Deb Casper, REALTOR, CRS, e-PRO

Minneapolis and St. Paul Minnesota Real Estate Trends Nov. 2009

If you're thinking of buying a new residence in the near future,

here's what you need to know now!

First, there are two parts to the new stimulus bill signed by President Obama on November 6:

1. The original $8,000 homebuyer tax credit for first-time buyers, which had been set to expire on December 1, 2009, is now extended through April 30 of next year Buyers will have an additional two months, until the end of June, to close IF, and only if, they have a completed signed contract (Purchase Agreement) in place by April 30, 2010. First-time buyers are identified as those who have not owned a home during the prior 3 years and regularly file income taxes. This new homebuyer tax credit plan increases the income limit for couples with income up to $225,000, and to $125,000 for single purchasers.

2. In addition, and for the first time, the new tax credit plan allows buyers who already own a home to be eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five consecutive years of the prior eight years (this means you could have sold your home up to 3 years ago IF you lived in it for the 5 years previous!). There is a cap on the sale price of the new home at $800,000.

The legislation takes effect December 1 (date of closing) and is not retroactive. Note that BOTH credits are available only for primary residences, not second homes or investment properties.

For more information go to the government website for Questions and Answers: Homebuyer Tax Credit

If you still have questions, call me - I can help! 651-407-7864

Obama Signs Homebuyer Tax Credit Extension

On November 9, 2009 President Barack Obama signed and approved the first-time homebuyer tax credit extension. It extends the tax credit to all buyers who have a signed Purchase Agreement on a home prior to May 1, 2010 and close prior to July 1, 2010.

This extension is part of the economic stimulus bill that extends the $8,000 tax credit for first time homebuyers and also now expands the program to offer a credit of up to $6,500 to homeowners who have lived in their current home for at least five consecutive years of the last eight years and are seeking to purchase a new home. The new home must be a primary residence and can include properties of up to 4 units as long as the purchaser will live in one of the units.

Here are details regarding the bill:

Who is Eligible

• First-time homebuyers, who are defined as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit or 10% of the purchase price of the home
• 
  Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence, will be eligible for up to a $6,500 tax credit.
• 
  You must file taxes to be eligible to participate in this program.

Income Limits

• Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
• 
  For married couples filing a joint return, the combined income limit is $225,000.
• 
  Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
  

Effective Dates

• The eligibility period for the tax credit is for homes purchased (closed) after Nov. 6, 2009, and before May 1, 2010.
• Also, home purchases subject to a binding sales contract (Purchase Agreement) signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify

• All homes with a purchase price of less than $800,000 will qualify This includes new construction or resale single family homes, townhomes, or condominiums. The home must be used as the purchaser's principal residence. Note that purchases of vacation homes and rental properties do NOT qualify.

Tax Credit is Refundable

• You may take the credit on your 2009 or 2010 tax returns. Be sure to check with your tax adviser!
• If the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

This tax credit does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

Frequently Asked Questions from the National Association of Realtors Government Affairs Division.

Go here for The Basics on the Extended Homebuyer Tax Credit.

One again, if you have additional questions or concerns on how to apply the provisions of the new program, please call at anytime: 651-407-7864 Deb Casper, RE/MAX Specialists, White Bear Lake, MN

Since inventories of both new construction homes and re-sale properties are high, prices are pretty much at bottom in the Twin Cities area, and both our local housing market and housing markets across the country are still testing the bottom following the real estate recession that wiped out more than $4 trillion worth of homeowner equity since 2006, anyone thinking of buying real estate soon, should really get off the fence and get going.

1. Know the Tax Incentive Program

It is anticipated that Congress will be passing the newly extended home buyer tax credit to ALL buyers, but at a reduced rate of $6500.00 to those who are current homeowners wishing to move up. There will be income limits and other criteria as well. The $8000.00 tax credit for first time home buyers (those who have not owned a home for a period of 3 years) will be extended as well. Now is the time! Purchase Agreements need to be negotiated and signed prior to the end of April per the Senate version. There may be more tweaks before it's final, but rest assured buyers will need to move quickly!

