Real Estate Information

The Economic Stimulus Bill, which has consumed much of our attention for the past few weeks, received Congress's stamp of approval and is now ready for President Obama's signature.

In terms of real estate, the new law will be a boon to most first-time buyers who purchase this year, as most will qualify for an $8,000 tax credit on their 2009 tax returns.

The old law, which was to expire in July, provided a $7,500 tax credit on homes purchased since last April. However, that law required the entire $7,500 to be repaid, in $500/year annual installments, which essentially made it not a tax credit but simply an interest-free loan.

Under the new law, the now-$8,000 tax credit won't have to be repaid, making it a true credit for the first time.

The new credit will apply to all qualified home purchases in 2009. There are income limitations (haven't yet found out whether it's changed from what it was under the old law, which was a maximum AGI of $150,000 for joint filers and $75,000 for individuals.)

If your thinking about getting off the fence this year, this has got to help nudge you! There are great buys in condos, townhouses and single family homes in the Santa Cruz County area right now. Loans are at amazing rates and thanks to FHA financing you can buy a home with as little as 3 1/2% down. Your credit score can even be in the lower 600's for this, too. But, you must have good credit, low debt ratios, and a secure job.

I am here to help you with the entire process of buying a home. It's not scary, really. It's something most of us dream of and until recently was really hard to do with such crazy prices for our real estate today, we have seen a correction of about 15% in many parts of the Santa Cruz area. Some areas in Santa Cruz County have gone down as much as 50%. What's stopping you? This is free money, folks.

Call me at 831-477-5815 and I will walk you through the whole process. I have wonderful lenders to pre-approve you for a loan. Call

I’m often asked if this is a good time to buy a home.  Some clients are concerned that home prices may fall further than they have already.  They are assuming that the best course of action is to wait for the bottom in the market and then buy.  The problem with this approach is that you don’t know where the bottom is until you see it in the rear view mirror, meaning until you’ve missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability.  Even though interest rates have gone up in the last six months, they are still near historic lows.  Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life.  It’s important to live in a home that reflects your taste and values, yet is within your financial “comfort zone.”  To that end, it may be more important to lock in today’s relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today’s market.

The Housing and Economic Recovery Act of 2008 was just signed by President Bush with some amazing benefits for first time homebuyers.  Call everyone you know who wants to buy their first home (or who hasn’t owned one in three years), this is too good to miss – it’s a $7,500 tax CREDIT (not deduction but a credit).

If you have not owned a home in three years, you qualify as a first time home buyer.  If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for this credit.  Call your friends who just bought a home since April 9th and tell them they may take $7,500 off their tax bill if they qualify.  It has to be your principal residence, so rentals do not count.

The tax credit is 10% of the cost of the home, up to a maximum of $7,500. This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit.  In other words, you take $7,500 off your tax bill.  But there is a catch; the credit you receive now is actually an interest-free loan that must be repaid.

The loan has no interest, and will be paid back over 15 years.  You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment.  You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year.  If you stay put for 15 years, you pay it off with no interest.

What happens if you sell the house?  You pay the balance back at the closing.  So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house.  What happens if you do not make enough money when you sell your house?  They forgive the rest of the debt. 

Other restrictions stipulate that you have to buy your first house in three years before July 1, 2009, not have super high income, not use bond financing and buy anywhere in the US.

If you’d like to learn more about this program, please call me!