Massachusetts has just joined a small but growing number of states which have developed a way for buyers to access the $8,000 Federal homebuyer tax credit at a time when it is the most useful in the home buying process.
First-time homebuyers with loans from the state's affordable housing bank, MassHousing, are now eligible to receive an $8,000 state loan if they buy before December 1, 2009. The loan is interest-free as long as it is repaid by June 1, 2010. By that time, buyers will have been able to claim $8,000 federal tax credit provided for in the federal Housing and Economic Recovery Act of 2008.
At a time when 82% of would-be home buyers believe that saving enough for a down payment is still their biggest obstacle to home ownership, these loans will enable more buyers to purchase their first home.
In an announcement of the new program, Governor Deval Patrick stated, "These loans will both help prospective homebuyers achieve the comfort and stability of home ownership for their families and also stimulate the Commonwealth's economy through increased home sales."
Details of the loan program:
Repayment terms:
There are no monthly payments required but the loan must be paid in full before June 1, 2010. If it is not paid in full at that time, it will be amortized for 10 year at the same rate as their first mortgage.
Related Posts:
Using the Tax Credit as a Down Payment on a Home
Taking Advantage of the $8000 First-time Home Buyer Tax Credit
Copyright 2009 - Claudette Millette, President,TheBuyersCounsel - 800-392-1446, E-mail
Serving Home Buyers in: Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough
Several weeks prior to your closing in Massachusetts, you should start the process of shopping for homeowner's insurance. It's a good idea to begin looking soon after your offer has been accepted. There are dozens of carriers available so making choice can be difficult. Get recommendations from friends, co-workers or your Buyer Broker.
Insurance companies will ask you a number of questions that will affect the premium and your coverage. Be prepared to be asked the following:
You can save money on your insurance cost by having a higher deductible on your policy. Typically, deductibles start at $500 with some companies offering up to $10,000. Be careful, however, since your lender may have its own requirements. Some mortgage companies will not allow to you to exceed $1,000. So, check with the lender prior to opting for a high deductible policy.
A standard homeowner's insurance policy provides four types of coverage: 1) Coverage for the structure of your home; 2) Coverage for personal belongings; 3) Liability protection; 4) Living expenses in the event you are temporarily unable to live in your home.
Property Structure Coverage
Most standard policies will pay to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or any other disaster that is listed on the policy. They will not ordinarily pay for flood or earthquake damage. If you want or need this coverage it is available at an additional cost. In determining how much insurance you need to cover your home, your agent will calculate the cost of rebuilding the structure at current construction costs. The cost of the land is not included in this figure.
Personal Belongings
In case of fire, hurricane or theft, your furniture, clothes, sports equipment and other personal items are covered. The coverage is usually 50% to 70% of the amount of insurance you have on your home. As an example, if you had $100,000 worth of insurance coverage on the structure of your home, you would have $50,000 to $70,000 worth of coverage on your belongings.
In order to calculate the proper amount of coverage you need for personal items you take an inventory of everything you own and be able to put an approximate price on those items. As part of your inventory take photos or videos of your items and place them in a fireproof safe. You can insure personal items at cash value or replacement cost. Cash Value will pay the cost of replacing your items minus depreciation. Replacement cost will reimburse you for the cost to actually replace them. If you have jewelry and silverware, there are usually limits to their coverage in your homeowner policy. If you want to insure them for full value, speak to your agent about a floater policy or rider with no deductible.
Liability Coverage
This is to protect you against lawsuits in the event someone is injured on your property. There is also a provision that will cover an event in which you, your children or pets accidentally ruin property belonging to a neighbor. It is advisable that you purchase at east $300,000 worth of liability protection.
Loss of Use
If you suffer a covered disaster such as a fire or storm, this part of your policy will pay the costs of living away from your home. It will pay hotel, restaurant and other expenses you incur while your home is uninhabitable. This coverage is typically 20% of your home insurance.
Related Posts:
Home Warranties, Are They Worthwhile?
Property Disclosure - Who Has the Burden of Proof?
What is Included in a Home Purchase?
The Importance of Being Pre-Approved
Copyright 2009 - Claudette Millette, President,TheBuyersCounsel - 800-392-1446, E-mail
Serving Home Buyers in: Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough
Is it possible to use the $8,000 tax credit as a down payment when you purchase your home in Massachusetts?
Although this has not been the case to date the situation may soon change.
In a recent speech, Secretary of Housing and Urban Development, Shaun Donovan mentioned that the FHA is currently working on a proposal that may allow home buyers being able to use the $8,000 tax credit as a down payment. Speaking to The National Association of Home Builders, he stated the Federal Housing Administration (FHA) will allow home buyers to apply the $8,000 first-time home buyer tax credit toward the purchase of FHA-insured home.
