Coldwell Banker’s plan to extend the tax credit

As an agent of Coldwell Banker, I wanted to talk about what my company is doing to continue to stimulate the housing market.  With the tax credit expiring last week, starting on Saturday, they announced a Buyer Bonus Sales Event.  Since many agents had buyers who would have missed out on the credit if it had really expired when it was supposed to in November, Coldwell Banker decided to do something about it since it did expire on Friday.

Sellers participating in this event will offer a credit of 3% (up to $8,000) for buyers at closing.  The contract has to be signed prior to July 31, 2010, but right now there is no set deadline on a closing.

Jim Gillespie, the president and CEO of Coldwell Banker Real Estate LLC said, “Without restrictions such as household income caps, the Coldwell Banker Buyer Bonus Sales Event allows for greater participation for all homebuyers.  And our sellers have a unique opportunity to allow their home to stand out from the competition in their marketplace.”  So no one is limited by this event.  Anyone (first time buyers or repeat buyers) can take advantage of this bonus.

To find a home participating, you can go to the Coldwell Banker Web site and check the box labeled Buyer Bonus Properties in your search criteria.  As you drive around neighborhoods you’re looking at, you can also see those that have a special rider on their yard signs.  Feel free to call your local office to find out if the property you’re interested in is participating.

Sellers planning to sell their home and want to participate, be sure to let your agent know.  You’ll get the benefit of national television advertising, promotion on the Web site, as well as social media outlets such as Facebook and Twitter.

This is a great chance to get some money back if you were unable to participate in the government’s program.  If you’re interested in selling or buying, please be sure to visit me online.

Tips to ensure first time buyer tax credit

Just a reminder that the deadline to be under contract on a home to still obtain the first time buyer tax credit is April 30th.  This is up to $8,000 in tax credits for any buyer who hasn’t owned a home in the past 3 years.  Of course, move up buyers are also eligible for up to a $6,500 credit.  Since that’s not very far away, I know that many people have just signed contracts or are still looking for their perfect place.  The property must close on or before June 30th.  And that April 30th contract must be signed by both the buyer and the seller, or one of their representatives, to make it legal and binding.  I wanted to give you some other tips to make sure you got through this process without a hitch.

1. Use your contingencies wisely.  In Illinois, you’re allowed an attorney review contingency, mortgage contingency, and home inspection contingency.  You’ll most likely want to take advantage of all three.  But don’t use them as just a stall tactic to buy more time.  Make sure you meet your deadlines.  Get the contract to your attorney as soon as its signed – give them as much time as possible to review it.  Order a home inspection upon signing it, too.  You don’t want to have to ask for extensions because you want to be able to close in time.

2. Don’t wait for better weather to go out looking.  You’re already in a serious time crunch, so delaying something even further could mean the home that’s meant for you is already sold or off the market.  Schedule appointments if it’s snowing if you need to find something quick.

3. Make sure you’re pre-approved before you go out looking. You don’t want to find out after you’ve finished negotiating that there’s a problem with the purchase price because you won’t qualify for a loan.  Make sure your mortgage broker has all of the documentation they need from you (tax returns, pay stubs, bank statements, etc.) well ahead of time.

4. Be wary of short sales in this situation.  The process to hear back from the lender could be a very long one, and you don’t want to risk losing your credit because of it.  At this point, that may not be the best way to go.

More great tips can be found here.

Let me know if you’re still looking.  I’m happy to help you find your dream home.  Visit me online.

Important real estate tax deductions

I’m sure most of you out there dread April 15th as much as I do.  Long lines at the Post Office, endless paperwork of filing taxes, and some people may even have money they still have to pay to the government.  I wanted to make sure that all of you out there do as much as you can to deduct all of your eligible real estate expenses.  A lot of people aren’t aware that owning real estate can significantly affect the taxes you owe.  So even though the housing market has seen better days, there are some benefits to being a homeowner.  Please remember to always double-check with a Certified Public Accountant prior to filing your taxes.

The first possible deduction is mortgage interest.  Any interest you pay, no matter what the rate, is eligible.  You can also deduct any late payments to the mortgage company and any prepayment penalties you’re charged for paying your mortgage down early (if you are charged).  You should receive a statement from your lender giving you the total mortgage interest paid over the past year. 

If you bought a home this past year and you had to pay points to the lender to obtain the mortgage, that is deductible.  If the word “points” wasn’t used but terms like “loan origination fees,” that also qualifies.  These points are only deductible in the year they were actually paid. 

