Ben Olson

Directly from the National Association of REALTORS®, here are some of the most frequently asked questions regarding the changes to the Home Buyer Tax Credit:

Question: Existing homeowner credit: Must the new house cost more than the old house?

Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

Question: I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?

Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phaseout range).

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?

Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?

Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.

Question: I am an eligible firsttime homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?

Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

First-Time Home Buyers and now NON-First-Time Buyers get a Tax Credit.

Maple Grove, MN - In a 98-0 vote on Wednesday, the Senate passed a bill that will extend the $8,000 First-Time Home Buyer* Tax Credit to all purchase contracts signed by April 30, 2010 and closed by June 30, 2010! The previous tax credit was set to expire at the end of this month. With most closing schedules booked solid, and lenders making provisions for after-hours and weekend closing, the environment has been electric! Throw Thanksgiving into the mix, the last Thursday of the month, and there is no cushion for error! If anything were to delay the closing... NO $8,000! Well, we can all breathe a sigh of relief, the safety net is back!

In addition to the tax credit extension, a form of the credit has also been expanded to Non-First-Time Buyers. If a home buyer has owned their current home for at least five years. They will be eligible for up to $6,500. The bill also increased the adjusted gross income cap to $125,000 for single filers ($225,000 for joint filers).

*A First-Time Home Buyer is someone who has not had ownership interest in a residence within the previous three years.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

Low Housing Prices... But for How Long?

In a CNNMoney.com article, "Homes: About to Get Much Cheaper," the argument was made that general home prices nationwide won't bottom until sometime next year. The primary factor being high unemployment contributing to an increase in foreclosures.

But Steve Havig, 2009 President of the Minneapolis Association of Realtors, argues that for the Minneapolis Metro Area, homes are moving fast and this will eventually cause prices to rise. Many price points have already turned into Seller's Markets, with multiple offers becoming a VERY common occurrence.

Take advantage of today's limited offers! The only way to know when we've "hit bottom," is when we look back and see that it's already happened.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

What to Expect when on the Road to Foreclosure

Buffalo, MN - Have you ever wondered what's involved in the foreclosue process for the state of Minnesota? Marci Weiche, one of the top Realtors in Buffalo, MN, details the steps below. Read on and wonder no more...

1st Missed Payment - Lender calls and sends letter to the homeowner.

2nd Missed Payment - Collections department continues calls and letters (30 day default letter is sent to the homeowner).

3rd Missed Payment - Collections efforts continue; transfer to foreclosure department ('Notice of Intent to Foreclose' is sent to the homeowner).

4th Missed Payment - Account is forwarded to foreclosing attorney. Legal fees accrue and attorney sends notice to homeowner.

5th Missed Payment - Foreclosing attorney schedules Sheriff's Sale date (Sherrif's Sale date is published for 6 consecutive weeks).

6th Missed Payment - Occupant served with notice of Sherrif's Sale (4 weeks before the sale).

7th Missed Payment - Sherrif's Sale occurs (this is the deadline for the homeowner to bring the mortgage current).

Redemption Period - Minnesota has a 6 month ‘right of redemption' period immediately following the Sherrif's Sale, although this period can be shortened to 5 weeks, if the sale was postponed by the homeowner. During the redemption period, the homeowner retains the right to occupy the house and pay off the entire Sherrif Sale amount, including fees. However, they must pay this amount or vacate the house by the end of the redemption period (or face eviction).

Foreclosure = Opportunity
Clearly, with the large volume of foreclosures in the state of MN, foreclosed homes are rampid in our current housing inventory. This presents a great opportunity for general consumers and investors alike. There are many Buffalo, MN area homes priced at incredible values, some range from needing a little TLC to a massive reconstruction, while others are move-in ready and just great for first time home buyers.

To learn more about Marci Weiche and her expertise in Buffalo, MN and the western Twin Cities metro area, click on the following link: Buffalo, MN Realtor - Marci Weiche, or call her directly at 612-220-1074.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.

HVCC & HERA Could Slow Your Ability to Purchase a Home.

Maple Grove, MN - It's no secret that many facets of mortgage lending and real estate have changed as a result of the credit crisis. In addition to tightened lending practices that resulted from rising mortgage delinquencies, Washington has been heavily involved in altering the way lenders do business today. Two individual pieces of legislation impacting our business need to be taken into account when determining closing dates for purchase transactions.

Home Valuation Code of Conduct - The Home Valuation Code of Conduct (HVCC) went into effect May 1, 2009. Intended to shield appraisers from undue influence from loan officers and lenders, this legislation installed a "firewall" between those individuals directly involved in the origination of the loan from the selection of and contact with appraisers. HVCC also requires that borrowers receive a copy of the appraisal a minimum of three days in advance of closing. Part of the kicker here is that "received" is considered, in effect, three business days after the appraisal has been mailed to the borrower. Since HVCC requires this "firewall" between the originator and the appraiser, the time to receive an appraisal has increased, in some cases by as much as two weeks or more. While this may not always be the case, it is important to take into consideration when considering closing dates. Today, conservative closing dates are mandatory to properly manage expectations of all parties. Make sure you're allowing enough time to avoid panic and stress in the days leading up the the closing date.

Housing and Economic Recovery Act - The Housing and Economic Recovery Act (HERA) amends and influences several aspects of obtaining a mortgage, the disclosures required for borrowers, and the timing of their delivery. This Act affects the minimum time required to close, and should any changes be made to a loan application that could impact the Annual Percentage Rate (APR), this could delay the closing date. Other than paying for a credit report, lenders may not accept any additional fees from a borrower until four business days after disclosures have been provided to or mailed to a borrower. This has the potential to delay several phases of the application process.

Finally, upon making application, a borrower is provided a Truth in Lending (TIL) statement, detailing the total expected costs that could be incurred over the life of the loan. Should anything change in the loan application that could change the APR by more than .125%, a new TIL must be reissued to the borrower a minimum of 3 business days before closing. Items impacting the APR could include a borrower accepting a higher interest rate than initially qualified by floating their rate at application, a change to the loan amount, a change in loan type, a change in closing date, and any changes to fees.

What Now? - While there is more we can discuss on the specifics of these legislative implications, I felt it important enough to let you know now that I would not recommend you write purchase contracts with short closing time frames (less than 30 days). I have prepared additional information to help explain the rationale behind not scheduling closing dates in advance of 30 days at a minimum and ideally not less than 45 days.

Ben Olson is Mortgage Consultant affiliated with Mortgages Unlimited, a Licensed Mortgage Lender - Minnesota Department of Commerce. If you would like to get pre-approved for your home purchase, please contact Ben Olson at 763-416-2620 or visit www.AskBenOlson.com.