Previous to this announcement, families could only access the tax credit after filing their tax returns with the IRS. According to new statement, FHA rules will allow state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) allowing borrowers immediate access to these funds for use as a down payment. Home buyers who use FHA-approved lenders will be able to apply the tax credit to their down payment in excess of 3.5 percent of appraised value of the home or to their closing costs. The FHA's new mortgagee letter explains the details.
This addresses one of the major hurdles to the purchase of a home - coming up with the down payment with a solution of tapping into the tax credit early. You can do this with an advance from an FHA approved lender or nonprofit; however, you will likely have to repay the money soon after getting your tax refund. The advance cannot be used for the 3.5 percent down payment that is required by FHA but it can be applied to closing costs or to increase the size of your down payment.
With the advent of this down payment program certain entities may come forward who will claim to be able to "help you" get these funds. Of course, this type of help will have a price attached to it. Be very careful to always deal with a qualified lender and check with a tax consultant.
Related Post:
Taking Advantage of the $8000 First-time Home Buyer Tax Credit
Copyright 2009 - Claudette Millette, President,TheBuyersCounsel - 800-392-1446, E-mail
Serving Home Buyers in: Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough
The National Association of Realtors has put out the word warning consumers about a recent property rental scam.
Using listing photos of vacant properties acquired through Realtor.com and other online real estate sites, these phony landlords are running ads promising to lease homes at very reasonable rates.
Typically, a consumer sees an ad for a rental home on Craigslist advertising an attractive property at a low rental and reasonable security deposit amount. Included in the ad there will be a contact email address. When consumers contact the address they will receive an email back explaining the situation. The responses are usually varied forms of the following (actual response):
"Thanks for the email...I own the House and also want you to know that it was due to my transfer to (West Africa, Nigeria) that makes us to leave the House and also want to give it out for rent and looking for a responsible person and God fearing person who can take very good care of the house in our absence. We are not after the money for the rent but want it to be clean all of the time and the person that will rent it to take it as if it were its own. So for now, we are here in West Africa and will be staying here for the next 4 years in our new House and also with the keys of the House for rent, we try to look for an agent that we can give this documents and the keys before we left but could not find, and we as well do not want our House to be used any how in our absence that is why we took it along with us. I and my Wife came over to Africa for a missionary work, so I hope you will promise us that you will take very good care of the house. So get back to me if you know you could take care of our house or perhaps experience you have in renting home. Hope you are okay with the price of $1000 per month and the security Deposit is $400. Get back to me for the rental application. You can go and view. Here is my contact number..."
The scammer will then send a bogus rental application out to the renter and will request the application to be filled out and the first month's rent and security deposit to be wired through Western Union. Sometimes a key is actually sent to the consumer but it does not fit any property. The end result is the loss of the money as well as a theft of the personal information provided in the application.
Some of the scam listings refer to a "Residential Lease Package" which is a document prepared by NAR (The National Association of Realtors.) NAR denies any involvement with the document and is encouraging anyone who has been affected by this scam to file a complaint. You can file online at Internet Crime Complaint Center which is sponsored by the FBI and the National White Collar Crime Center.
Copyright 2009 - Claudette Millette, President,TheBuyersCounsel - 800-392-1446, E-mail
Is the housing meltdown coming to an end?
According to the National Association of Realtors, pending home sales rose in March. The pending home sale index rose 3.2 percent to 84.6 from 83.7 in March 2008. It was also up from February's reading of 82.
It has been a good year for first-time home buyers in Massachusetts who have seized the opportunity with low interest rates, low prices and the government's $8,000 tax credit program which will be in place until the end of this year.
According to chief economist, Lawrence Yun,
"We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around. This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit."
The pending home index measures contracts signed and not yet completed. The up-turn in the index may indicate that home prices have fallen enough to encourage buyers to get off of the fence and into the market.
Looking for the Bottom
Economists are expressing the fact that things look a bit brighter than they did at the beginning of the year. However, with 10 months of inventory currently in many markets, we are looking toward a market with six to seven months of supply to begin a return to normal conditions.
An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house. And, with houses going under agreement at a more rapid pace, buyers are feeling more of a sense of urgency to put in an offer and go through with a purchase now. The perception is that the market is close to or at a bottom.
"Investors believe the worst of the downturn is behind us," said Mark Zandi, chief economist at Moody's Economy.com. "The economy is still in a recession. But the rate of decline is moderating, and a bottom for the housing market and the overall economy are coming into view."
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446, E-mail
Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough
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