Many Lake County and Cook County, IL residents will be happy to know that their real estate property tax is deductible.  If you escrow your property taxes with the lender, the amount you paid over the past year will be included in the statement you receive detailing the total insurance.  If you pay separately, you can most likely view cancelled checks, or check with the tax assessor’s office for your county.  This information is also available online in Illinois where you can just enter your PIN number for your home or property address.  While the actual taxes are a deduction, any private services to the utility companies you use like electricity or trash removal is not.

Another deduction to keep in mind is for home improvements.  You’ll want to discuss these with your CPA because a lot of improvements you make to save energy can offer you back a tax credit.  Some of these include new windows and energy efficient appliances.

Some common items that are not deductible include premiums you pay for homeowners insurance, homeowners association fees, utility payments, and the principal you pay on your mortgage.  Again, please verify everything with a CPA.  More information can be found on the TurboTax site here.

Please visit me online for any real estate matters I can assist you with.

Energy conscious homeowners get rewarded

You may all remember the famous Cash for Clunkers program offered by the government last year.  Well, Obama wants to do for homeowners what he did for car owners and that is offer a similar program called Cash for Caulkers.  He’s proposing a bill where homeowners can earn tax credits and receive money back for purchasing energy-efficient appliances.  Up to $12,000 per home!

Congress is currently working on drafting a bill that would be twofold.  First, homeowners would receive reimbursement for energy-efficient equipment and insulation.  Second, the government would reward small businesses and companies.

Included would be appliances such as refrigerators, washing machines, dryers, and even air conditioning, heaters, windows, and insulation.  They’re currently looking at reimbursing homeowners 50% of the purchase price PLUS installation.  So without an income cap, you could spend up to $24,000 to get $12,000 back.  Congress is still working out the kinks as to how the money would get returned.  It’s possible that it would come in the form of a tax credit (there is a current tax credit for energy-efficient appliances already, but not this much) or they might set it up where you can fill out information for a rebate and receive a check.  The government is looking at a cost of about $10 billion to fund this.

They’re trying to model it similar to New York State’s energy efficiency program.  How that program works is homeowner’s contact a contractor who is licensed to perform an energy audit from the State’s Web site of a toll free number.  The contractor arrives to determine how much energy is wasted in that specific home.  It costs the homeowner several hundred dollars.  When the contractor generates a list of what could be replaced, the cost, and how much energy could be saved, the homeowner chooses what he wants done and negotiates a price.  The contractor gets paid directly, submits paperwork to the state, and the homeowner receives about 10% back in the form of a check.

So do you think it is another program that could invite fraud?  Will homeowners take advantage of it?  Is the government wasting $10 billion that could be spent elsewhere?  I’d love to hear your thoughts.  Please leave me a comment or visit me online.

More information on the program can be found here, here, and here.

Tax credit extended and expanded

Just last week I blogged about how the first time buyer tax credit was set to expire on November 30, 2009.  Well, a lot has happened in the past week.  Earlier in the week the House of Representatives passed an extension.  And Barack Obama signed it into law early on Friday. 

The extension now runs through June.  In order to take advantage of the tax credit up to $8,000, you will need to sign a contract by April 30, 2010 and close by June 30, 2010.  Just be careful.  If you are signing a contract to purchase a home that is going through a short sale, please beware.  A lot of banks can take longer than 60 days to approve a short sale or that closing.  So you’ll need to get everything signed prior to April 30.  April 30 is the last day you can have a contract signed and June 30 is the last possible day to close to take advantage.

8000-tax-creditAgain, how the credit works is this.  If you purchase a home for $80,000 or more, you are eligible for an $8,000 tax credit on your 2009 taxes.  Remember, you file 2009 taxes in 2010.  If it’s a home for less than $80,000, you can get a credit for up to 10% of the purchase price.  If the home is $59,000, you will receive $5,900.

Obama also extended the income limits of who is eligible.  Single buyers can now earn up to $125,000 per year in income and married couples up to $225,000 to be able to receive it.  If your income level is above those amounts, you are not eligible to receive the credit.

Obama also extended the credit to move-up buyers, not just first time buyers.  In order to qualify for this $6,500 credit, you must have owned and occupied a principal residence for at least 5 of the last 8 years.  So many more people will qualify under the new rules.  Congress and the President are hoping the economy will get stimulated a bit by this expansion.

Originally, Congress was hoping that this tax credit would start a domino-like reaction.  First time buyers would purchase homes from sellers who would then choose to purchase homes and so on.  Unfortunately, a lot of buyers turned to vacant/foreclosed/short sales, so these homes didn’t have sellers who needed to move up.  But they’re hoping that offering a tax credit to move-up buyers will start this domino effect again.

More information on the expansion can be found in this article. I also have lots of great info on my Web site.

