Going Away

For future blog updates, visit my newest blog at http://outandaboutchicago.tumblr.com/!

Turns Out It WASN'T Your Last Chance for $8000... or $6500!

Just today, President Obama signed into law a new unemployment insurance bill, which includes an amendment to the First Time Homebuyer Tax Credit. The new law includes the following exciting changes that now even affect buyers who have already owned a home:

• The tax credit has been expanded to include homebuyers who are selling a home that they've lived in as a primary residence for 5 consecutive years of the past 8 years (repeat buyers)
• Repeat buyers are now eligible for up to $6500
• The new deadline for the credit is April 30, 2010 (instead of Nov 30, 2009). This deadline will now apply to all sales with binding contracts signed by this date - not just properties that have actually closed by this date. This means that if you plan to close by April 30 and the closing gets pushed back a few days, you may still qualify for the credit since you already have a binding contract.
• First time homebuyers are still eligible for up to $8000
• Income limits have been increased to $125,000 for single filers and $225,000 for married filers
• The maximum home purchase price to be eligible for the credit is $800,000

Some FAQ about this credit:

Q: I am a "repeat buyer". Must the new house that I purchase cost more than the old house I sold?

A: No, repeat buyers also include those who are "downsizing", or spending less on the purchase than they got on the sale.

Q: I owned and lived in my home for 10 years. 2 years ago I sold it and have been renting. If I buy a home before April 30, 2010, will I still be eligible for the $6500 (assuming I meet all other criteria)?

A: Yes. You owned and lived in your home for 5 consecutive years of the last 8 years so you qualify as a repeat buyer in that respect.

Q: I am purchasing a home for $815,000. Am I still eligible for at least a portion of the $6500 repeat buyer credit (assuming I meet all other criteria)?

A: No. The credit limits the purchase price at $800,000. This is a hard maximum (not a phase-out), so any purchases above $800,000 will disqualify you from claiming this credit.

As always, please consult your tax professional to discuss your eligibility for either of these credits and your particular situation. Do not hesitate to contact me if you'd like to discuss the possibility of buying or selling property in time to claim this credit. I'd be happy to discuss your situation with you or refer you to a great agent in your area!

$8000 Tax Credit Explained

I wish I'd found this video sooner. It explains the tax credit really clearly. We have about a week and a half left for anyone wanting to make the plunge in time to claim the credit! So there's still time if you're ready to move quickly. http://www.blip.tv/file/2724367

Your last chance to qualify for $8,000!

On Wednesday, Oct 14 at 7:00PM, Wells Fargo & Coldwell Banker will be hosting a webinar for potential homebuyers to learn about financing options, 3.5% down payment loans, buying foreclosures, tax incentives, and more!

This is also a LAST CHANCE opportunity for first time homebuyers to learn about the $8,000 Homebuyer Tax Credit! This credit expires on November 30, 2009 so don’t miss this informational presentation!

You may attend our webinar from the comfort of your home!

Topics Covered:

· $8,000 First Time Homebuyer Tax Credit

· 3.5% Down payment loans and other financing options

· Benefits of owning property, such as tax deductions and property appreciation

· Buying foreclosures and short sales

· How YOU can benefit from current market conditions

· Why NOW is the ideal market for first time buyers

· … and MUCH MORE!

Register for this informational webinar at www1.gotomeeting.com/register/343644008.

After registering, detailed instructions will be emailed to you.

$8000 FOR YOUR DOWNPAYMENT

I apologize for the blogging hiatus. Terry - I also apologize personally to you. I know you were very sick of looking at the giraffe print house every day in hopes that I'd have a new blog update. I will say that I think my blogging frequency is directly related to the condition of the real estate market - the busier I am, the less time I have to blog!

However, I am back on track...

This update is really important so I wanted to make sure I got this posted ASAP.

The news is related to the $8000 First Time Homebuyer Tax Credit. Originally, you'd have to close on the property before you could fill out the tax form and receive the tax credit. This meant that you could not use it directly toward your downpayment.

The new guidelines - which are still being developed - say that you can use the $8000 tax credit for your downpayment on FHA loans. FHA loans allow you to put down a minimum of 3.5% downpayment.

How would this work? The $8000 would be lent to you as an advance - so that you could use it at the closing table. It would come from certain eligible lending agencies - not from the IRS. This $8000 advance would act as a loan that you then repay from the $8000 tax credit you'd receive from the IRS when you file for it after closing.

