please read about that here : $8,000 tax credit rescinded by HUD. For some reason, it was prematurely placed on HUD's web site, but apparently wasn't finalized. Now we have a new version and if not read correctly, you could be putting misinformation out there. So what does the new mortgagee letter state?
Here is the positive part about the tax credit. You can receive the first time homebuyers tax credit upfront, but not through the IRS. This would be illegal. Please read : It's illegal to receive your tax credit before you close on your home. Buyers - BEWARE, please read that, because too many people are saying that you can get the money directly from the IRS prior to closing. The IRS & HUD both say no!!!
So how can you receive this upfront? It can be given to you as a second or a silent second from any Federal, State, or local agencies, and any FHA mortgagee or any FHA approved non-profit organization. People, in layman's terms, this is already acceptable by HUD's standards, except for the lender that is now able to give the monies upfront in a form of a 2nd mortgage. Another terminology is that this can be an advance loan from any of the entities mentioned above.
Summary : Essentially, this means that the entities mentioned above, are purchasing this tax credit on your behalf and giving it back to you. The short version of this is that you can use some of the money from the $8,000 Tax Credit as your down payment, but after you put down the first 3.5% of that down payment. Meaning, you have to come up with 3.5% of your own money still. With FHA loans, it can still be a gift from a relative/family member. It also can come from non-profit or government agencies to be used as your initial down payment, but not used through the tax credit. Overall, the tax credit that is advanced, can be used for all closing costs. But you can't receive monies back at closing.
And again, keeping in mind, it's illegal to receive this tax credit upfront directly from the IRS. There is more verbiage in the mortgagee letter 2009-15 , but the main point is that you have to have 3.5% of the downpayment yourself, before you can use the tax credit that would be 'loaned' to you.
THOUGHTS??? - Well, in all honesty, how does this truly help? What is the gov't thinking here? As a buyer, I would still need the initial 3.5% of my monies for the down payment. Again, needing money to buy. I know some of you are for this fact, that buyers should have skin in the game. But keep in mind, this was not the true demise to our foreclosure mess. We need to sell houses to keep this economy going. Just my opinions and food for thought. thanks
My Series on the First time homebuyers $8,000 tax credit - Everything you need to now, from start to finish - What's allowed and what's not allowed :
On Tuesday a letter was issued by HUD letting us know that the $8000 first time home buyer's credit could be used for down payments for FHA loans. A few news stories broke out immediately following that exciting news. At least we thought it was exciting news. Within a couple of days the story reversed. Never mind, HUD withdrew the letter. They were only kidding.
After sending out what I thought was exciting news, I had to send out another message a day later to my clients and fellow real estate professionals, letting them know that the HUD letter and information I sent out was not accurate.
THANK YOU, Jeff Belonger! Jeff the FHA expert who posted a blog article that did a wonderful job of clearing up the confusion created by HUD:
In our local news there has been a series of stories about a mortgage broker team who were committing mortgage fraud.They were also trying to trick people out of their homes.
The wife mortgage broker’s wife set up a fake escrow company and used shill buyers to supposedly help folks refinance their homes.They told people they were temporarily putting the deeds in the names of the shill buyers to make the refinance work and the cash they got out would be held in escrow to help make the mortgage payments. They later tried to evict the duped owners.One of the owners turned them in and the prosecutors shut them down.Legal action has been taken to keep the one owner in their home, but the deed is still in the name of the shill buyer.
The public needs to have their guards up.Those of us who are truly professionals need to be extra protective of our clients and be on the lookout for scam artists.Folks who are in a distressed situation are particularly vulnerable to folks like this.
In the last month or so, I have seen usually reliable lenders getting stacked up and unable to handle the recent surge of business with the same level of customer service as in the past.
Last year things were slow and the banks were cutting back on staff. Many brokers closed their doors and now things are picking up again. There are fewer players to compete today for that business. A couple of lenders in our area who have been steady as the rock of Gibraltar are now stumbling. They have also tightened up with more than normal conditions on loans before funding. That was expected with the environment that they are working under.
I am not sure they really want my advice, but here it is anyway.
Remember who brought you to the dance. Real estate agents like me bring you steady business, without compensation. My only vested interest is to get my clients good service.
Make me look good.
Communicate with me and my clients.
Give us realistic timelines that you can meet.
Take Care of my Clients!
I depend on repeat and referrals. Clients that are dissatisfied or merely satisfied will not refer their friends to me. They need to be wowed by the experience of buying their home that includes your part of the process. When I recommend a vender to my client they grade me on your performance also.
