Posts Tagged ‘Homebuyer Tax Credit’

Ah, Loan Contingency Periods, aka Scrutiny on Your Bounty

By Ed Gory | August 18th, 2010 0 Comments

One of the most critical things when getting your mortgage to purchase a home is the loan contingency.  Speaking from recent experience, and understanding the new reality of overly scrutinizing lenders, here are Ed’s must-know things when it comes to loan contingencies:

Don’t Take Shortcuts

Firstly, please, please, please, work with a mortgage lender who has a proven record of being able to secure a loan.  This has got to be one of the most important to-do’s before you go out shopping for a home.  This is as important, and may even be more important than the loan rate you lock in.

Yet, with still so many choices out there – direct lenders, mortgage brokers, etc. – you may ask yourself, how do I find a good one?  The best source, I’ve found, is to get recommendations from friends, relatives, or trusted realtors.

A good lender who’s truly looking out for your best interest should ultimately be able to tell you what you can and cannot afford.  A great lender will go above and beyond to get the job done.

Do Your Homework

Where are your downpayment funds going to come from? From your own savings? Cashing out some WebVan stock? A gift from your solvent parents?  Whatever the source of your funds, you have GOT to make sure you let your mortgage lender know early on in the process.  Any  funds that are NOT coming directly from your own savings, might be subject to major scrutiny by the lender – and you may find yourself having to provide a boatload of documentation showing where the money’s coming from, or, in the case of a gift, additional scrutiny on whoever was giving you the money.  And of course, as Murphy’s Law would have it, that kind of scrutiny can very well happen at the 11th hour when you least expect it, probably right before you’re supposed to close escrow.

Final Thoughts

Be realistic about your loan contingency period. Don’t put it at 14 days if you’re not 110% positive that your lender can do it. Better to be conservative and ask for more days than you think you’ll need.

Be sure your lender knows of any red flags during the contingency period. Find this out early on in the process. Continually ask your lender what the current conditions to close (CTCs) are, and are they being met.

Remove your loan contingency as close to on time as possible. No one, particularly the sellers and the sellers’ agent, get more stressed out when loan contingencies aren’t removed on time.

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Intero Insider: Homebuyer Tax Credit, ACT III

By Gino Blefari | June 15th, 2010 1 Comment

That’s right. It’s back. The homebuyer tax credit strikes again – like a string of sequels in a movie franchise.

First, there was the first-time homebuyer tax credit. It received mixed reviews, but ticket sales were good, and popular opinion encouraged a sequel. The Homebuyer Tax Credit: Part II (The Revenge), opened to great fanfare. It ran only for a limited engagement, however, and people clamored to take advantage of its benefits before the end of its run in the real estate (and economic) theater.

Many of those who were able to get in on the homebuyer tax credit, which stipulated that buyers needed to be under contract by April 30, 2010, but also close/settle by June 30, 2010, are now finding themselves in a bit of a pickle.

So many people bought homes in order to take advantage of the credit that banks, lenders, title companies, and every other body that plays a role in the settlement of real estate transactions, are having one heck of a time getting it all done by the June 30 deadline (which is approaching rapidly). They’re so backlogged that many buyers might not get their tax credit after all.

Unless Congress takes action. Quickly.

Right now, they are considering extending the time to close those transactions by as much as three months. That’s a good thing, too, because the National Association of REALTORS (NAR) estimates that if Congress takes no action, as many as 75,000 homebuyers might lose out because they can’t meet the June 30 deadline.

Regardless of your position on whether the tax credit was a good idea in the first place, I think we can all agree that everyone who was under contract in time to claim it ought to be able to do so. That the settlement process is totally backlogged isn’t their fault and they shouldn’t be punished as a result.

What will Congress do? Will they save the day for tens of thousands of Americans? Stay tuned … the credits on this story haven’t rolled just yet!

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Intero Insider: Out of the Ashes Rises the Phoenix…Or At Least A Parakeet

By Gino Blefari | May 25th, 2010 0 Comments

I love finding the silver lining in things.

No matter how desperate a situation might look, there is almost always something positive, glimmering no matter how faintly, beneath the surface.

