Gary Giffin

$15,000 for homebuyers

Under the Senate's stimulus bill, homebuyers could receive a $15,000 tax credit if they purchase within a year.

By Les Christie, CNNMoney.com staff writer

February 10, 2009: 7:10 AM ET

The Senate's version of the plan sweetened the $7,500 homebuyer tax credit provision proposed by the House, doubling it to $15,000 or 10% of the home's purchase price (whichever is lower). What's more, the credit applies to all buyers - not just those purchasing their first homes.

The Senate credit also has no income limits. The House version, in comparison, allows only those with incomes up to $75,000 for singles and $150,000 for couples to qualify for the full amount. (In that bill, those earning up to $95,000 and $170,000, respectively, can qualify for a partial credit.)

Also, unlike the tax credit passed last summer as part of the Housing Recovery Act, this one does not have to be repaid. The old credit acted more like a no-interest loan than a true credit and, as a result, had little impact on home sales.

"This will bring pent-up demand back into the marketplace," said Jerry Howard, president of the National Association of Homebuilders. "We believe you can't effectively stimulate the economy until you find a way to stop the downward movement of home values."

The National Association of Realtors estimated the Senate measure will attract an additional one million buyers who would otherwise have remained on the sidelines. "Consumers will view the tax credit as they do lower home prices," said Lawrence Yun, NAR's chief economist. "And more people will qualify [for buying homes]."

That, combined with low mortgage rates, could help reverse the sentiment of many potential homebuyers who are waiting for prices to fall further before they act.

"Consumers are saying, 'Why buy now?' With money on the table, more would jump at the opportunity," said Yun.

The differences

The Senate tax credit, unlike the House proposal, is also non-refundable. That means, if your tax obligation is less than the credit, you only receive an amount equal to your tax bill, no more. The average taxpayer pays considerably less than $15,000 a year in federal income taxes and so would not qualify for the entire credit. For example, if your total tax bill is $8,000, your debt would be zeroed out, but you wouldn't receive the remaining $7,000 as a refund.

But homebuyers can take the credit spread out over two tax years. So in the above example, the taxpayer could claim the remaining $7,000 on next year's taxes.

Another difference is that the Senate credit is good for one year following its enactment and is not retroactive. Homebuyers who make purchases before the credit takes effect cannot claim it; under the House bill, they can because the credit is retroactive to the start of 2009 and expires at the end of June. In both bills, buyers must live in the home for two years or forfeit the credit.

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Interest rates are nearing 50 year lows again!

LOW 30 yr fixed RATES below 5%! ( loan amounts below 546,250)

LOWER home prices!

HIGHER LOAN LIMITS (546,250 for conforming loan limits in San Diego county)

FHA max LTV is 97% financing to 546,250 !

IF YOU CAN FIND THE RIGHT PROPERTY - IT'S A GOOD TIME TO LOCK IN FOR THE LONG TERM!

Banks, the Govt, and the Fed are doing everything they can to shrink the amount of foreclosures and short sales coming online by reducing interest rates for new buyers to increase demand and significantly increasing the amount of loan modifications to keep home owners in their homes paying their mortgages. This will help with the recovery of the housing markets at a faster pace.

Rates won't stay down forever in this volatile market!

More articles on my website www.SanDiegoHomeSold.com

Happy Thanksgiving! Good News for Home Buyers.

The Government is buying up mortgage bonds which is sending the yields down = lower interest rates!

We are nearing the all-time lows again!

30 yr fixed conforming @ 5.375% ( under 417,000)

30 yr fixed Jumbo Conforming @ 5.75% ( 417,000 - 546,250)

http://www.garygiffin.com/Nav.aspx/Page=/RealEstateTips/Default.aspx current loan interest rates

See CNN Money Article below:

Mortgage rates plummet
The $800 billion infusion of federal funds into credit markets has an immediate impact on mortgage rates.

NEW YORK (CNNMoney.com) -- Mortgage rates fell sharply yesterday after the administration announced that it will pump another $800 billion into credit markets to free up frozen consumer and mortgage lending.
That number dwarfed previous government actions aimed at bolstering the mortgage lending market.

"The feds agreed to spend a half a trillion dollars to buy up mortgage backed securities and another $100 billion to fund lending for Fannie and Freddie; we're not talking chump change anymore," said Keith Gumbinger of HSH Associates, a publisher of mortgage information.

Rates averaged 5.77% for the day on a 30-year, fixed rate loan, down from 6.06% Monday, according to Gumbinger. They fell as far as 0.75 percentage points during the day, according to Orawin Velz, Associate Vice President for Economic Forecasting at the Mortgage Bankers Association.