If you bought a $200,000 home with an FHA loan, your minimum downpayment would be $7,000 which would be more than covered if you qualify for the $8000 tax credit. This means NO OUT OF POCKET COSTS TO COVER YOUR DOWNPAYMENT. This is only good through the end of November of 2009 so WHY WAIT? Even if you have to break a lease to buy a home, why not consider it - what's cheaper - breaking your lease, or losing out on $8000? You may even be able to get a seller to buy out your lease in this market filled with motivated sellers.

Honestly, I can't imagine that it's going to get better than this. When they announed that the previous $7500 credit was increased to $8000 and didn't have to be repaid anymore, we thought it was too good to be true. NOW, you can use that $8000 directly at the closing table and you might not even have to come up with a downpayment.

Terry

Animal prints are so last year...

Just found this up north... I am speechless.

First Time Homebuyer Info

So, I've told you about the new $8000 "Obama money" for first time homebuyers. But how exactly do you get it? It doesn't just magically appear in your bank account. And how do you know if you qualify?

Come to our info session Tuesday March 24 from 6-7PM to learn more! You'll also meet a lender who can tell you about 3.5% downpayment Federal loans, and you'll hear from a real estate attorney who can answer all of your questions.

Not only will we cover the $8000 tax credit, but I can tell you all about how to find a deal with foreclosures & short sales, and MUCH MORE.

Date: Tues 3/24

Time: 6-7PM

Location: 1840 N Clark, Chicago

Why: Because you want $8000 in free cash. And because we'll give you free food.

RSVP to me! (773) 467-5345 or eileen.mcauslan@cbexchange.com

FHA Financing - First Steps!

Federal Housing Administration (FHA) loans are the next big thing in real estate financing. The reason? These are the only low downpayment loans that have survived the turmoil of the lending world. First time buyers are particularly fond of these since they require only 3.5% downpayment. For that, you pay a slight premium usually in the form of a slightly higher interest rate, but for some buyers this type of loan is the only option.

The issue we run into with FHA loans is that the property has to actually qualify for the loan. This gets troublesome at times, especially in the condo world.

If you're going to be getting an FHA loan and you're interested in buying a condo, you have two options:

• Only look at condo buildings that are fully FHA approved
• Only look at condos that might qualify for FHA spot approval

The building management company can usually tell you if the building is FHA approved, or you can search online for approved buildings at https://entp.hud.gov/idapp/html/condlook.cfm.

If the building is not FHA approved, there are a number of criteria the condo itself must meet in order to get a spot approval on the individual unit. Without going through the entire spot approval process, you should start by finding out:

1) Does the condo association hold the Right of First Refusal? If they do, this condo will not be able to get an FHA spot approval. Skip it. On the flip side, if you're trying to sell your condo in a building that has the first right of refusal, you might consider talking to the association to see if they can change this rule in the condo by-laws. This might open the market for you and draw a larger buyer pool to your condo. But do this right away - because changing the by-laws might require getting past some red tape and take a little time.

2) What percentage of the condos in the building are owner-occupied versus rented? The building must be at least 71% owner occupied in order to be considered for an FHA spot approval. So if you're interested in a building full of renters and you're getting an FHA loan, forget it. Move along to the next building.

If you'd like help finding FHA approved condos, I know many in the Chicagoland area and am happy to help. Contact me anytime!

My Next House

"America's First Green Mansion", located Manalapan, Florida:

• 1.6 acres of gardens
• 15,000 square feet of mansion
• 7 bedrooms
• 11 baths
• Featuring: an aquarium wet bar, waterfall spa, floating sun terraces, bedroom ocean views you could only dream to witness, and more!

And the green factor -- it's entirely energy self-sufficient!

How does a 15,000 square foot mansion provide enough energy to power itself entirely? Well... it probably helps to have enough solar panels to cover two basketball courts, and a water system that collects enough runoff to fill a swimming pool twice a month, and environmentally conscious lighting system that also takes advantage of natural light.

Really?

I honestly sometimes wonder about some agents. The other day I tried to show a condo. The listing agent gave me the lock box code so that I could get the key to show it (unit #2); she warned me that the lock box was sticky and I'd have to mess with it a couple of times to get the key out.

So I drive Zack to the property to show it to him and the lock box is definitely stuck. So stuck, in fact, that neither of us could get the key out even after trying for close to 5 minutes. I called the listing agent to no avail - all I got was her voicemail. There was definitely no way we were going to be able to see unit #2.

