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Homebuyer Tax Credit Deadline Quickly Approaching

Monday, February 8th, 2010

With only three months until the new $8,000 first-time homebuyer and the $6,500 existing home buyer federal tax credits are set to expire, time is running out on an opportunity that buyers and sellers may not see again. The tax credit, which was originally created in mid 2008, then expanded in January 2009 and extended again this past November, was only designed to be a short-term incentive to drive more buyers into the housing market.

That’s why many people in Congress are saying that, come April 30, 2010 when the credit expires, “That is it!”

So the clock is ticking. The average real estate transaction, from offer to closing, takes approximately 90 days and that is just about where we are now. To meet the federal deadlines, a buyer must have a binding sales contract in place by April 30, and have the home purchase completed by June 30. To achieve those time frames, buyers need to act almost immediately. Those deadlines also mean that this is also a prime opportunity for sellers. As the April 30 deadline gets ever closer, we are bound to see an influx of home-seekers who are hoping to find a house and make an offer in time to receive the tax credit. So for sellers who have been considering moving up in the market, downsizing, or relocating, now is an opportune time to put their house on the market.

We’re at a unique time in real estate. The tax credit deadline is helping to create the “perfect storm” in the market, due to four key elements – I.I.I.P:

• Inventory: Although there are an overwhelming number of markets where inventory is down, and even with a decline in inventory year over year, there are still plenty of homes on the market for buyers to choose from.
• Interest Rates: Mortgage rates remain at near historic
lows. This means higher purchasing power for buyers.
• Incentives: The extension and expansion of the homebuyer tax credit is providing benefits to buyers who may have otherwise not been interested in getting into the market.
• Prices: Affordability remains at an all time record level nationally and in many of our local markets as well. While the urgency of trying to find and close on a home before the deadline may seem stressful, it doesn’t have to be. For those who are in the early phase of the home buying process, there are a few key things that you can do to speed up the process:
• Find A Qualified Real Estate Agent. If you do not already have one, work with a real estate agent who will be able to help identify mortgage lenders, home inspectors,
lawyers and others who will play a role in helping to get the buying process completed by the April 30 deadline.
• Know Before You Go. Free online tools and mobile applications for smart phones are available to help you quickly and conveniently learn about neighborhoods and view homes on the market. Consult with your own tax advisor as to your ability to qualify for the tax credit based upon income levels, length of residency/homeownership and housing prices. Arming yourself with as much knowledge as possible in the beginning is bound to save time in the long-run.

Tags: tax credit
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Buying a Santa Clara REO

Wednesday, March 11th, 2009

716 Kiely Blvd. Santa Clara - Mariposa Gardens

This is part C of a series of posts documenting the transaction of a REO home listed in Santa Clara on 716 Kiely Boulevard. Parts A and B discussed making the offer and the offer acceptance and the initial escrow period with property inspections and contingencies.

Since the first series of postings on this thread we were able to negotiate with the sellers, in this case Indy Mac Bank to drop the price of the home another $10,000 due to the section 1 findings and other property related issues. The seller and seller’s agent were reluctant at first but as buyers we insisted that the damage was significant enough that it warrented a further price drop. After some negotiation the agreed and the Santa Clara home’s purchase price was dropped from $400K to $390K.

We removed the property condition contingency thereafter. Financing was just removed yesterday. The appraisal for the property came in at the purchase price and we are scheduled to close Friday the 20th of March.

I have submitted all signed disclosures and addenda to the agent and am waiting for documents that Coldwell Banker requires signed back from the seller. Banks or asset management companies rarely sign anything so more than likely this will not come back to me.

The title company which is selected by the Seller is Chicago Title in Irvine CA. They send us a estimated settling sheet for the buyers closing costs, and charged the buyer $980 for a buyer’s escrow fee. This is were its important to use an agent who is detailed oriented and knows what to expect in a transaction. In Santa Clara County its customary for the seller to pay the buyer’s title insurance policy and escrow fee.

Although its customary it needs to be on the contract in order for the escrow companies and sellers to agree, especially out of area sellers and title companies. The attempted to explain that this was outlined in the contract addendum they sent out but after examining the document again there was no evidence of a buyer’s escrow fee and we referenced the original contract. They subsequently agreed and removed that from the buyers charges.

These title companies and asset managers will try to off load whatever costs they can so its important to read those REO Contract addenda closely and understand how they differ from the contract.

At this point we are waiting for the loan docs to go to title and then we will schedule a sign off. So far its been a relatively smooth transaction.

Tags: mariposa gardens home, santa clara homes, santa clara reo
Posted in Bank Owned, Home Buying, Mariposa Gardens, Santa Clara, Tips & Info | No Comments »

First Time Home Buyer Programs: Santa Clara

Wednesday, March 4th, 2009

With the economy in it’s current state and the housing market seen as the culprit, you can expect that the government is focusing on stimulating housing and home buying. As a first time home buyer you are already guaranteed an $8000 tax credit if you purchase between January first and November of 2009.

Here is a local first time home buyer program offered by the City of Santa Clara. It is a $75,000 dollar second mortgage provided by the city towards the purchase of a home in Santa Clara. Here are some more details below:

City of Santa Clara 1st Time Home Buyer’s Financing Program

How Does The Financing Program Work?
The Financing Program helps first time home buyers purchase a single-family house, town home, or condominium located in the City of Santa Clara.

Who Is Eligible?
People who have not owned a home in the last three years, People whose annual household income is no greater than 120% of the County’s median income (as calculated based on your household size).

What is the maximum assistance amount?
The maximum City second mortgage is $75,000.

Minimum Down Payment Requirement:
3% of the purchase price, more may be required to qualify

What Are The Terms Of The Second Mortgage?
The City’s second mortgage will be a 20-year loan structured in the following way:
For the first 5 years, the City’s loan will be zero percent interest with no payments;
Starting the sixth year through the twentieth year, the City loan converts to the interest rate of the primary loan, and monthly amortized payments of principal and interest are paid.

Is there any equity share with the city if I sell my home?
No, terms are as above.

What loan programs can I go through? Can I refinance if rates come down?
You can go through any approved conventional 30 year fixed mortgage including FHA or CALHFA for the first mortgage. Yes you can refinance as long as it’s a fixed mortgage and no cash out other than to pay off the city loan.

What kind of interest rate can I expect on the first loan?
The interest rates are market rates determined based on the first mortgage guidelines on credit scores and down payment based on program guidelines.

What is the process to get this program?

Get pre-qualified to determine maximum purchase price and loan amount (apply online or request application)
Provide supporting income and asset documentation
Once your pre-approval letter is issued, go out and look for your home!
Once you are in contract to purchase, the escrow period to close will take a normal 30 day time frame to close