Hurry to take advantage of tax credit

I had to write this week about the first time homebuyer tax credit.  If you haven’t heard of this by now, please continue reading.  The government is actually giving buyers who purchase a home up to an $8,000 tax credit.  They are giving you money to stimulate the economy.  It does not get any better than this.  There is some fine print, of course, so keep reading.

First of all, this credit is for all homes which close prior to December 1, 2009.  That gives you less than a month from now to take advantage.  There are talks in place to extend it, but nothing has been approved yet, so we’re going to continue on as if December 1st is the last date.  You can’t write a contract on a home on November 30th.  You have to close on a home prior to then!

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Who qualifies?  The government is defining a first time homebuyer as anyone who hasn’t owned a principal residence in the past three years.  So let’s say you owned a home five years ago but sold it to move out of state.  You’ve been renting for a few years and now want to purchase a home.  You qualify!  If you are married, both you and your spouse can’t have owned property in the past three years.

What qualifies?  Any home qualifies that’s used as a principal residence.  So no second homes or vacation homes.  But any type of home will work- single-family home, townhome, condo, mobile home, house boat, you name it.

Remember that I said you can get a tax credit of up to $8,000.  So, basically, if you purchase a home for $80,000 or more, you get all $8,000.  If it’s less than that, you can get 10% of the purchase price.  So if the home you buy is $54,000, you would receive a tax credit for $5,400. 

This credit can be claimed on your 2009 taxes (payable April 15, 2010).  Since you’ve most likely already filed your 2008 taxes, it won’t work for those.  Talk to your accountant if you’ve received an extension through this point.

So what’s next?  Pick up the phone and call me immediately at 800-858-7917.  If you’re out of the Illinois area, I can refer you to an agent in your area, too.  We need to get shopping ASAP!  For more information, you can also visit my Web site.   I’ve set up a page exclusively to this tax credit with an FAQ section and other links.  Make sure to check it out.  Just click on the graphic on my home page that you see on this blog.  I hope to hear from you soon.

News you can use for first time buyers in this market

As I’ve made aware several times, the time to take advantage of the first-time buyer tax credit is before December 1st.  The offer of the $8,000 tax credit is currently set to expire at the end of November, and you would need to close on your residence on that date or before in order to qualify.  If you’re in the market to purchase your first home (or you haven’t owned a home in the past 3 years), these important facts will help you learn everything you need to know.  For more on who is eligible for the tax credit and more specific details, be sure to click here.

1. Understand that the Mortgage Disclosure Improvement Act is now in existence.  This act went into effect July 31st.  It basically states that if there are additional costs that affect your APR, you need to get a new Truth In Lending statement a week prior to closing.  What this means to you is that your closing could be delayed.  If you know of any changes that could affect your mortgage affordability/interest rate, be sure to let your Realtor and mortgage lender know as soon as possible.  Some of these changes could be a change in your take-home pay from your job, an FHA home inspection, etc.  first-time-home-buyer

2. Don’t forget about closing costs.  You may know that you can afford the down payment for your home, but don’t forget about those additional costs such as attorney fees, lender fees, title fees, and transfer tax, if it applies.  Be sure to speak to your lender up front about these costs and know what to expect.  Your lender should be able to come up with an amount you need to bring to closing prior to the closing occurring.  In Illinois, you will need to have this money as a cashier’s check made out to yourself.  And remember to bring your photo ID.

3. Be careful who you choose as your Realtor.  It’s great if you have a friend of a friend of a friend or your cousin’s mother’s boyfriend’s neighbor is a Realtor.  They could end up being a great agent for you.  On the other hand, they may not.  You’ll want to use someone who is knowledgable about the area you’re looking in.  If it’s a someone a family member or friend gave you the name of but they work in a completely different market, chances are you’ll be better off with someone local.  Make sure you ask for references and get referrals for a Realtor from people you trust, or those you know who closed in the past year.   As a first-time buyer, you might also want to work with someone who specializes in working with first-time buyers and is familiar with the tax credit.

4. Make sure as a buyer you know that you do not need to pay for a Realtor’s services (this is true in Illinois.)  If you are interested in having Realtor representation for for sale by owners, a Realtor may ask that you cover some of their commission if the seller refuses to do so.  If you are looking at homes in the MLS, the sellers pay the commissions out of the money they make on the home.  Understand this as you’re negotiating with them. 

5. The first closing can be overwhelming.  As you’re in the room looking at the stack of papers that could total the number of pages in an encyclopedia, take a deep breath.  The mortgage company requiers your signature on several pages just making sure you understand how the process works.  Make sure you have your attorney accompany you to the closing.  They will explain to you each paper that you sign so that you feel comfortable.  Don’t hesitate to ask questions.  It may be overwhelming, but it’s wonderful being handed the first set of keys to your new home! 

View this great article for more tips. If you do have more questions, please be sure to visit me online.