A "perfect storm" is defined as the simultaneous occurrence of weather events, which taken individually, would be far less powerful than a storm resulting from their change combinations. In nature, it's very rare--even rarer in the real estate biz.
Every "weather condition" in the real estate universe has lined up in perfect symmetry to create the perfect storm for FTHB. Here's what's happened and why you need to get the word out to your client database, the press, apartment dwellers and includes content for your FTHB seminars. (Find apartment mailing lists at www.ApartmentToolKit.com)
Why is it the perfect storm?
FHA & VA lending has increased 400 percent over previous years. More and more lenders are offering government loans. It's easier to get approved and loan limits for FHA have increased. (Check with your lender for the new loan limits in your area.) FHA limits are $217,050 on the low end and $729,750 in high-cost areas. On January 1, 2009, the high-cost FHA loan limit will decrease to $625,500...still a decent loan amount in most parts of the country.
The $7500 Tax Credit for first-time home buyers and applies to all types of loans(FHA, VA and Fannie/Freddie). Here are some of the highlights but you can download free the MortgageTalkingPointsTMflyer on www.ApartmentToolKit.com and read who qualifies and who does not qualify.
§ Maximum "tax credit" of $7500 or 10% of the sales price if lower than $75,000.
§ Tax Credit is paid back over a 15-year time period ($500 per year) and FTHB can skip a year before payments start. It's basically an interest-free loan to stimulate home sales.
§ Qualifies if adjusted gross income is $95,000 for Individual tax return and $170,000 for Joint tax return.
§ First-time home buyer is defined as not owned a home within the last 3 years.
§ Tax returns must be filed to get the cash tax credit-the entire amount is refunded the 1st year.
§ If the buyers received a refund each year from the IRS, the $500 tax credit pay back will be deducted from the refund.
Hold a FTHB seminar with a tax advisor, and JUST cover this topic ONLY. Since the tax credit covers homes purchased between April 9, 2008 and July 1, 2009, review your database of closed loans to first-time home buyers and invite them to the seminar too. Ask them to bring a friend, who has not owned a home within the last 3 years along with them to learn about this huge benefit.
Fixed mortgage rates are the lowest in years and you can demonstrate the tax benefits of home ownership by giving your prospects a Net-Effective Interest Rate/Payment Chart which you can download free on the www.ApartmentToolKit.com site.
What does "net effective interest rate mean? It's the effective interest rate your client will pay if they complete a 1040A Tax Return, factoring in the tax-write offs for mortgage interest paid.
Consider a loan amount of $150,000 and an actual interest rate of 6%. Based on current tax charts, a couple, filing jointly and making $90,000 per year, the "net-effective interest rate" would be 4.95%. The P & I payment based on 6% is $899.33 but the "net-effective payment" would be $800.65. The chart provides tips on how to file a new W-4 form and a disclaimer on checking with a tax advisor.
Decrease in property values (worst of times for sellers) has made it more affordable than ever.
Consider yourself the "weatherperson". The best way to let prospects know that their timing is perfect is by offering seminars and free info (provided above) on your website. In addition to contacting prospects in your database, sending post cards to apartment complexes (the NAR reports that over 75% of FTHB have rented before buying their first home) is the next best way to let everyone know that there is a home buying storm brewing-and that lightning very rarely strikes twice!
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