Luckily we were taking a look at another unit (unit #3) in the building so it hadn't been a complete waste of time to drive there. The listing agent for unit #3 actually met us there to let us in. I told her that I'd tried to show unit #2 and couldn't get the key out. She told me that she wasn't surprised - many people had told her that; she didn't think unit #2 had ever actually been shown because no one could get in and unit #2's agent never returns calls or has even tried to put on a new lock box. Really?? I can not believe it when I hear things like this - if that was my listing, you better believe I'd have a brand spanking new lock box on that unit before you can say the words "lazy agent". No, wait, I wouldn't even have done that - I would have personally accompanied every showing to be sure that the buyers can get in to see the unit!

Meanwhile, the poor owner for unit #2 has had his property on the market for over 200 days. And in that time, the price has been reduced and reduced and is now down to $209,000. And the worst part is, I'm sure he has no idea that his agent is not actually even showing his property.

And here's another kicker... I see photos like this all the time on listings. Really? As if in the age of digital cameras, you couldn't take the time to snap ONE MORE decent shot of the building without your finger covering the lens?

First Time Homebuyer Tax Credit UPDATE!

Congress passed the stimulus bill late Friday night. What does this mean for the housing market?

It means we're about to see an influx of buyers. One major item of note is a revision to the First Time Homebuyer tax credit. This is GREAT news for the housing market and will really be enticing for first time buyers. Here's how it will work:

To qualify for the credit, you must be a first time homebuyer or have not owned a home in the past 3 years. If your income is over $75,000 ($150,000 for married couples filing taxes jointly), the credit starts to phase out and is completely phased out after $95,000 of income ($170,000 married filing jointly).

If you purchase a home after Dec. 31, 2008 and before Dec. 1, 2009, then when you file your taxes, you'll be entitled to claim the credit. The credit is now $8,000 (or 10% of the purchase price of the home, whichever is lower), up from the previous $7,500 credit. The best part is - YOU NO LONGER HAVE TO REPAY IT! The previous law required the $7500 tax credit to be repaid, interest free, over a 15 year period. With the new law, you won't have to repay the credit unless the home ceases to be your main residence within 3 years. This is FREE MONEY, people.

This means: if you make less than $75,000 as an individual, and purchase a home for $80,000 or more, and you continue to live in the home as your main residence for 3 years, you're entitled to the full $8,000 credit and do not have to repay it!

You can use this money any way you like - buy new furniture, pay down your mortgage, fix up your house, buy a car, start a business, go on a trip, invest it... the possibilities are endless!It's money for YOU, no strings attached!

How you claim the credit:

When you file your taxes after buying the home, you'll fill out a worksheet which you'll attach to your 1040 (tax return). If, say, you otherwise would have been getting a $1000 federal tax refund, you'll now be getting a $9000 refund (assuming you qualify for the full credit)! Or, on the flip side - if you would have owed $1000 in taxes, you now will actually be getting a $7000 refund!

Once the IRS posts guidelines, I will provide a link to the tax credit worksheet that you can use to claim the credit, so keep checking back! And as always... contact me if you have any questions at all!

More Green

As a continuation from the previous message, here are some medium-cost ways to go "green" in your home:

• Conduct an energy audit to determine how you can implement efficient projects in your home cost-effectively.
• Tune up your HVAC (heating, ventilation, & air conditioning) to keep it running efficiently
• Replace carpet with no-VOC (volatile organic compounds) carpeting.
• Instead of normal hardwood floors, consider using bamboo floors (bamboo grows faster than any other plant - up to 47 inches a day! - therefore it is less depletive to the environment)
• Install a tankless water heater (water is heated on-demand, rather than stored in a tank and constantly heated, thus reducing energy needs)
• Insulate attic and other areas to reduce temperature loss.
• Buy recycled products!

Eileen's Going Green

So, I'm now working toward getting the brand-new GREEN/Sustainable Property designation recognized by the National Association of Realtors. It's the first designation of its kind and I think GREEN is the wave of the future so I'm trying to keep up!

Here are some low-cost ways to make your home "green":

-Use energy-efficient CFL or LED lightbulbs

-Install low-flow showerheads and faucets to save water

-Start a compost pile

-Insulate your hot water heater to reduce heat loss

-Weatherstrip and caulk doors & windows

-Collect rainwater to water plants

-Paint with low-VOC paints to keep chemical fumes out of your home & body

-Install programmable thermostat so the heat or A/C turns down while you're at work

-Install motion sensors so lights will automatically turn off when room is not in use

-Take advantage of daylighting

-RECYCLE!