I have long postulated that the Federal Government’s stoppage of investment in mortgage-backed securities could result in rising interest rates. And I still believe that to be the case.

We seem, however, to have found a silvery lining in the specter of that cloud.

As you are likely aware, our friends in Europe are going through a bit of a financial crisis of their own. Greece is deeply in debt and has no earthly idea how to get out. The rest of the European Union doesn’t want to help them out, but Greece’s troubles are having a crippling effect on the, until now, untouchable Euro, whose value is dependent on the economies of all of the countries that use it.

The result? International investors, now wary of stockpiling their cash in European markets, have sent the U.S. an unexpected windfall in the form of mortgage rates that are now at near 50-year lows.

How low, do you ask?

Freddie Mac, on Friday, the 21st, said that rates averaged just 4.84% last week. Far from shabby, that’s the lowest since December 2009. In fact, I’ve heard reports of mortgage officers locking in loans with rates as low as 4.25% — fixed — which is as low a rate of which I’ve ever heard.

Did you miss out on the Homebuyer Tax Credit? As I mentioned a couple of weeks ago, it’s OK if you did. In the long run, that $8000 won’t take most people all that far. But a mortgage interest rate of below 5%? Now that is something that’ll save you some big money. A one-percentage-point decline in mortgage rates can save you hundreds of dollars each month. Over a 30-year period, that could translate into a lot of money. Real savings.

Also, lowered interest rates will increase buyers’ spending power. For each percentage point mortgage rates decline, buyers can spend about 10% more on a home. The extra bedroom or bump-out for which they’d been hoping might now be within their reach.

Take heed, though. It’s tougher now to qualify for a mortgage than it has ever been. Underwriting standards are tough. Not everyone is going to qualify, I’m afraid.

How long will things stay this way?

That’s a great question, and unfortunately one which has no answer. But I can tell you this: it’s unlikely that these rates will last for very long. If you have questions, contact your mortgage lender, your financial advisor, or your Intero real estate professional. They can point you in the right direction. If you’re looking to buy a home (or to refinance your current mortgage), it would seem that there is no time like the present.

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The Intero Insider: Missing Out On The Tax Credit Is OK. Really.

By Gino Blefari | April 27th, 2010 0 Comments

Ah, yes. The Homebuyer Tax Credit. It ranks right up there with health care reform and Eyjafjallajökull as the most-discussed news item of 2010. The proverbial dead horse has been beaten to a fare-thee-well, yet still keeps coming back for more.

The tax credit has, I think, driven many buyers who were on the fence about whether or not to purchase a home into the marketplace. It’s been something of a boon to those who have been able to take advantage of it. If you were able to qualify, that’s a great thing. $8000 (or $6500, if you were already a homeowner) is nothing at which to stick up one’s nose.

But is it, on its own, a reason to purchase a home? Absolutely not.

Everywhere I turn, I see advertisements, blog posts, and the like reminding people that the deadline for being able to claim the tax credit is rapidly approaching. To claim it, you must, in fact, be under contract by Friday, April 30, and you must be able to settle on that contract no later than June 30, 2010. At this point, however, any potential homebuyer who hasn’t been in the trenches and actively looking for a house — and looking seriously — should bide their time. They should not, under any circumstances, rush to sign a contract on a home by Friday, simply so they can claim an $8000 credit.

Why?

Because that $8000 isn’t worth the heartache and sleepless nights that will come with making a $300,000 mistake. Because of the pressure associated with meeting this deadline, lots of people are going to dive headlong into a decision that they’re not actually ready to make.

Any REALTOR worth his or her salt will stand up and say so. A good REALTOR — one who’s really looking out for his clients’ best interests — will not urge that decisions be made on a factor that, in the long run, won’t matter all that much.

And if you miss the credit? Don’t worry. The real estate market will, most likely, adjust once the credit expires. The bustling spring sales market will start to ebb. Sellers of real estate will have to consider absorbing some of the letdown, either by conceding some closing costs or, perhaps, agreeing to helping buyers buy points on their mortgages, or agreeing to other credits that will entice buyers to sign when the time is right.

A good REALTOR will understand these things and a good REALTOR will advise his clients of those options of which they might not have been aware.

