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  1. Housing Double Dip Shows Homebuyer Tax Credits Were a Waste

    By on May 12, 2011

    Of course hindsight is 20/20, but you didn't need a crystal ball to see that this was a bad idea.

    SmartMoney.com published an article by Jack Hough that raises some interesting questions regarding government support for the housing market, specifically, the first time home buyer tax credits of the past two years.  The premise of the article is that since the expiration of the tax credits, average home prices have significantly declined, wiping out anything gained by the credits:

    “The median home value fell to about $170,000 in March from $185,000 a year earlier, according to Zillow.com. That means a buyer who closed on a house just before the tax-credit program expired in April 2010 collected $8,000 but has since lost $15,000 in value. Those who bought earlier in the program have done worse; the median price is down $20,000 from March 2009.”

    This of course is only true on average.  Home price declines have been more precipitous in some markets than in others.  Just because someone purchased using the tax credit doesn’t necessarily mean that they lost more than they claimed in the credit.  For instance according to the most recent S&P/Case-Shiller Home Price Index, prices in Boston are down 1.0% over the past year, and prices in San Diego are down 1.8 percent year-over-year.  On the other end of the spectrum, prices in Minneapolis are down 8.3 percent over the last year, and prices are down 8.4 percent in Phoenix over the last year.  So it is entirely possible that many people who utilized the tax buyer credit lost money, but it is by no means fait accompli as the article would suggest.

    Continue Reading…

    Category: Mortgage Rates

  2. California Home Sales Decline Year-Over-Year

    1 By on September 17, 2010

    Just a quick report on an otherwise slow Friday, news-wise.

    A new report from real estate research firm MDA DataQuick says that home sales in California were down 14 percent from August 2009 to August 2010, despite low mortgage rates, the first time homebuyer tax credit, and California state housing credits.  Foreclosed properties made up almost 36 percent of all homes sold in August, down from about 43 percent the year before.

    Home prices in California have increased for 10 straight months following 27 months worth of declining home equity.  It seems apparent that government stimulus helped to prop up home prices for a short time, now that the stimulus has expired, we should expect to see home prices resume their decline.  Most home prices indices are lagging indicators, for instance the S & P Case Shiller Home Price Index is a three month average with a two month lag.  Post tax credit sales won’t enter into nationwide reports until October or November, and probably a few months after that for California due to their state tax credits.  Expect to see home price indices show home price declines in California sometime in the late fall/early winter.

    Do you agree or disagree with my logic here?  Let me know where you think housing prices in California will go over the next year in the comments section below.

    Category: Current Mortgage Rates, Mortgage Rate Trends and Analysis

  3. Could First Time Homebuyer Tax Credit Return?

    18 By on August 30, 2010

    The last iteration of the repeat homebuyer tax credit and the first time home buyer tax credits expired on April 30, 2010.  After their expiration, demand for housing utterly collapsed despite record low mortgage rates.  Currently there is a huge overhang of homes on the market (over 12.5 months worth).  The excess supply and lack of demand are causing house values to drop.  Nobody knows where the market will settle, but many are predicting declines of 5-20 percent over the next year or two.

    One would think that this clearly demonstrates that the tax credits did nothing more than accelerate sales from the summer and fall into the spring, providing a temporary lift to the housing market, which resumed its decline as soon as the tax credit was withdrawn.  In short, we dumped billions in taxpayer money into the housing market for no real price stabilization.

    Surprisingly, the Obama Administration has not ruled out bringing back the tax credits. According to a New York Times article, on Sunday HUD Secretary Shaun Donovan was quoted as saying:

    “It’s too early to say whether the tax credit will be revived”.  Donovan said in an interview on CNN’s “State of the Union” program.  He said the administration would “do everything we can” to stabilize the shaky U.S. housing market”.

    Another tax credit may stabilize the market temporarily by goosing demand for homes, as it did before.  Our current experience suggests that the lift would be temporary, at which point housing prices would resume their decline to whatever level is naturally dictated by the market (unless other conditions, such as the labor market, were to improve in the meantime).

    It seems clear to me that the tax credits were bad public policy, and likely cost taxpayers billions of dollars that caused no long term benefit.  Despite this, I wouldn’t be surprised to see this country’s politicians enact another tax credit in order to curry favor with voters in November.  If there are any further developments in this story, I will be sure to update this space.

    Do you disagree with me on the tax credits?  Do you think they were good policy?  If so, let me know why in the comments section below.

    Category: Mortgage Rates

  4. Pending Home Sales on the Rise: Good News for Recovery Efforts

    1 By on April 5, 2010

    The National Association of Realtors announced today that pending sales of U.S. existing homes rose by 8.2% in February, representing the second-biggest gain recorded by the pending homes sales index (PHSI) and the largest since October 2001. Pending sales, which tally contract signings, are considered to be a leading indicator of economic activity. This news, along with March’s positive jobs report, indicates that the housing market and the American economy at large are on the right path towards a sustained recovery.

    Home sales in April are expected to increase as buyers take advantage of low current mortgage rates and a homebuyer tax credit that will be expiring at the end of the month.  With the Federal Reserve recently ceasing its purchasing of mortgage bonds, however, it will be interesting to see how homebuyers respond to market conditions void of heavy government participation and incentives that kept mortgage rates near all time lows. According to Michael Feroli, chief U.S. economist at JPMorgan Chase & Co, even if the increase in home sales is inspired by the homebuyer tax credit, “if what we’re seeing in the labor market is actually showing decent growth, then I would expect housing would follow along.”