Condo Mortgages - New (not-so-buyer-friendly) Guidelines

Since the market crash we've witnessed throughout 2008 and into 2009, the condo market has become a more risky in the eyes of mortgage lenders. The reason for this is manyfold:

1) Often times, a condo is not the primary residence of its owner. Frequently, people buy condos for investment purposes (to rent out), or as second homes. This isn't so much the case in a major city like Chicago but is often the case elsewhere. The problem with this is that when someone is in trouble financially, their investment property is usually the first to go. Generally, when faced with the inability to pay both mortgages, people will stay in their main home and let their investment property get repossessed by the bank. This has led to a higher number of foreclosures in condo buildings, especially in those that were built with the intention of selling to investors.

2) In an over-saturated market like we're faced with today, condos are tough to sell. For example, the Park Place building in Lakeview (655 Irving Park) currently has 53 units for sale! With about 900 units in the whole building, this means about 6% of the building is for sale. This is not uncommon to see in today's market. The problem is that a lot of big condo buildings are just floor after floor of the same unit. When there are 10 other condos on the market with the same floorplan as yours, the competition really increases, and prices start to come down. Lenders don't like to see this. And if one of those units is foreclosed on, the bank suddenly owns an asset where there is severe downward pressure on it's value.

Because of the increased risk of condo purchases, new Fannie Mae guidelines will be adding a fee of .75% of the loan amount on 30 year mortgages for condos with less than a 25% downpayment. This will be effective April 1, so if you're thinking about buying a condo this year, don't wait around!

Positive Signs in the Housing Market

According to Richard Bove of investment banking firm Ladenburg Thalmann, one of the country's veteran financial analysts, there is a positive dynamic taking shape in the current cycle:

• Bove said he expects “housing prices to stabilize and/or rise (in 2009) after a likely boom in mortgage refinancings as rates fall and loan applications increase.”

• Add in the expected massive economic stimulus package being put together on Capitol Hill with the incoming Obama administration – and there's a good chance we're going to see a gradual transformation of the downward cycle into a slow rebound over the coming several quarters.

• Mortgage rates continue to hover at 50-year lows – 5% and even 4.75% for 30-year mortgages, and still lower for 15- and 20-year mortgage terms.

• There are signs that housing prices are stabilizing in some parts of the country. The latest monthly Federal Housing Finance Agency index found home prices up by 0.6% in the Mountain states and by 0.2% in New England.

• We're all paying a lot less at the gas pump, and sharply discounted prices for retail goods and autos.

• Americans are actually saving again, the national savings rate took a nearly 3% jump last month. That might sound small, but it's hugely important if it is the start of a trend.

Keep your eyes open for the small positive signs that are accumulating out there … because all down cycles tail off and come to an end.

From: http://realtytimes.com/rtpages/20090106_realestateoutlook.htm by Kenneth Harney, Realty Times, Jan. 6, 2009

Changes to First Time Buyer Tax Credit - FREE MONEY!!

Great news for First Time Home Buyers in 2009!! The government proposed on Friday that the $7500 tax credit for first time home buyers will not have to be repaid for homes purchased after January 1, 2009! Originally this credit was essentially an interest-free loan given by the government and repaid over the course of 15 years.

Potential new tax law changes allow for NO REPAYMENT of this loan. It would apply to purchases of homes through July 1, 2009.

Think about it... on a $200,000 mortgage, that means the government will actually be GIVING you more than enough enough to cover a 3.5% down payment on a home (FHA loans still only require 3.5% down). Of course you'll have to front the money at the closing table, but if you file your taxes the next day, you won't have long to wait until that money is refunded to you by the IRS.

Toronto's Little House

Take a look at this one! No doubt it's the smallest house I've ever seen. This comes from an email that has been floating around for about a year saying that this house is in Brooklyn; turns out it's actually in Toronto. It was built in 1912 on the newly paved driveway of a neighborhing home after the city wouldn't allow the curb to be cut to accommodate the new driveway. It sits on a piece of land only about 7 feet wide! The interior is under 300 square feet, smaller than most studio sized condos in Chicago! And it carried a price tag of $179,000.

I'll walk you through a tour of this lovely palace.

