Greater Chicago Real Estate
Archive for the 'Things You Should Know' Category
Tax Credit Extended and Expanded Beyond First Time Buyers with Higher Income Limitations!!
It is looking pretty good that the first time home buyer tax credit of $8,000 will be extended past the original December 1, 2009 deadline. All we need now is the President’s signature (UPDATE: President has officially singed the bill) and we have an extension of the bill through mid-year 2010. On top of that there are a few changes in the bill, namely increase in income limitations and a second credit for homeowners who have owned and lived in their home for 5 years or more. Here are the details:
- First time home buyer credit of $8,000. Must be under contract by April 30, 2010 and close by July 1, 2010.
- Income limitations: $125,000 for individuals (up from $75,000) and $225,000 for couples (up from $150,000). There is a $20,000 “phase-out” meaning if you make $135,000 you would qualify for a portion of the tax credit bu not all of it. If you make more than $145,000 individually or $245,000 as a couple you DO NOT QUALIFY.
- A new $6,500 tax credit for homeowners who have lived in their home for 5 years or more. Same limitations on income as above. You must have lived in the home for 5 CONSECUTIVE YEARS OR THE PREVIOUS 8 YEARS.
- Existing home buyer credit follows same rules where you must be under contract by April 30, 2010 and close by July 1, 2010. Think of it this way: you can close by July 1, 2010 but if you went under contract on May 22, 2010 YOU DO NOT QUALIFY AS THE CREDIT HAS TECHNICALLY EXPIRED.
- To qualify as a first time home buyer you must have not owned a home in the past three years. So if you close on April 3, 2010 to qualify you must have not owned a home on or after April 3, 2007.
- PURCHASE PRICE OF HOME MUST NOT EXCEED $800,000. THEY WILL BE VERY FIRM ON THIS DOLLAR AMOUNT!
- A lot of fraud has come with the current first time home buyer credit…thus more documentation will have to be sent in with the tax credit form. I believe we’re talking RESPA statement and executed contract.
- Once this is singed by President Obama it will be as if teh old tax credit never existed as far as moving forward. That $6,500 tax credit for those in there home more than 5 years will apply even to those currently under contract.
A few resources with good information on the tax credit changes:
NAR Tax Credit Changes Worksheet
FAQ for Home Buyer Tax Credit Changes
That is great news. I have been reading how effective the existing credit has been and am glad that both sides of the aisle have seen the importance of passing these new credits. They have always said how important it has become to get the housing industry back on its feet and this is a step towards accomplishing that. If you have any questions don’t hesitate to contact me. Excited about the tax credit and ready to start searching?? Take advantage of the PROPERTY SEARCH on this very blog. No registration is required and it is a pretty sweet search tool. Take advantage of it now!!
Video: Easy explanation of the first time home buyer tax credit expiring December 1, 2009
The first time home buyer tax credit has been extended & expanded. CLICK HERE TO FIND OUT THE DETAILS!
I found this on the Illinois Association of Realtors® you tube channel today. It is a short video that helps explain just how easy it is to take advantage of the first time home buyer tax credit.
The tax credit expires on December 1, 2009 meaning you have to close on November 30, 2009. I posted a link a few months back that goes over the specifics. You can find that post HERE.
As always if you have any questions regarding the tax credit don’t hesitate to contact me. I’ve already had several first time buyers take advantage of the program. Some of the same people, along with others, have also taken advantage of other options out there like FHA financing.
The rules are changing every day so make sure you work with someone who is on top of things. If there is ever a topic you would like discussed here on this blog just comment and let me know what you’re thinking. Just know that me and a lot of other REALTORS® out there are making our voices heard here in September asking for an extension/expantion of the first time home buyer tax credit. Enjoy!
IAR President Podcast: Covers Foreclosures & Short Sales in Illinois
I subscribe to the Illinois Association of Realtors YouTube channel to help stay on top of all of the new information that is out there. One of my favorites videos is the podcast put out by the President of IAR, currently Pat Callan. Today’s video discussed Foreclosures and Short Sales here in Illinois. I thought I would share the video and then summarize what was said and provide all of the links mentioned in the video. Enjoy!