That could save a typical homebuyer more than $90 a month on a $200,000 mortgage.
"The government action was geared to bringing mortgage rates down," said Velz, "and it did."
The drop was the largest since early September, when the administration announced that it was taking control of mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), and stemmed from similar market sentiment.
Both actions sought to give confidence to the investment community. Most mortgages are sold to investors in so-called secondary markets but with foreclosure rates so high and expensive write downs of mortgage-backed securities so common over the past several months, investors had fled the mortgage market.

Instead of buying mortgage bonds, they've been snapping up Treasurys, a virtually risk-free investment. That showed up in the falling yields of Treasury bonds and the greater difference between Treasury yields and mortgage interest rates.
Normally, interest rates on 30-year fixed rate mortgages are only slightly higher than yields on 10-year Treasury bonds, about 1.5 percentage points. That difference compensates mortgage investors for taking on extra risk.

Lately, however, because investors have perceived, quite reasonably, that risks of mortgage-backed securities were far greater than previously supposed, they demanded greater reward for investing in them.
That sent the difference, or spread, between mortgage interest rates and Treasury yields to 2 percentage points or so over the past year. That had widened even more recently, to about 3 percentage points, before the government took action yesterday. Even after the big drop in rates, the spread is still more than 2.5 points.

Whether the government action will lead to lower mortgage rates over the long term remains to be seen. "In theory, it should stimulate investor demand but there are a lot of unforeseen things that can occur," said Velz.
She initially thought the Fannie-Freddie takeover would have much the same long-term impact because it meant that the government was guaranteeing all the loans the two were backing.

"But the government started backstopping almost everything," she said, "so demand for mortgages declined and the spread increased again."
This time might be different, according to Mike Larson, a real estate analyst with Weiss Research, but he's far from certain.
"There's been some short-term bang for the buck," he said. "We have to see if it sticks."
Helping it stick could be the downward pressure from deflation concerns and the still unusually wide spread with Treasurys.
"Even if the spread just got a little tighter you'd get some added horsepower," said Larson. "We could see rates in the low fives pretty soon."




Great time to lock in on a 30 yr fixed program!

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WELL SOME GOOD NEWS FOR HOME OWNERS FOR THE HOLIDAYS Fannie Mae and Freddie Mac announced Wednesday that they are temporarily suspending foreclosures and evictions during the holiday season in an effort to keep people from losing their homes.

QUOTE FROM BLOOMBERG:

Nov. 20 (Bloomberg) -- Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, will suspend foreclosures and evictions over the holidays.

The six-week halt will begin Nov. 26, a day before the U.S. Thanksgiving holiday, and last through Jan. 9, the companies said in separate statements today. The hiatus is designed to give servicers more time to implement a streamlined loan modification program for struggling borrowers.

"It's a giant time out," Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, said today in a Bloomberg Television interview. "I wouldn't be surprised to see this across the board."

Fannie and Freddie, government-sponsored enterprises that own or guarantee $5.2 trillion of the $12 trillion U.S. home mortgage market, were placed under federal control Sept. 6. They have since been pushed to work harder at modifying troubled single-family and multifamily mortgages to curtail foreclosures.

Until a streamlined modification program is up and running, "we felt it was in the best interest of both borrowers and Fannie Mae to take this extra step to ensure that homeowners with the desire and ability to prevent foreclosure have an opportunity to stay in their homes," Fannie Chief Executive Officer Herb Allison said in a statement.

Fannie and Freddie have partnered with HOPE Now, a government-organized coalition of the largest U.S. mortgage servicing companies, to offer borrowers who are at least 90 days delinquent and have high loan-to-income ratios the chance to modify mortgage terms to cut their monthly mortgage payments.

Incremental Steps

The companies plan to reduce interest rates for up to five years and lengthen repayment terms to as much as 40 years to trim monthly payments to roughly 38 percent of a homeowner's monthly pretax salary. In some cases, borrowers may qualify to temporarily reduce the principal amount of the loan, which would be due without interest if the house is sold or refinanced.

http://www.bloomberg.com/apps/news?pid=206...refer=worldwide

More real estate related articles on my website www.SanDiegoHomeSold.com

Since the government began regulating Fannie Mae and Freddie Mac they have started a new program to put a stop to foreclosures in America. See article below from Barclay Capital. It is not a government bail out nor are tax payers being hit for this. The program pushes lenders to take a loss by assisting those who cannot afford their mortgage by streamline refinancing into lower interest rates while possibly increasing loan terms and in some cases deferring a portion of the loan to a later date. The idea is to make mortgages affordable and fix what the adjustable loan market has contributed to this failing economy.

What does this mean? It means that foreclosures will slow down quite a bit, the supply of homes will drop, housing prices will stabilize, and demand will increase. Many economists would call this "The Bottom".

If you or anyone you know have been holding out to purchase a home, I believe now is the best possible time. Homes are priced low, interest rates are low, and guidelines currently only ask for a 3% down payment to buy. Feel free to call me anytime with questions about buying or listing your home. www.SanDiegoHomeSold.com