The $7,500 tax credit for first-time home buyers, a provision of the Housing and Economic Recovery Act of 2008, created a monetary incentive to stimulate the housing market.  According to Homes & Money Quarterly Newsletter, “The tax credit will be 10% of the purchase price of a home, up to a maximum of $7,500.  That means if the home costs more than $75,000, first-time home buyers will receive the full $7,500 tax credit.

Sounds good so far?  Yes, except that the buyer will have to pay back the tax credit over a period of 15 years, beginning two years after the credit is taken – which really isn’t that bad if you think of it as the government providing first-time home buyers with an interest-free loan to help them buy a home.

If the home is sold prior to the tax credit being repaid and is sold for a profit, the remaining amount of the credit is due at settlement.  If there is insufficient profit resulting from the sale, the remaining credit due is forgiven.

There are income limits to qualify for this program and it only applies to homes purchased between April 9, 2008 and June 30, 2009.  To learn more about this incentive, CLICK HERE.

Thinking about buying?  Check out our Successful Buying Tips to help you get a good deal.

We work with many first-time home buyers, so if you're thinking that now is the time to jump into the market, call us at 410-215-7131 or email us, so that we can help you get started on this exciting process.

Wishing you sunshine everyday and the home of your dreams,
Jeri

One important component of the Housing and Economic Recover Act of 2008 that was signed into law on July 31^st provides for the elimination of down payment assistance programs (DPAs).  Why does this matter to sellers as well as buyers?

For most first-time home buyers, saving up enough money for a down payment is very difficult.  Down payment assistance programs (DPAs) solve this problem by allowing a seller to contribute money to a down payment assistance company, a third party, which then provides a legal grant to the home buyer.  According to Homes & Money Quartlerly Newsletter, “For FHA mortgages, which required as little as 3% down, this program has been very popular in the past – an estimated two-thirds of all FHA loans utilized these programs.  Since 2000, that’s nearly 900 families!  Without this program, many buyers qualified to buy a home today will not be able to qualify without the required down payment for FHA loans (which is increasing to 3.5% under the new law).”

What does this mean for sellers?  DPAs create a larger buyer pool, so in essence, if there are more qualified buyers looking to purchase a home, the greater the odds that the home will sell more quickly and for a higher price than if there are fewer qualified buyers.

The elimination of DPAs goes into effect on October 1^st, so if you know anyone who is thinking about using a DPA to purchase a home, now is the time to take advantage of this program.

Also, if you know of someone looking to find a bargain on a home, tell them to check out our weekly Best Buys.

Wishing you sunshine every day and the home of your dreams,
Jeri

Unfortunately, the real estate doom and gloom portrayed daily in the media seems to be overshadowing the fact that right now is really a great time to buy a home.  Many houses are reasonably priced or low-priced, sellers for the most part are eager to sell, and mortgage interest rates are low creating the perfect scenario for first-time buyers or people looking to move into larger houses. 

First-time homebuyers should absolutely jump into the market before the end of 2008.  After the presidential election and when the spring real estate market returns, we are expecting to see home prices rebound somewhat.  That’s why we believe that this is the opportune time to get the best deals.

For those homeowners looking to move up into a larger home or into a more expensive location, this is also a favorable time to make the move.  Yes, the home that you will sell will most likely fetch less money in this market, but so will the larger home – and that is how you can maximize your real estate investment in this market.

For example, let’s say that if you sell your house in this market you will get $250,000 for it as opposed to selling in a seller’s market where you might get 20% more for your house, meaning that the house would sell for about $300,000.  At this point you are seeing a loss of $50,000 by selling in this market.  But if the house that you are moving up to costs $400,000 in this market, assuming the 20% appreciation if sold in a seller’s market, that house would cost $480,000.  By selling your home and purchasing a home in this buyer’s market, you actually save yourself $30,000 – and as a buyer you have greater negotiating power in this market, meaning you can probably get more favorable contract terms.

The only people who should not consider buying in this market are those folks who are downsizing.  But for the rest of us, deals are to be had TODAY!