The video starts out with some general advice for agents here in Illinois on how to help clients that might be in or heading towards trouble. There is an emphasis for people to GET HELP NOW and DON’T DELAY. Take the calls and letters being sent by the lender. Communicate. If you’re lender won’t help then talk to other lenders. Finally, you don’t have to go alone. Along with your Realtor there are helplines to give you advice on what steps can be taken. They are:
- Homeowners HOPE Hot line: 1-888-995-HOPE (4673)
- Illinois Attorney Generals Homeowner Helpline: 1-866-544-7151
Next there is talk of several resources agents here in Illinois can turn to and share with there clients. Three popular ones for advice and Q&A and printed material are:
- www.IHDA.org (advice, Q&A)
- www.yourillinoishome.com/foreclosure (brochures, etc.)
- www.hug.gov/foreclosure
There was some talk about consumers being aware of these FALSE MORTGAGE RESCUE companies that have been surfacing in this market. Be aware that some are trying to take advantage and profit from the current situation. Here are a few of the tips:
In some cases, the “mortgage rescue” company provides phantom help offering to work as an intermediary with lenders, collecting an up-front fee for services it never provides or that homeowners easily could have done on their own for free.
In other scams, the “mortgage rescuer” may offer to pay off the delinquent loan and allow homeowners to stay on as renters, with the possibility of buying the home back later. But the scam artist doesn’t make the payments and the homeowners, who have signed over their deed, end up losing the home and any equity they had in it.
One of the last things covered that I’d like to mention is the legislation on the state and federal levels that has been passed to help homeowners and future homeowners. Here in Illinois Gov. Pat Quinn passed in April a bill that allows struggling home owners a 90 day grace period to get everything in order with their family and their lender. It might just be enough time to save their home or at least give them time to make the next steps.
Federal legislation can be found at www.makinghomeaffordable.gov. There are two important programs found here:
- Refinance Program
- Ends June 2010
- Loans must be owned or guaranteed by Fannie Mae or Freddie Mac
- Must be current on their house payments
- Loan-to-value ratios must be between 80% – 125%
- Modification Program
- For homeowners already at risk and behind on payments
- Loans must be at or below maximum GSE conforming loan limits (currently $417,000 in Illinois)
- Ends December 2012
The rest of the video covers short sales and give advice to agent on how to handle and find resources. This is a lot to take in so watch the video and if you have any questions on the material provided don’t hesitate to contact me. I’m here to help.
First Time Home Buyer Credit Available (to some) at Closing
It’s been a few weeks now and it hasn’t gone away so it must be true. I kid. A few weeks back they made the first time home buyer credit available at the closing table to FHA loan borrowers. My understanding is that the lender will do a short term bridge loan to provide the credit immediately and that bridge loan will be paid back when you receive your tax credit after you file.
The credit can be used to cover closing costs, buy down your interest rate or make an even larger down payment. However, you must still have the minimum 3.5% down payment that is required for FHA loans. This does not replace but can add to and make larger the existing down payment.
Let me know if you have any questions. You can find the official press release from the National Association of Realtors here. As always make sure you include your accountant when it comes to decisions made regarding this tax credit.
What Is Months Supply of Inventory?
When I put out my market statistics for communities around Chicago I pull a large number of stats to share with you. One of my favorites is Months Supply of Inventory or MSI. This is a simple way to help us talk about whether or not we are in a “buyers” or “sellers” market. A quick look at how we figure it:
Let’s say Naperville, IL has 200 properties for sale in a certain month and 25 of them go under contract in that month. We do some simple math: 200/25 and we get 8. That months supply of inventory for that particular month would be 8. At the current rate of properties going under contract it would take 8 months to get rid of the current inventory. So, now what? What does 8 mean to you and me? I’ll tell you.
When we are looking at the numbers once we have figured them out we have to know a few simple things. A “healthy” MSI is 4-6 months. Anything higher than 6 months and it is an indicator that we are in a “Buyers Market.” Anything under 4 months and we are looking at a “Sellers Market.” When we start seeing MSI’s that go above 10 or 20 months and we can attache the work VERY STRONG to “Buyers Market.”
Let me know if you have any questions? I’d love to help and feel free to browse the site…you’ll find tons of monthly statistics on several Chicagoland communities. Just stopping to search for homes? Check out my MLS Property Search and you’ll find a state of the art search that uses Google Maps. Enjoy!!
