Residential Real Estate in SW Washington State

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Archives for October 2009

Not Buying? You’ll Still Benefit From the Home Buyer Tax Credit!

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pay with credit cardSince the beginning of 2009, first time homebuyers have benefited from an $8,000 gift directly from Uncle Sam. Qualifying for the gift was easy and thousands of people benefited.

As I write this, plans are in place to extend and modify the tax credit into next Spring (thank heavens), which will continue to help economic recovery for more folks than just those stepping up to purchase a home.

I’ve been amazed while hearing our various elected officials and economists speak shortsightedly, in my opinion, about why the tax credit should not be extended, nor should have been in place to begin with. I absolutely agree that the tax credit has a huge price tag. However, let’s think very briefly about what that tax credit is actually buying.

Just help buying a house? Hardly!

Think back to your last move, whether it was a house, an apartment, back to mom’s, wherever. What was the first thing you did? I can tell you what I did … picked up my wallet and headed straight to the store. I needed STUFF — boxes, moving supplies, shelf liner, paint, curtains, towels, furniture — STUFF!

That’s where the money goes. Not just in a pocket or frankly, not just back in a savings account. Is $8,000 too much? Did I buy $8,000 worth of stuff? Oh yes. And much more. Had I been given the $8,000 as a gift from my last move, my house credit card might not have been maxed out!

Homebuyer’s Tax Credit Has NOT Yet Passed — Not Quite!

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As I write this at 4:45 PDT, our local news station, along with several lenders and title companies are reporting that the Homebuyer’s Tax Credit has passed and will be extended to April 2010.

While that’s GREAT news, it’s not quite right yet, from what I can see.

Looks like the Senate has agreed to pass a resolution that would extend the $8,000 tax credit to First Time Homebuyers, a $6,500 tax credit for repeat homebuyers, both with qualifying issues.

However, a vote hasn’t actually taken place that passes the resolution as a stand-alone bill. At the moment, it’s hung up on the premise that it’ll be tagged onto legislation to extend unemployment benefits, although it appears that it’ll pass the Senate even as a stand-alone bill.

Read more at my favorite site: Reuters.

I’m holding off the celebration until it’s signed around! And I’ll be the first to let you know — that way we can ALL celebrate!AR Gay Sig

Senate Activity on Extending the $8k Tax Credit

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j0382678Like almost everyone I know that works in the housing industry, I’ve been chasing myself around for the last few weeks trying to get all of the First Time Homebuyers in my client list qualified and under contract so that they were eligible for the $8,000 tax credit … due to expire on November 30th. It’s been a wild ride, full of both elation and disappointment!

And, of course, absolutely full of the question “Will it be extended?”

I’ve been diligently trying to follow along with activities in the legislature while listening to other opinions about why it will and why it won’t and who thinks it’s a great idea and who thinks it’ll continue to bankrupt us all.

Reuters is one of my favorite places to find quality news feeds–in this case current activity on extending the $8,000 tax credit for homebuyers.

Yesterday, Reuters reported that Bill Nelson (Dem.) of the Senate Finance Committee indicated that the Senate would act this week on the tax credit and that it would likely be extended for a “limited” period.

Then the stock market reacted negatively later in the day to a report that it would not be.

This morning, Reuters posted another story complete with Q&A about another proposal being floated through the Senate by Senate Majority Leader Harry Reid, a Nevada Democrat, and Senate Finance Committee Chairman Max Baucus, a Montana Democrat. In their scenario, the credit would be extended to the end of 2010, but would be phased out in $2,000 decreases beginning in April, then again in July and in October.

Now, at the moment, I kinda like this proposal. And I like the idea that it carries into the Spring, where house purchases and sales tend to begin rallying all by themselves.

bd06916_My only issue with their proposal is that it’s being attached to the passage of another bill for unemployment insurance benefits. Sigh. Seems like it’d be so much easier to keep track of things if each expenditure had to stand on its own.

I’m sure tomorrow there’ll be yet more ups and downs about whether the $8,000 tax credit will be extended, or buried. Passage will be cause for celebration, in my opinion. Of course, then the bill will need to go on to the House, where, no doubt, it’ll be changed yet again. Back and forth.

Just my 2¢ worth!

 

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Don’t Move Money Around

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money bagI sometimes hear frustration from buyers who are being asked to produce the papertrail that supports the source of the  money being used for the downpayment and closing costs. The underwriter (the person that issues final approval for your loan) requires this information as one method of eliminating the possiblity of fraud, to meet the requirements of investors with whom they work, and for quality control. They’re just doing their job, but sometimes meeting this requirement is difficult and tedious.

You may have  been diligently consolidating money from various accounts so that it’s easier to manage, but this can actually cause more loan approval challenges.

During the time you’re working on purchasing a home, or at least for the prior three months or so, don’t move money around unnecessarily. The underwriter will require documentation of any large deposits or withdrawals from your account. This could include money you received as gifts, from transferring funds between accounts, investment liquidations, cashing out mutual funds, retirement funds, or whatever. You may be asked for copies of cancelled checks, deposit receipts, or other supporting documents that may see inconsequential.

