Good Neighbor Next Door Program

Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence.

Read more here.

5 Tax Tips, Tricks and Traps for Homeowners

Ask a roomful of homeowners what’s so great about owning versus renting, and you’ll hear them holler in unison: “the tax deductions!” And it’s true – homeowners who itemize their taxes are able to deduct 100% of their mortgage interest and property taxes from their income tax returns.

That means that if you’re in a 28% tax bracket, Uncle Sam effectively subsidizes about a third of your borrowing costs or more, making your home more affordable or allowing you to buy a larger home than you could have otherwise. Also, big chunks of your closing costs are tax deductible, and hundreds of thousands of dollars of any profit (or capital gains) that you realize when you sell your home are exempt from income taxes.

Read more here.

Home Improvements That Qualify for $1500 Tax Credits

This is the year. If you’ve been sitting on home fixes, waiting for the right time, it’s 2010. Lucrative federal tax incentives are set to expire at the end of 2010, meaning these projects will never be more affordable. The government will cover 30% of the costs, in most cases, and investments in energy efficiency generally pay for themselves over time, since you’ll be paying for less wasted energy year after year. (Except where noted, taxpayers can qualify for no more than $1,500, regardless of the total cost of multiple qualifying projects were performed in 2009 and 2010.)

Read more here.

New Buyer Incentive on HomePath Homes

Fannie Mae is offering buyers up to 3.5% in closing cost assistance on HomePath properties through December 31, 2010. Buyers must meet the following qualifications to be eligible for the incentive:

  • HomePath property sale must close on or before December 31, 2010 and close within 60 days of offer acceptance
  • Only owner occupants purchasing a HomePath property will receive up to 3.5% in closing cost assistance
  • Buyers must request incentive upon submission of initial offer in order to be eligible. 

Click here to search Fannie Mae’s HomePath listings. Let us know if you see something that interests you.

10 Reasons To Buy a Home

September 16 (Wall Street Journal)

1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It’s the first thing people do when they buy.” It was a small sign that said something big.

5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.

6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl “Chip” Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

7. It’s risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.

8. It’s forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn’t a cost. You’re just paying yourself by building equity. As a forced monthly saving, it’s a good discipline.

9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That’s below last year’s peak, but well above typical levels, and enough for about a year’s worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the “glut” simply won’t matter: It’s concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won’t have any long-term impact on housing supply in your town.

Read more of the article here.

Portland Homes Seek Green Labels

September 10 (Sustainable Business Oregon) – Green homes, little more than a novelty just a decade ago, now account for nearly one in every four new homes sold in the Portland area.

In the year that ended April 30, 403 homes, or 23 percent of all new residences, were certified by the Portland-based Earth Advantage Institute or one of its rivals, according to figures based on data compiled by the Regional Multiple Listing Service.

Ann Griffin, Earth Advantage Institute’s sustainable community program manager
The Earth Advantage certification is the most popular in the Portland area, but is just one of several certification programs for single-family residences.

Read more of the article here.

Congress backs home tax credit extension

June 30 (Reuters) – The U.S. Congress on Wednesday approved a bill extending the closing deadline for homebuyers trying to take advantage of a popular tax credit.

Homebuyers with contracts signed by April 30 who failed to go to closing by the June 30 deadline will now have until September 30 to complete their purchases. The House of Representatives on Tuesday approved the bill and it now goes to President Barack Obama for his signature.

Read more of this article here.

Homebuyer Tax Credit Set to be Extended and Expanded!

Earlier this week, the U.S. Senate unanimously passed an extension and expansion of the homebuyer tax credit. The House of Representatives approved the agreement reached in the Senate by a vote of 403-12. The bill has now passed both chambers and is awaiting the President’s signature.

Below is a summary of the new modifications in the extension and expansion of the tax credit:

 1)  The $8,000 tax credit will be extended and available for first-time purchases before May 1, 2010.

 2)  A new $6,500 tax credit will be available for repeat buyers who purchase between December 1, 2009, and May 1, 2010. To qualify for this provision, buyers must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.

 3)  Prospective purchasers with binding contracts in place as of April 30, 2010, will be allowed an additional 60 days to complete the transaction.

 4)  Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.

For a complete summary of changes to the tax credit visit: NAR Issue Brief – Homebuyer Tax Credit

HUD: Stimulus tax credit can be used on first-home purchase

First-time homebuyers can apply their tax credit of up to $8,000 under the federal stimulus program toward the purchase of an FHA-insured home through short-term loans, U.S. Housing and Urban Development Secretary Shaun Donovan said Friday.

Under the American Recovery and Reinvestment Act of 2009, first-time homebuyers can qualify for the tax credit for purchasing their first home after filing their taxes.

But under a new Federal Housing Administration program announced Friday, state housing finance agencies and nonprofit groups can advance money to homebuyers up to the full amount of their tax credit so the money can be used on a home purchase, either to pay closing costs or to add to a down payment.

Read more of this article here.

First-time Homebuyer Tax Credit FAQ

The homebuyer tax credit is one of 10 key provisions of the American Recovery and Reinvestment Act signed by President Obama into law on Feb. 17, 2009.

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

Frequently Asked Questions

Download the IRS First-time Hombuyer Tax Credit Form

Filing Options – Guidance from the IRS