I keep a list of venders that I and my clients have had good experiences with. It takes a lot to get on that list. I know many loan officers and lenders and only a small select group makes my list. That is the same with the other types of venders. You can however be knocked off my list in an instant. That is true of the rest of the real estate agents in our area.
Banks may be busy today with refinancing, but that will not always be the case. When the surge of refis flush through the system, will you still be getting the home buyers through us? If you drop the ball today, you will be back on the street trying to replace that lost future business.
Hawaii Chess Kids Do Well at SuperNationals Tournament
A small group of youngsters representing Hawaii performed extraordinarily well. Over 5,000 youngsters gathered this weekend, representing 47 states, for the Super Nationals, grades K-12 (all Nationals combined) in Nashville. Even though there are lower rated divisions, all Hawaii players competed in their respective Championship Division, the highest available for their respective age/grade group.
This last year has been an amazing one. I knew that the market and the rules would be changing. Changes would be coming and they would be dramatic. Those expecting them are not disappointed. Those doing business the same way they did in years past are probably not doing so well or may have already left the business.
In my market, sales activity has cooled over the record sales volume of a couple years ago. Sellers are seeing homes sit on the market for months instead of days. They are looking for the best agent they can find and no longer just looking for the cheapest. Buyers are on the internet and loaded with data. They have a better knowledge of the market and the numbers. They are also prescreening agents online before contacting them. Real estate agents without a strong internet presence can't are not doing so well these days.
We went from having a website to have a blog like on Active Rain to now being on social networks and having multiple websites with IDX engines and multiple blogs. Our listings a few years ago were posted on the MLS. Today we post them on dozens of websites, have virtual tours and create a website for each and every listing with its own domain name.
Listing presentations went from tax records and comparable sales to now adding satellite photos, demographics, maps, charts, detailed marketing plans and computer demonstrations. In this information age what we did a couple of years ago is no longer even the bare minimum. You need to take it to a much higher level and you need to incorporate technology.
You also need to take your personal marketing to a much higher level. Clients are looking at your personal marketing. If you are not doing a good job of that, what message are you sending about the kind of job you will do for them? Many of the new clients I picked up the last two years specifically mentioned my personal marketing as a reason.
Clients are looking at your bio. Have you invested in your career? Do you have professional development and designations? I hear the argument that those are just alphabets and the public has no idea what they are. WRONG! They are on the internet and they are reading. Even if they do not know what they mean, they know they need them. While taking a class a couple of years ago the instructor made that very point. When he had to have oral surgery, he had no idea what the designations after his surgeons name were; he just knew he needed them. He did not want the surgeon without them. I am sure in today's world he will GoogleTM them.
So if you do not feel the need to utilize technology in your real estate business, not to worry. The world need ditch diggers. If you are looking to buy or sell residential real estate in Hawaii, please check me out. You will receive the VIP treatment.
I have to run. I am meeting today with a new client who met me through my website: www.HawaiiRandy.com
If you are looking to buy or sell a home you may want to ask a question of you real estate agent before making a decision on whether to work with them.
Do you do this full time? In other words is this their primary source of income?
In my county and I am sure the numbers may be similar across the country. About 2/3 of the members of our Board had one transaction or less last year. I know you are stunned, but this is the number. That does not include all the people who have active real estate licenses who are not member of the Board of REALTORS®.
I am in a class of some kind monthly and sometimes even more often. As a full time licensed broker/ agent I write and review contracts continuously. I allocate a large budget every month for marketing both y client's properties and myself. I attend briefings and meetings constantly. This is a complicated business and it requires that we stay on the top of our game.
Someone who had zero or one transaction in a year cannot possibly be up on the contract and law changes.
There is no way that they will be able to market your home properly when they are not successful marketing themselves.
Will they even have the resources to pay for the marketing?
Are they tight for money and will they be pressured to close this sale at all costs? Will they be willing to protect your interests even if that puts the sale at risk?
Of the other 1/3 of the agents who had 2 sales or more, how many of them are actually in the business of real estate? How many have a full time job and do this weekends and evenings while balancing their family time?
In this changing market the need to find a professional real estate agent is stronger than ever. To have success in this market look for an agent who is having success. They are out there. They are however in the minority. Like the old saying if you want to get something done find the busiest person to do it.
Real estate is my full time occupation. In 2008 when many agents left our industry, I increased my marketing budget and increased my sales. If you are looking to buy or sell a home in Honolulu County (Oahu), I would be honored to assist you. My services are normally free to buyers and I have aggressive marketing programs for sellers.
The below numbers were taken from the HUD and VA websites.