Daylight Savings – Don’t Forget to “Spring Forward” This Weekend Chicagoland
This weekend, the weekend of March 6-8, is when we are to set are clocks one hour
forward. We do this at 2am on Sunday morning, March 8, 2009. Or, you can do as I do and just set them all ahead as I go to bed on Saturday night. I don’t see 2am quite as much as I used to.
I can’t tell you how many times over the past 11 years of practicing real estate that adjusting the clock forward or backward has had an impact on my Sunday morning business. The good news is I normally wind up an hour early rather than the latter in the fall.
I’ve also had clients forget and that 11am appointment on Sunday morning sneaks up on them as I ring the doorbell before the showing. It all works out in the end. For more information on daylight savings (translation: if you’re a dork like me and want to know the history of daylight savings) you can find it here.
Enjoy your weekends and as always let me know if there is anything I can help with.
Tax Form for First Time Home Buyer Credit – Form 5405
First time home buyer tax credit has been extended & expanded. CLICK HERE FOR DETAILS ON THE TAX CREDIT!
So, thanks to previous posts, we’re all familiar with the first time home buyers credit that is available. Well, I now have the form you can use in order to claim it with your taxes. Or the form that you can give to your accountant in case they don’t have it.
One of the great things about his credit is you can purchase in 2009 but use it in your 2008 tax return. If you have already filed your 2008 taxes then you can send in an amended return to take get the money this year.
A few things to keep in mind: 1. The $8,000 credit that you do not have to pay back is only good for homes purchased by first time buyers between January 1, 2009-December 1, 2009. If you purchased between April 1, 2008 & December 31, 2008 you will be eligible for the $7,500 interest free loan from last year. 2. Income for a single person can’t exceed $75,000 and $150,000 for a married couple filling jointly. There is a phaseout so click here to see what those are. 3. First time buyer is anyone who has not owned a home within 3 years of the new purchase. This is also only for your principal residence and NOT investment property.
UPDATE ON FIRST TIME BUYER TAX CREDIT…LEARN HOW SOME CAN TAKE ADVANTAGE OF IT AT THE CLOSING TABLE!
Let me know if you have any questions as I’m more than willing to help out. Feel free to take advantage of my MLS Search which is listed above and I’d also invite you to subscribe to the blog to get updates. Enjoy!
Click here to download Tax Form 5405 – First Time Home Buyer Tax Credit Form!
New Lending Guidelines Counter Productive to Stimulus Bill
Seems every time I get excited about something there is another something
that comes around the corner and ruins my fun. Within the past few weeks we have been on somewhat of a roller coaster trying to make sense and see what passes to help home buyers within the Stimulus bill. Well, we did pretty good. As mentioned in previous posts we got a solid $8,000 tax credit for first time home buyers and they kept FHA lending limits higher so more people could take advantage.
So imagine my surprise when I started to hear more and more about the new lending guidelines coming out from Fannie Mae and Freddie Mac. It’s kind of all over the place so I will do my best to make sense of it all. I’ve heard about this through my lenders as well as several articles. You can read an article on it from the Chicago Tribune by clicking here. Take note that these changes are going to be effective as of April 1, 2009.
From what I understand in order to get the best interest rate now, more than ever, it is going to be a much bigger down payment AND higher credit scores. From what I gather we’re talking about at least a 740 credit score and a 20% down payment. If you are below 740 the magic number on down payment to avoid fees is 30% down. The 20% down was always the threshold for getting that best rate so that has not changed unless your credit is under 740. The 740 is up from around 720 a few months ago and roughly 670 a few years ago. So, if you are below 740 and have anything less than 30% down you are now going to be hit with an up front fee (all percentage based.)
Let me try to lay this out. If you have a 715 credit score and you are putting 22% down you will get hit with one of these fees from Fannie & Freddie. If you have more than 30% then they’ll be more flexible on your credit score. That’s crazy. Since when did a credit score of over 700 become not good enough to get prime interest rates. Complete over reaction. In order to avoid fees you need a combination of more than 30% down and a credit score of 740 and above.
For my condo buyers out there things actually are a little simpler but not in a good way. Just know that if you are buying a condo you are more than likely going to get hit with a slightly higher interest rate and will find it almost impossible to avoid these up front fees. Magic number on down payment for a condo seems to be around 25%. However, regardless of credit and down payment there is going to be a fee. The better your credit and the more you put down will just reduce the fee but not avoid it.