This living room has plenty of space for your 12 inch flat screen TV. Good thing, because you're sure to be hosting a lot of guests in this party house!

Bed is here, then its gone, here, gone, here, gone. And what, the mattress is sold separately??

And how smart of them to fit a washer/dryer in the home as well.... I mean, with all that closet space, you're gunna have a lot of clothes to wash...

And then of course even a back patio overlooking the beautiful driveway of the neighbors. How relaxing.

Brown Earth Cow

2009 on the Chinese calendar is the year of the Brown Earth Cow (AKA Ox). On the calendar of real estate, I call it the year for first time homebuyers. In addition to the $7500 first time homebuyer tax credit, there are so many reasons why this year is a great time to jump into the world of homeownership! Home prices have fallen...and fallen...and fallen. Many homeowners in dire need of moving or selling their home have gone to short sale and sold their homes for less than they owe on the property. There comes a point when people decide that the benefit of moving/selling does not surpass the downfall of selling for a lower price, and they take their home off the market. When that moment hits, supply drops - and when it drops enough, that's when prices stop falling. It's just the law of supply and demand, we learned this in high school people!

Well, here's the pertinent info (based on 3rd quarter 2008 data from the Chicago Association of Realtors) - Seriously, READ IT, even if you don't like numbers -

Of 75 Chicago neighborhoods we have data for, 50 of them now have median home prices LOWER than the same quarter in 2004. Only 25 neighborhoods have a higher median price than they did in 2004.

28 (over one third) of the neighborhoods currently have median home prices lower than the same quarter in 2003.

Only going back to 2001 do we see that all neighborhood's prices are higher now than in that year. 2008's median home price is higher than 2001's prices for all 75 of the neighborhoods.

So this is telling me that we're back down to prices from around 2002...

Looking back at historical interest rates, current 30 year fixed mortgages are about the same level they were in 2002. So that means it is no more or less expensive to buy a home for a certain dollar amount.

So I could actually buy a home for the same price at the same interest rate that I could have 6 years ago? And I don't even need Doc Brown's Delorean for it?

If that doesn't give you a reason to save up 3.5% for a downpayment, what will??

Get more info on this Tuesday Jan 27 at 6pm at the Coldwell Banker office located at 1840 N Clark Street in Lincoln Park. It'll be a really good info session, don't miss!!

(This blog post was edited on 1/10 to reflect an error I found in data pull)

Housing Assistance Tax Act of 2008

There's been another change in tax laws which will benefit homeowners this year. The IRS will allow up to $1000 in real estate tax deduction for non-itemizers. What this means to you is:

When you do your taxes each year, you have the option to either itemize, or use the standard deduction.

Usually you'll itemize if you have a significant number of tax deductions, such as mortgage interest, property taxes, or significant medical or dental expenses. You'll add these deductible amounts up and subtract them from your income in order to figure your taxable income.

However, the IRS also gives you the option to take a standard deduction amount - no questions asked, no receipts needed - without itemizing. These amounts differ depending on your filing status and a few other factors, but for a married couple filing jointly this year, the standard deduction is $10,900.

This means that if a married couple's itemized expenses are less than $10,900, they're better off taking the standard deduction.

So, for someone who just purchased a home this year, this can be frusturating. "I thought I would be able to deduct my property taxes and mortgage interest this year!!" they say. Well, if you bought the property in, say, October, you might not have paid enough in mortgage interest & taxes in 2008 to exceed the standard deduction amount.

However, this year, the IRS is giving you a little present :-) Even if you are not itemizing your deductions because they don't exceed the standard deduction amount, the government will allow you, as a homeowner, to deduct an additional $500 ($1000 if married filing jointly) for property taxes you paid.

Add that to the list of "why now is a great time to buy"!

Happy Holidays From Fannie & Freddie

Fannie Mae & Freddie Mac issued orders suspending foreclosures from Nov 26 - Jan 9 just in time for the holiday season! This suspension is intended to help implement the new Streamlined Modification Program which will be launched in a few weeks.

The newly announced loan modification program is aimed to help high-risk borrowers who have already missed at least 3 mortgage payments and haven't filed for bankruptcy. Loan modifications can be done by either reducing the interest rate, extending the length of the loan, or temporarily reducing principal payments.

The suspension on foreclosures only applies to occupied properties, not to vacant homes and should help 6000 borrowers avoid foreclosure at the end of this year.

I think this is a great step in the right direction....