While many potential buyers believe now is the time, at the same time, tighter lending restrictions have made it harder to qualify for a mortgage loan, keeping the dream of home ownership out of reach for all but the most credit worthy consumers.

As such, Barry Zigas, director of housing policy for the Consumer Federation of America, says those looking to benefit from the buyer's market today must come to the table prepared, armed with a clean financial bill of health and plenty of research to ensure they get the best deal on their purchase.

If the price is right and you plan to stay put for the near term, and you're able to get good financing, he notes, there's no real reason to wait.

2. Get Your Credit Report

Your first order of business is to obtain a copy of your credit report from the three major reporting agencies, Equifax, TransUnion and Experian.

It's free and the earlier in the process you review it, the more time you'll have to correct any errors and make changes that can improve your score.

These reports are not always accurate. They may include old credit lines that you closed, other people's information or other incorrect information with a potential to hurt your credit.

In our current market, you'll need a credit score of 720 or better to land the lowest rates. If your score is under 660 you will undoubtedly have a difficult time in getting a loan with favorable terms.

You can help raise your score by paying future bills on time, eliminating lines of credit and paying off any outstanding debts you may have, including student loans, car loans and credit card balances.

3. Know Your Purchasing Power

You will need to determine how much you can reasonably afford to spend on a home and a good mortgage loan officer can help you here. Typically your trusted Realtor can refer you to a great loan officer that she (or he) has worked with and knows can give you the best loan and closing costs package there is. Ask your Realtor who she (or he) recommends.

The amount you qualify for depends, of course, on interest rates, your credit history and any existing debt.

4. Making An Offer

When you do find your dream home, don't rush in.

Together with your trusted Realtor, research the neighborhood, recent sales, competition, schools, etc. very carefully to be sure your offer is within range of comparable sales in the area.

And don't be afraid to play hardball. Sellers in this market are likely to give you what you ask for, within reason.

Make sure you get an inspection and if problems come to light you may be able to ask the seller to correct them or make a contribution towards any repairs.

In the current market, you can also ask for seller contributions toward your closing costs (Note: there may be lender imposed limits so be sure to work with your loan officer and Realtor on this point)!

Be aware that with prices down as much as they are in the local Twin Cities marketplace, there may be many more interested and qualified buyers than you may think. Therefore, be careful in making a low-ball offer and be prepared for a bidding war.

5. Getting Your Loan in Place

In our current market qualifying for a mortgage loan can be the most difficult part of your task.

You will need to show and document steady employment, have good credit history, and have a low debt-to-income-ratio in order to qualify. If you should fall short in one area, you may be able to make up for it with a larger down payment or higher interest rates. Be prepared!

Despite the credit crunch and disappearance of zero down and no-doc loan programs, the Federal Housing Administration still offers programs for cash-strapped borrowers with little money for a down payment. FHA-insured loans require a 3.5 percent down payment, far less than most conventional loans require. Be sure to get all the options available, then weigh each one to determine which works best for your situation.

6. Buy Your Dream Home!

Buyers who are in it for the long haul are sure to benefit from this confluence of factors: Low prices, higher inventory, low interest rates, and great bargaining power.

Trying to bet on the ups and downs of the market is not reasonable in this market. Check with your trusted Realtor, if a house is comfortably within your reach it is time to move on it.

The NEWS is in! Senators agree to extend homebuyer tax credit!

Currently set to expire at the end of November, the plan is to remain in effect until the end of April. Purchase Agreements must be signed by the end of April and close by the end of June, 2010.

PLUS Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years.

This is great news for the economy! Homes will be bought and moved into and the buyers will receive enough money to purchase retail goods to spur the retail sector, pay down debt and otherwise get things moving.

It's a great time to buy a home! Prices are down, interest rates are still at unbelievable levels and inventory is still great.

Call today to find out your best route to purchasing a new home, selling your current home, and finding out how to qualify for a mortgage. Plenty of inventory in the NE quadrant of the Twin Cities including White Bear Lake, Lino Lakes, North Oaks, Shoreview, Stillwater, Lake Elmo, Mahtomedi, Mounds View and more!