I know this is kind of all over the place but so are these guidelines and the people who are implementing them. The reason I bring this to your attention is so you are aware and you can discuss and get your questions ready for your lender. Now more than ever you need to ask questions about fees. If you’d like you can call me as it will be easier to discuss knowing some specifics. there are 1,000’s of scenarios we can go over and none may apply to you. Good luck out there!! If you ever need to talk or have things explained my door is always open and my email always on.
Call 8-1-1 Before You Dig on Your Next Outdoor Project
Putting in a new deck? New fence? Mailbox? Shrub, bush or other 
landscaping? What are your responsibilities when it comes to any outdoor project you may be interested in? Many people think that the company you hire is going to take care of everything. Well, when it comes to underground utility wires you may want to error on the side of caution and make the request yourself. A minimum of two days before you start your project (whether you do it yourself or hire professionals) you must contact someone to mark the utility lines that are underground. So who do we call?
I installed a wood fence in my yard last summer for my two dogs. I found the company I wanted to use, filled out the proper paperwork, applied for the proper permits and wrote the proper checks. At the end of it all I was told to call 8-1-1 and put in a request for utility wires to be properly marked. 8-1-1 is an easy to remember number that will connect you to the right company depending on where you live. If you’re in the suburbs of Chicago you’ve probably heard of J.U.L.I.E. and you can contact them direct if you’d like. If you’re in the City of Chicago limits you’re looking at contacting DIGGER. Rather than remember all of this PLUS their phone numbers all you have to do is call 8-1-1 and they’ll get you set up.
Any project in your yard that require a shovel and you must follow these simple instructions. Cost to you for calling 8-1-1? NOTHING! They are a non-profit organization that was put together to make sure you don’t wind up dead putting in that new shrub in the back corner or the new mailbox that looks like a miniature version of your house. Any digging and you must! Here are some forms and brochures from JULIE & DIGGER:
Click Here to Download Digger Direct Brochure (City of Chicago)
J.U.L.I.E. Locate Request Form (Suburbs of Chicago)
Good luck and feel free to contact me with any questions. Visit the website above as well as they are packed with information and statistics regarding properly marking these utility wires. Enjoy!
The First Time Home Buyer Credit as Part of the Stimulus Package (New & Improved!)
First time home buyer tax credit has been extended & expanded. CLICK HERE FOR DETAILS!
Okay. Updating my update on the First Time Home Buyer Tax Credit. Here is a closer look at the new and improved First Time Buyer Credit as we have seen it passed as part of the American Recovery and Reinvestment Act or the Stimulus as played on TV:
- The $7,500 credit (that was to be paid back) will now be $8,000 or 10% of the purchase price not to exceed $8,000 and it WILL NOT HAVE TO BE PAID BACK. A TRUE CREDIT!!
- Eligible property includes any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence (no change from previous bill.)
- Income limitations are the same. Full amount of credit available to individuals with a gross adjusted income of no more than $75,000 ($150,000 on joint return.) Phases out above those caps not to exceed $95,000 & $170,000 (no change.)
- THIS REMAINS IN EFFECT ONLY FOR FIRST TIME HOMEBUYERS! First time homebuyer is anyone who has not owned a principal residence 3 years previous to purchase (no change.)
- Recapture. If the home is sold within 3 years of purchase the entire amount of the credit is recaptured upon sale. This applies only to homes purchased in 2009.
- Still a small window of opportunity. This expires on December 1, 2009.
- Effective date. All revisions to the old bill are effective as of January 1, 2009. Translation: if you purchased in after January 1, 2009 and before December 1, 2009 and meet all the other criteria this bill is for you. If you purchased in 2008 you do not qualify. The $7,500 credit is still in play for you just not the new one.
NEW UPDATE….LEARN HOW SOME CAN TAKE ADVANTAGE OF THE TAX CREDIT AT THE CLOSING TABLE!!
So we have increased the credit, extended the termination date on the credit and made it a true credit. No payback if you don’t sell the property within 3 years of purchase. I’ll take it! I was hoping for a little less restriction (all buyers-not just first time buyers) but it has improved.
Click Here to Download a PDF version of the First Time Home Buyers Credit.
**From reading you can gather that I am a Real Estate Agent. That being said please go over all of this information with your accountant or whoever does your taxes. Make sure you qualify and meet all the requirements in order to take advantage of this credit. Good luck! **
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