On another note, if you are planning to go to the Maryland State Fair and would like a chance to win free tickets, CLICK HERE to enter our free drawing.  Drawing held on August 20^th, so don’t delay!

Wishing you peace, love, and the home of your dreams,
Jeri

I’m feeling the need to blog about this today due to a recurring issue that we’ve been dealing with on recent transactions.  This issue is about adhering to the deadlines in a contract of sale.

Why is this important?  Because it can mean the difference between asking for a home inspection in the contract and actually being allowed to have one performed.  It can mean the difference between being able to ask for repairs to be made, and not being able to ask for those repairs.  It can mean the difference between having a contract in full force and effect, or being in default of the contract and being made to deal with the issues that arise from that situation.

The stakes are very high when deadlines in the contract are missed, and yet it is a simple situation to monitor – count the days for the deadlines, put them on a calendar, and check your calendar on a regular basis.  In fact, the moment our clients have a ratified contract, we complete a checklist for all of the items that must be completed and note when those items are due.  We put those items on our calendars and we create a list of those deadlines for our clients.  We ask our clients to put the deadlines on their calendars and hang the list on the refrigerator.  That’s how important meeting contract deadlines are to us.

So, who should be monitoring these days?  Isn’t that the responsibility of the realtor?  It is the responsibility of the realtors, the sellers, and the buyers – all parties involved in the contract – to know the deadlines in a contract and to make certain they are met.  In fact, the Maryland Association of Realtors Residential Contract of Sale states, “Time is of the essence of this contract.  The failure of Seller or Buyer to perform any act as provided in this Contract by a prescribed date or within a prescribed time period shall be a default under this Contract…”

When counting the number of days in a contract, it is important to know that all days count including weekends and holidays.  Day one begins on the day following the date of contract ratification, so if the Date of Contract Acceptance is August 10^th, August 11^th is day one.  Using this scenario, if you have a home inspection addendum in the contract that states the inspection and request for repairs along with a copy of the report be delivered to the seller within 10 days from the Date of Contract Acceptance, that means that the inspection and repairs request with report must be delivered to the seller by August 20^th.

Simply said, counting the days and meeting the deadlines is crucial is getting from sale to settlement.

By the way, the Maryland State Fair is being held August 22^nd – September 1^st, and if you’d like to go for free, CLICK HERE to enter our drawing.

Wishing you peace, love, and the home of your dreams,
Jeri

Issues impacting the mortgage industry have recently brought about some rather suspect charges on the settlement sheet (also called a HUD-1).  These charges are appearing in the 800 section of the HUD-1, entitled Items Payable in Connection of the Loan, which are normally charges to the buyer.  These charges are questionable when they appear on the seller side of the HUD-1, and that has been happening quite often lately.

Here’s what happens.  Let’s say that according to the contract of sale, the buyer and seller agree that the seller will contribute $8,000 toward the buyer’s closing costs.  One would assume that at closing, the settlement sheet would reflect charges to the seller in connection with the sale of the house consisting of taxes and transfer fees, document preparation, realtor commissions, his loan payoff, and (in this scenario) the $8,000 seller subsidy – and that would be it.

Not so these days!  Often times, the lender will state that there are certain charges in connection with the loan that the buyer is not allowed to pay, so in addition to the $8,000, the seller must also pay anywhere from $90 to $900 in additional charges.  Since these charges are in connection with the loan, in which the seller had no decision-making powers, it does not seem fair that he should have to pay these fees.  Our argument has been that if the seller is subsidizing the buyer’s closing costs, those fees in connection with the loan that the buyer is not allowed to pay should come out of the subsidy since that was the purpose and intent of the subsidy – and we have been successful in every case thus far.

It is important to mention that this situation is not the buyer’s fault; this is directly related to the lender or mortgage broker.

I am beginning to wonder how many times a seller is now paying more money to sell his house than what he originally agreed to because of this situation.  How many sellers and realtors truly understand the charges on the settlement sheet and know that they should question these charges?  In my experience, not many.

On a lighter note, if you are looking to buy a house and want a bargain, check out our Best Buys page.

Wishing you peace, love, and the home of your dreams,
Jeri