2009 Hawaii FHA Loan Limits
County
One-Family
Two-Family
Three-Family
Four-Family
HAWAII
$625,500
$800,775
$967,950
$1,202,925
HONOLULU
$793,750
$1,016,150
$1,228,300
$1,526,450
KALAWAO
$716,250
$916,950
$1,108,350
$1,377,450
KAUAI
$773,750
$990,550
$1,197,350
$1,488,000
MAUI
$790,000
$1,011,350
$1,222,500
$1,519,250
2009 Hawaii VA Loan Limits
County
Single Family
$0 Down up to
Max Guarantee
HAWAII
$625,500
$1,000,000
HONOLULU
$783,750
$1,000,000
KALAWAO
$656,250
$1,000,000
KAUAI
$775,000
$1,000,000
MAUI
$681,250
$1,000,000
To find out your qualifying loan amount or details on VA or FHA borrowing, please seek a out qualified loan officer. If you are looking to buy in Hawaii, my services are normally free to buyers. I can help you with the purchase of the property and can give you the names of top professional loan officers in the area that I and my clients have had good experiences with.
*The above information is believed to be accurate, but not guaranteed.
Below is a great post from Kathleen explaining the change in the capital gains. This effects those who are taking investment property and converting it to owner occupant or the other way around.
The Housing Assitance Tax Act of 2008, enacted on July 30 modifies the rules with respect to gain on the sale of a primary residence. As you know, under prior law up to $250,000 of such gains ($500,000 for married coupels filing jointly) was excludable for purposes of capital gains tax if the taxpayer had owned and occupied the property as a principal residence for at least 2 out of the 5 years prior to the sale.
This meant that owners of investment properties could render them eligible for the primary residence exclusion in its entirety by moving into them for two years. Effective January 1, 2009, the exclusion will be restricted to the time the property is used as a principal residence (qualified use) for the period after that date. The gain allocable to the period of time the property is owned as an investment or a second home prior to its conversion to personal use will no longer be qualified (unqualified use) under the new exclusion rules. This does not, however, apply to years prior to 2009.
The effect is to prorate the exclusion on sales of investment or second homes converted to personal use after January 1, 2009. In other words, the exclusion will be reduced by the period of unqualified use taken as a the proportion of the total time of ownership. The period of ownership before January 1, 2009 is grandfathered (i.e., treated in effect as qualified).
For example, John Doe and his wife, Fanny, purchased a house as an investment in 2001 and rented it out. In January, 2006, they sell the house and do a 1031 exchange for a home in Phoenix where they intend to live when they are able to retire. In the meantime they will rent it out. In January, 2013, they retire from their jobs, sell their home in Peoria, and move to their house in Phoenix, which they remodel with some of the $300 thousand gain realized on their Peoria home (which is, of course, fully excludable from tax). After three years, however, they miss their friends and family and decide to move back to central Illinois. Suppose they realize a gain of $400 thousand on the sale, which closes in January 2016. Under the new rules, the four years from 2009 to 2013 would constitute "nonqualified use." The three years they occupy the property (2013-2015) as well as the period 2006 to 2009 are qualified. Thus the amount excludable would be calculated as: $400,000 less 4/10 X $400,000 or $160,000 =$240,000. Under this scenario, John and Fanny would be liable for capital gains tax on $160,000.
There is one further wrinkle. The new allocation rules (as between qualified and nonqualified uses) apply only to the period prior to conversion to principal residence. Owners who,for whatever reason, rent their residence after at least two years of occupancy are still eligible for the entire exclusion if they sell the property within the next three years.
So we as realtors need to be sure that our clients seek advice with their tax consultants!
Last week I attended the CRS Sell-a-bration in San Francisco. The Sell-a-bration is a gathering of some of the top agents in the country. We spent 3 days of classes, conference session with top speakers and some fun social mixers. During the conference I picked up several pearls. One that I truly liked was the phrase: "A Pricing War and a Beauty Contest."
When describing the sale process to a potential home seller, this phrase sums it up in the best direct way I can think of.
In most parts of the country we are in a buyer's market. There is a good selection of inventory and prices are either flat or slipping depending on the area and type of property. With that said, what will make you home sell before the others in your neighborhood?
You have to win the beauty contest plain and simple. When the buyers walk in did you grab them? If they liked what they saw did the price scare them off and send them down the street? This is one of the hardest concepts for many sellers. They have lived in this home. Raised their family and have had so many great memories here. Their friends and neighbors have all told them their home is worth so much more than all the others in the neighborhood. Let me clear things up for you. It is not! Friends and family will tell you that to be supportive. Neighbors have a conflict of interest. They are hoping you will raise their property value by selling at a higher price.
To keep it simple, when you are getting your home ready for sale remember you are entering a Pricing War and Beauty Contest.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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