Andrea Geller

Last evening the United States Senate unanimously passed a bipartisan amendment, offered by REALTOR® Champions, Senators Johnny Isakson (R-GA) and Joe Lieberman (ID-CT) to the Economic Stimulus Bill creating a $15,000 tax credit to individuals who purchase a home in the next year.

Specifically, the Isakson-Lieberman amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislation's enactment, and the tax credit would not have to be repaid.

The amendment would allow taxpayers to claim the credit on their 2008 income tax return. It also seeks to prevent misuse by only allowing purchases of a principle residence and by recapturing the credit if the home is sold within two years of purchase. The amendment would sunset the current $7,500 housing tax credit on the date of enactment.

While the final details of the Stimulus Bill are still being debated, this amendment represents a tremendous step forward in NAR's efforts to stabilize housing markets around the nation. Because of the efforts of REALTORS®, we expect the final Economic Stimulus Bill will contain several major housing provisions. We will continue to update you as the bill progresses through the legislative process.

(Information provided by the Chicago Association of Realtors)

Late Friday night Freddie Mac announced increase in loan fees on condos comparable to Fannie Mae's as a result of the increased default rate on mortgages.

Wall Street Journal Article on Freddie Mac Fee Increase

Between lower interest rates and current market values you can mortgage at almost 20% more home today than a year ago for the same monthly payment and get probably get additional 10% or more in home based on current market values.

• In 2008 rates for a 30 year fixed were at 6.5%
• In 2009 rates for a 30 year fixed are 4.75%.
• In 2008 a $344,000 loan at 6.5% costs $2174.31Monthly
• In 2009 a $417,000 loan at 4.75% costs $2175.27Monthly.

Using the rates above and assuming a loan amount of $300,000 with monthly taxes and insurance of $400;

• In 2008 a buyer must earn $91,848.16 to qualify for the loan
• In 2009 a buyer must earn $78,597.68

These numbers were provided by Frank Sommese of American Bank & Trust. Frank can be reached at

312 388-2176 or fsommese@AMBANKQC.COM.

Now is the time to buy. It is one of the most favorable times for qualified buyers.

As there are many qualified buyers out there waiting for the best rate, they are missing the great opportunities in today's real estate market by searching online and not getting out there, finding their new home and get an offer negotiated.

"With interest rates and home prices down, buyers must be prepared to act. The buyers must work with their real estate agent to identify a property and execute a sales contract. It's only then that a buyer can lock into these historic low rates. The market is very volatile right now and a rate that is available now can be gone in 5 minutes." says Frank Sommese of American Bank and Trust.

Andrea Geller, Realtor

Sudler Sotheby's International Realty

andreageller.com

Although the interest rates are historically low, the market is very volatile. When prospective buyers are going after the rates that were yesterday's news they don't understand why that rate is no longer available. It can change from hour to hour, minute by minute.

The buyer needs to have identified the property they will be closing on order to be able to "lock" into the rate and have a loan application in process. This is where the partnership of the Realtor®, the mortgage professional and the purchaser comes in. The time to start looking is now and getting your loan in order now. I find one of the biggest mistakes the buyer makes is continually shopping lenders after they have gone under contract and losing out on capturing a rate.

The inventory level is still high offering a lot of options and great value. Work with your lender from the start to make sure you are qualified for the home you want and the home is qualified for you. There are a lot of loan products available but many of them have very particular regulations especially on condominiums such as owner occupancy and rules and conditions of the association. This is where the team work comes in to make sure you can close on your new home.

Frank Sommese of American Bank and Trust says of the low rates:

30 year fixed rates fell under 5% for a short time on Thursday, December 18^th, 2008. There is a good chance we will test these levels again. I recommend that the borrower start the loan process in anticipation of falling rates. The ability to lock a rate and quickly close on the loan will guarantee a better rate.

For more information contact Frank Sommese at 312 388-2176 or fsommese@ambankqc.com