So, yes. The Homebuyer Tax Credit was nice while it lasted. But don’t fret about having missed it. It’s OK. Really.

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Intero Insider: A Delicate Balance

By Gino Blefari | February 10th, 2010 0 Comments

For the past two years or so, our nation’s economy has been floundering, doing all it could to get its head above water. The real estate industry has played — and continues to play — rather a large role in how the story pans out. But contributing to successes and failures in our own industry are untold numbers of mitigating factors, from fraudulent lending and sub-prime mortgages, to over-inflated sales prices, foreclosures, tax credits, and the some of the best sales prices in recent memory. When working together properly, these things can spur wonderful upward movement.

When something is knocked even slightly askew, however, that delicate balance can be thrown into a tailspin.

There has been great news of late, of course. Many neighborhoods across the nation have seen upticks in sales prices, many listings are, once again, seeing multiple offers, and interest rates are at astonishingly low levels.

Now, though, we are holding our collective breath, as several things that have helped spur the market along are poised to come to a halt.

First, the homebuyer tax credit. It’s been credited (no pun intended) with getting a lot of buyers into the market that wouldn’t have been otherwise. It was expanded in the Fall, but will expire this Spring.

Strike one.

Second, foreclosures. As we’ve reported already, the incidence of foreclosure continues to rise. Many homeowners in financial distress are simply making the decision to walk away from their homes, and their debts right along with them.

Strike two.

Third, we have another wrinkle. Those low interest rates that we just mentioned? They’re due in large part to Federal Reserve purchases of mortgage-backed securities. Thus far, the Fed’s purchases total almost $1.25 trillion dollars, but those purchases are due to stop near the end of March. This move will likely cause interest rates to turn upward. How much will they rise? That remains to be seen, but initial estimates have them climbing by more than a percentage point by year’s end.

Strike three.

These three factors coming together at roughly the same time could, potentially, throw the tenuous balance and modest signs of recovery we’ve seen thus far completely off kilter. The ever-changing conditions make the handling of a real estate transaction, whether for a buyer or a seller, all the more difficult. Intero’s real estate professionals stay up-to-date with the latest trends and will know which will affect you, and which won’t.

Negotiating the most important financial decisions of your life requires all of the information.  Your Intero real estate professional has that information and will help you keep things in balance.

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Intero Insider: Sweeping Changes Coming to the HVCC

By Gino Blefari | December 23rd, 2009 0 Comments

While we’ve all been focused on the Homebuyer Tax Credit and the effect that foreclosures have had on the real estate market, Congress has been hard at work, trying to right some unintended wrongs.

For some time now, the home buying process, already strained by the desperate straits of our nation’s economy, has been made more difficult than necessary as a result of unofficial “rules” put in place by Fannie Mae & Freddie Mac. These “rules”, known as the Home Valuation Code of Conduct, were put in place to reduce abuse by appraisers, who’d been under pressure from lenders, real estate professionals, sellers … you name it, to make sure that a particular house appraised for a certain amount (whether that amount had any basis in reality or not).

But while paved with good intentions, the HVCC’s road was littered with potholes.

The HVCC put the onus on lenders to order appraisals. It also required that lenders stay out of the process; that they not exert any influence over the appraisal. This has led to the use of appraisal management companies, which, for lack of a better description, are like brokers for individual appraisers. The AMC (appraisal management companies) gets an order for an appraiser, then assigns someone to take care of the job. The big problems here are that, more often than not, appraisers are being assigned to value homes in communities and neighborhoods with which they are wholly unfamiliar. Also, the use of the management companies requires the splitting of appraisal fees, causing appraisers to cut their rates and putting many experienced appraisers out of business.

Complaints about the HVCC have run the gamut from inaccuracy in valuation, “lowball” appraisals, to inexperienced appraisers (not to mention a host of other complaints). As a result, many sales have been adversely affected.

It looks like that may be about to change.

The US House of Representatives has been hard at work on its financial and mortgage industry reform bill. It has voted to terminate use of the HVCC, pending the initiation of a new Consumer Financial Protection Agency. The House’s bill, now on its way to the Senate, requires the director of this agency to implement national sales rules and standards that will cover all transactions.

