Lisa Wiseman

If your Purchase Offer includes a credit from the Seller, and you are planning to pay points to buy down the rate, (there's never been a better time to pay points, because the rate reduction one will receive has rarely if ever been greater than it has been lately. Whereas a point may have bought down the rate a 1/4% to 3/8% in the past, now it's buying that rate down 5/8% to 7/8%).

MAKE SURE TO DESIGNATE THAT THE CREDIT IS FOR PAYING THE POINTS, IN ADDITON TO (or RATHER THAN) THE CLOSING COSTS on the Purchase Contract! Why? Because Points, REGARDLESS OF WHO PAYS THEM, can be written off by the buyer in the year in which they are paid (Tax Year of Close of Escrow date).
Example:

Your Purchase Offer provides for a $15,000 credit from the Seller, $7500 of which will be used to buy down the interest rate. DON'T put, "$15,000 Seller Credit to pay Closing Costs". Instead, put "$15,000 Seller Credit to pay $7500 in Loan Discount Points, and $7500 in Closing Costs". This provides the Buyer concrete proof that $7500 is going to pay points, so they'll have a paper-trail to prove that write-off.

Excellent for a First-Time Homebuyer who is also receiving the $8000 Tax Credit this year! In the example above, assuming a 33% tax bracket, a $7500 write-off would provide for a $2500 reduction in taxes, resulting in a total of $10,500 dollars of tax credit this year for a First-Time Homebuyer!

Sage advice from a saavy mortgage advisor I work with. Contact me if you'd like more information

Very interesting commentary on this subject. History repeats itself. Buyers take heed....

House Prices Will Rise, Buy Now

President Obama's proposed budget includes a provision to reduce the mortgage interest deduction.A reduction for those earning more than $250,000 will negatively impact the California housing market, further erode opportunities for homeownership in our state, and will contribute to further price declines and diminished equity for homeowners already reeling from the economic downturn.

Write your representatives about this one as it will have a direct impact on you whether you own a home or will in the near future.

The cost of owning vs. renting has begun to swing in the direction of home ownership. After 2 yrs. of rapid
home depreciation, the cost of rental payments vs. after tax mortgage payments is favoring home ownership.
Many are finding that they can pay less on a mortgage than what they would rent.

Home affordability is also at a high not seen since the '90s. The minimum household income needed to purchase an entry-level home at $248,030 in California in the fourth quarter of 2008 was $48,900, based on an adjustable interest rate of 6.02 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the area's prevailing median price. The monthly payment including taxes and insurance was $1,630 for the fourth quarter of 2008.

At $48,900, the minimum qualifying income was 42 percent lower than a year earlier when households needed $83,700 to qualify for a loan on an entry-level home.Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.

At 76 percent, the High Desert region was the most affordable area in the state.The San Luis Obispo County region was the least affordable in the state at 44 percent, followed by the Los Angeles County region at 46 percent.
Lower prices and interest rates are spurring some buyers to get off the sidelines, though lending standards are stricter than before, particlularly
on jumbo loans (loans higher than $729,750, the conforming loan limit.

Below is a helpful own vs. rent calculator to assist you in this decision.

<script type="text/javascript" src="http://cdn.widgetserver.com/syndication/subscriber/InsertWidget.js"></script><script>if (WIDGETBOX) WIDGETBOX.renderWidget('34862916-98e5-4d2b-9155-039f8cab7af6');</script><noscript>Get the <a href="http://www.widgetbox.com/widget/rent-vs-buy-home-calculator">Rent vs. Buy Home Calculator</a> widget and many other <a href="http://www.widgetbox.com/">great free widgets</a> at <a href="http://www.widgetbox.com">Widgetbox</a>!</noscript>

Welcome to my Blog: Real Dirt; Real Estate That Is!

I'm no economics expert, but this looks like it ccould be another big plus or minus
in the new year.

What's a bad bank? The one under consideration at Treasury would buy frozen mortgage assets off the books of large and small commercial banks. That in turn would give them the capital they need to lend to all sort of borrowers, including real estate investors.

Check out this link for more information. Investor Report: Bad Bank Program