If you’re relying on gift monies that will be used in your purchase in any fashion, you’ll likely also be required to produce a letter from the person giving you the money that documents the fact that you are not required to repay the gift. In fact, the person from whom you’re receiving the money may also need to produce copies of bank statements, etc., that documents where they received your gift money.

In fact, this is also not the best time to be changing banks, or even opening new accounts.

Don’t move your money around … or if you do, be absolutely certain you can document everything thoroughly.

AR Gay Sig

Dear Buyer … Please Quit Spending!

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spending moneySigh, it’s happened yet again. Somehow no matter how much counseling, another Buyer’s forgotten one of the golden rules of buying a house: If you spend money on credit cards, buy a new major appliance on credit, buy a new car, decided to furnish your new home before closing … you run the risk of not qualifying for your loan. Even if you qualified before you ever started shopping.

There’s nothing more disheartening to find the home of your dreams, go through all the steps … qualify and be preapproved for your loan, inspection, title searches, negotiations, etc., … and then find out just before closing that, yes, the underwriter reviewed that last credit report only to find an additional new monthly payments

OH NO! There’s a new credit line that blows the debt to income ratios totally apart.

Yes, sometimes life gets in the way of judicious decisious during the period of time between making application for a home loan and closing. And some Buyers have sufficient income and are shopping far enough below their top qualifying number to sustain an extra monthly payment, but typically not.

Not only are your credit scores, credit history, and monthly debts examined at the time application is made, they’re checked again right before closing to be sure no significant changes have occurred. Qualifying for a mortgage is difficult right now. Hang on just a few more weeks. Wait until after closing.

There’s a Certain Peacefulness About Owning a Home

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DahliasI just came back in the house and to my home office desk. The weather is gorgeous — clear blue sky and the garden just called for a quick walk through. Picked a few dahlias and stuff to put in a vase on my desk.

Such peacefulness.

Yes, I know that owning a home is tremendous commitment. It’s hard, daggone it! Like many of you, we’re close to being upside down on our house. We bought right in the middle of the 2005 upswing of prices. Four plus years later, we’re back to where we started.

At least once a week I walk through the house and the yard and mutter about all of the remodeling that’s still undone. And bemoan the hundreds … make that thousands… of dollars we’ve spent on it thus far. With thousands yet to be spent.

Sometimes we make mistakes in our home choices. Sometimes we’ve spent too much or picked the wrong neighbors or painted the walls the wrong colors. Sometimes we just flat out can’t afford our choice due to circumstances beyond our own control. Sometimes we have to face up to those mistakes and start over.

Every seller I’ve helped sell that had to sell for one reason or another–not just because they wanted a bigger or better house but because financially the house just didn’t work for them–told me they couldn’t wait to buy another one.

Homeownership IS a tremendous responsibility. But the Buyers with whom I work constantly remind me just how important it is to have one’s own space. How badly they want it . It’s an American obsession this desire to own a home. To be able to walk about one’s own rooms or yard and look about.

There’s a certain peacefulness about owning a home. I’m hooked. The dahlias are calling.

Impact of King County Furlough Days on First Time Homebuyer Tax Credit

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j0433136I received a message late last week from one of my helpful resource folks, Garrett Huffman of the Master Builder’s Association, regarding real estate closings and King County furlough days.

Earlier this year I posted a blog entry listing the days various King County offices would be closed in an effort to help minimize budget overruns. One of the most troublesome dates on the list is scheduled furlough for November 25th … just 5 days prior to the end of the First Time Homebuyer’s Tax Credit, as it is currently defined. Add in the typical Thanksgiving holidays of November 26-27, the last week of November has generally been deemed a write-off as far as getting transactions closed.

According to Garrett, the folks at King County have taken into account the general “panic” that may WILL occur by folks trying to get transactions recorded so as to qualify Buyers for their tax credit.

I have a couple of transactions that are looking like last minute closings too. YIKES!

The Master Builder Association has been working hard to be sure that last minute transactions are recorded on time. Here’s what they’re reporting:

“King County has been very responsive to our association’s concern regarding a furlough day planned at the county in late November. To make sure that the home sales to first time homebuyers close by Nov. 30 and are therefore able to qualify for the federal first-time homebuyer tax credit, the Recorder’s office is taking the following action:

  • King County plans to have 15 employees in the Recorder’s Office designated as furlough ineligible and therefore able to work overtime during Thanksgiving week.
  • These designated staff will work overtime on Monday, Nov. 23 until all documents are recorded.
  • On Tuesday, Nov. 24 the Recording Office will start at 7:15 a.m. and stay late until everything is recorded.
  • They will have a team of seven recorders on stand-by to work on Wednesday, Nov. 25 should there be any additional work not completed on Tuesday.
  • The office will not be open to the public on Wednesday, Nov. 25 and would not receive any additional documents.

In addition, we have requested that King County be prepared for Recording office staff to work overtime on Monday, Nov. 30, to help ensure that all sales are recorded and no first time homebuyer will miss the tax credit deadline.

Thank you, Garrett for such great information!

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Happy Thanksgiving to My Canadian Friends!

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roast turkey

 

May you be surrounded by friends and family …

and may you be full of good things … like TURKEY!

and may you find a comfy chair afterwards to nap it all off!

 

 

 

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