Once the new standards are in place, Fannie Mae & Freddie Mac will be barred from using their much-maligned rules.

How the Senate will handle the creation of this new agency (if it goes along with it at all) remains to be seen, but the House bill is a clear signal that the HVCC is all but dead in the water.

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Top 10 Silicon Valley Real Estate Trends for 2009

By Dawn Thomas | December 16th, 2009 0 Comments

As 2009 draws to a close – you’ll soon be reading lots of  top 10 lists for the movers, shakers, and trends of the year and the decade!   In the spirit of being just a little ahead of the crowd, here’s our list of the top Silicon Valley Real Estate trends of 2009:

1. Low Interest Rates – with More Strings –  Interest rates have been low this year, with periodic dips into historic record  ”low” territory.   These great rates, though, come with seemingly ever-changing requirements and conditions.  Selecting a great financing source who can get you great rates AND help you navigate through the process has never been more important.

2. We’ve Got to Keep It Together For Longer – With the changing lending guidelines, it’s been taking longer for properties to close escrow and having a signed purchase contract did not automatically mean a closed escrow in 2009.   Having a black belt negotiator on your real estate team has been critical this year.

3. “Turn Key” is Hotter than Ever – A few years ago – buyers could purchase a property & count on some quick appreciation to pay for a remodel in just a little time.  Now – buyers can’t count on home appreciation to finance a remodel in the near term & are looking for great condition, move-in ready homes to buy  (as if location and condition ever go out of style in the world of real estate!).  On the other hand – for buyers seeking to purchase a property in a high-demand area like Palo Alto or Cupertino – it may pay to look for properties needing some work.  If you can see the potential in a fixer – you may have fewer competing bids from other potential buyers.

4. Buying a Silicon Valley Foreclosure is not as Easy As It Sounds - Some of the busiest agents in any real estate office are the ones listing “Real Estate Owned” or REO properties for the banks.    Buying one of these properties means navigating a maze of bank-specific requirements for making the offer, competing against multiple offers (some properties are getting 20, 30 or even 50 offers), and positioning your offer against “all cash” investors.  Finding a deal & making sure it stays a “good deal” through the process is not for the faint-of-heart!

5. No Shortage of Short Sales – over the course of 2009 – we continued to see properties listed for less than what is owed to the lender(s) – resulting in a short sale requiring lender(s) approval to go through.   We’re starting to see short sale listings where the lender has approved a short listing price – allowing the whole process to go smoother and quicker.

6. The Year of the First-Time Buyer – with more affordable home prices, the First Time Home Buyer Tax Credit, and sweet interest rates – many of the homes sold in 2009 went to first time home buyers.   In the final months of the year – we are starting to see more and more “move up” buyers rousing the mid and higher-end price points.  Welcome!  Please bring friends!   This is a trend we want to see continue & grow in 2010!

7. Deal Hunting in Palo Alto – Where’s the deal on a single family home in Palo Alto for less than $300,000?  The media in 2009 did a fantastic job of painting the picture of real estate in free fall, and we went through a period in the spring where every day brought Internet inquiries looking for the extraordinary deal in Palo Alto.  According to the MLS – the least expensive Palo Alto single family home sold so far in 2009 went for $703,000 for a 67 year old, 703 square foot cottage with foundation issues.

8. Your Home May Have a Bigger Electronic Footprint than You Do - Social media sites like Facebook and Twitter are 2009 Trendsetters above and beyond the world of buying and selling dirt.  In real estate, though,  the savvy home seller now ensures that their Real Estate agent is marketing  their property through multiple Internet channels.    Wouldn’t  you want 30 million visitors at your open house – especially the ones who can’t leave foot prints on your new carpet?

9. Welcome to California! – We are working with an increasing number of clients who are relocating to Silicon Valley for a new job.  It looks like both our job market and our real estate market are picking up!   Welcome!

10. Less to Pick From, More Competition – And finally, in many areas of Silicon Valley – we are seeing fewer homes on the market.    In fact, for Silicon Valley overall – more homes are “pending sale” than are actively for sale.  For buyers – this means that there are fewer homes to consider and more competition to get  your offer accepted. For sellers – it means that there are fewer competing properties.  This sets the stage for an even brighter 2010!

We wish you the best holiday season & look forward to serving you and your referrals in 2010!

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Mortgage Rates are the REAL Stars of the Show

By Gino Blefari | November 18th, 2009 0 Comments

Unless you’ve been living under a rock of late, you know that escaping discussion and news pertaining to the newly-revised, revamped and retooled Homebuyer Tax Credit has been next to impossible. True, it’s big news.

But has the attention that’s been shone on the tax credit been keeping us all from focusing on the REAL stars of the real estate show? Is there something else that ought to have everyone’s tongues wagging?

In my opinion, YES.

Mortgage rates, my friends, are what should be driving traffic into the real estate market and are what will give today’s homebuyers (those who qualify for the tax credit and who don’t) a real incentive to buy.

Look at it this way: when given a credit of $8000, how will most people spend it? Will they save it? Likely not. Will it go toward bills? Maybe. The instinct for most Americans, however, is to spend. This is great for bolstering the economy, but from a personal perspective, it doesn’t help all that much.

Have you ever stopped to consider how much just a percentage point in a mortgage rate can save you over the life of a loan?

For the week ending 11/12/2009, Freddie Mac announced that mortgage rates had fallen to a staggering 4.91%. Not long ago, lenders were delighted to be able to offer a rate of 6.0% (still not anything at which to turn up one’s nose). In a side-by-side comparison, assuming a loan amount of $400,000, a mortgage with a 6% rate will feature a monthly payment of about $2398. The same mortgage at a rate of 4.91% has a monthly payment of $2125. That’s a savings of a little over $270 per month. Nothing to sneeze at, to be sure. Here’s where it gets really exciting, though. Over the course of a 30-year loan, that savings adds up to more than $98,000.

 Now THAT is something to get excited about.

Another great benefit of rates falling to record lows is that they give buyers more purchasing power. Less money going toward interest translates into more house for your money. When combined with home prices that, across the nation, are at levels not seen since the early 2000s, a buyer’s purchasing power is very strong, indeed.

If you’re unsure of the amount for which you might qualify, talk to your Intero agent about giving you a referral to an Intero Mortgage loan officer.

The Homebuyer Tax Credit is certainly newsworthy. But it shouldn’t be stealing center stage from the real stars. Mortgage rates and their record low levels are what should be making headlines.

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The Heartbeat of California Real Estate is Growing Stronger

By Gino Blefari | October 30th, 2009 0 Comments

It’s happening. Bit by bit, little by little, new life is being breathed into the California real estate market. On Monday, October 26, the California Association of Realtors posted its sales and price report for the month of September, and it held some very, very encouraging news.

For the seventh straight month, resale home prices in California increased.

This stretch, which follows a period in which sales had decreased for 22 consecutive months, is a clear indicator that things really are improving. In addition to the increase in resale prices, the unsold inventory index – the index signifies the number of months needed to deplete the supply of homes on the market at the current sales rate — fell to 4.2 months, compared with 6.5 months for the same period in 2008.

Not only are homes now selling at somewhat higher prices, they are also taking less time to sell. In September, the median number of days – the number which is exactly in the middle between the most and the least amount of days it has taken to sell a home – to sell a single-family home was just shy of 34. In September 2008, the median was almost 47 days.

For the sellers of real property in California, this news is nothing but good. While home prices might not be at the levels of 2007 (it will likely be quite a while before we get there again), this steady increase will alleviate much of the pressure and worry being felt at watching home prices fall and dwindle. Sellers, and their Realtors, will be able to price their homes with greater confidence of achieving their listing price.

For buyers, too, the news is good. Because it very clearly points out that for those considering purchasing a home, the time to do so really is now. Prices are still very low, by comparison to the standards of 2006 & 2007, and mortgage rates are still at record lows. As we’ve (and just about every other news outlet) pointed out, too, the Homebuyer Tax Credit, unless Congress decides to extend it, is set to expire in just about a month. Combining the tax credit with low prices and low mortgage rates is an opportunity that first-time homebuyers might not have again.

The bottom line: while this news shouldn’t give us cause to think that the hard times have come to an end, it is very encouraging. Things are getting better. Slowly, but surely, we are getting there.

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