    Pending home sales increased significantly in three out of four regions in the United States in February, with the Midwest experiencing a surge of 22%. Purchases increased by 9.2% in the South and 9% in the Northeast. Only the Western region of the United State experienced a decrease of 4.8%. These increases in the pending sales of existing homes are essential to the resurgence of the American housing market, as they reduce inventory and help stabilize home values.

    With the aforementioned departure of the Federal Reserve from the mortgage bond industry, mortgage rates have already started to rise and are expected to continue to do so throughout the year. Additionally, the homebuyer tax credit will be expiring at the end of this month on April 30. If you are interested in purchasing a new home or refinancing your existing one, now is the great time to take advantage of low mortgage rates and homebuyer incentives by calling 877-868-2509 to speak with one of our mortgage experts.

    Category: Mortgage Rate Trends and Analysis, Stimulus

  5. Existing Home Sales Fall in February

    1 By on March 24, 2010

    In addition to new home sales dropping in February, the National Association of Realtors reported that existing home sales fell in February 2010 to a seasonally adjusted annual rate of 5.02 million units, down 0.6% from the 5.05 million units that were sold in January 2010. Despite this drop in sales volume, sales in February were nevertheless up 7% from the 4.69 million units sold in February 2009.

    While the snow, sleet and ice are major reasons to blame for keeping potential home buyers indoors, the lack of any soon expiring homebuyer tax credit did not produce the surge in home sales that was seen in the fall and is expected before the April 30 deadline, as homebuyers take advantage of low current mortgage rates to purchase or refinance.

    Existing Home Sales Fell in February thanks to snowy conditions and an extended homebuyer tax credit

    Existing Home Sales Fell in February thanks to snowy conditions and an extended homebuyer tax credit

    The national median existing home price was $165,100 in February 2010, down 1.8% from the February 2009 price as a result of distressed homes accounting for 35% of last month’s total sales. The Federal Housing Finance Agency (FHFA) index, which tracks the prices of houses that are sold or guaranteed by Fannie Mae, Freddie Mac or the Federal Home Loan Banks over time, is 13.2% below its April 2007 peak, indicating that low current mortgage rates and depressed home prices make it a strong buyer’s market.

    Despite total home sales dropping for the month, existing home sales in the Northeast were up 2.4% and 2.8% in the Midwest, as buyers took advantage of current mortgage rates in states such as Connecticut and Illinois. Despite low mortgage rates in Georgia and Virginia, however, home sales in the South fell 1.1% and 4.7% in the West in February 2010.

    The housing recovery is still fragile at the moment, however, now is a great time to capitalize on near record low mortgage rates before they start to rise later in the year. Total Mortgage Services offers some of the best current mortgage rates in the Country. Whether you are looking to refinance your home with a Jumbo loan in New York state or require an FHA loan to purchase your new home in Pennsylvania, call 877-868-2503 today to speak with one of our mortgage professionals.

    Category: Current Mortgage Rates, FHA, Jumbo Mortgage, Mortgage Rates, Purchase, Refinance

  6. Low Mortgage Rates and Tax Credits Indicate Blooming Spring 2010 Housing Market

    1 By on March 19, 2010

    blooms

    As we get ready to say our final goodbyes to the winter of 2010 when the clock strikes midnight tonight, welcoming in March 20, 2010 and the first day of spring, let us hope spring 2010 holds true to the significance of what spring signifies for us.

    This spring, if you haven’t been paying attention to the climate in the national housing market, existing home sales fell 7.20 percent to a seven-month low in January 2010. This decrease follows on the heels of December 2009′s decrease of 16.20 percent, which is the largest decline on record. January 2010′s decline was the largest decrease in almost 11 years.

    While many housing experts were expecting January’s existing home sales to be slow, this came as a surprise, and is raising serious concerns about the stability of the housing market recovery and the economic recovery as a whole.

    This is the perfect time to be a home buyer in America. You may be able to make a serious argument this is the best time in American history to be purchasing a home.

    Current mortgage interest rates for 30-year fixed mortgages are still in the mid to high 4 percent range and 5/1 adjustable rate mortgage interest rates are still hovering in the high 3 to low 4 percent range. The federal government’s tax credit incentive now eligible to first time home buyers, and also existing home owners to purchase a home, is still in effect until April 30, 2010 for a signed purchase contract. Home prices are still at incredibly affordable levels. The federal government also has a $1,500.00 (up to 30 percent of the cost) tax credit available until December 31, 2010, for energy improvements. The criteria of eligibility for this credit is very attractive and covers hot water tanks, windows, doors, roofing, furnace, air conditioning units etc. (see http://www.energystar.gov/index.cfm?c=tax_credits.tx_index)

    If you are a first-time home-buyer, you could collect your $8,000 tax credit then use $5,000 of the credit to purchase eligible energy efficient improvements, and receive an additional $1500 cash back from the government for improving your home. You can parlay the 8k into 5k in improvements and still end up with $4,500 in cash in your pocket, for a total credit of $9,500, not too mention the possible increase in the value of your home due to the improvement. This current environment available to home buyers makes it difficult to understand why existing home sales fell so much.

    The numbers for February existing home sales should be released sometime next week. Hopefully they will show some improvements. From here through the spring and summer months of 2010, if you live in or near the East Coast - whether the Northeast, Mid Atlantic or Southeast states - you understand what a very cold, and basically ugly winter we all just finished enduring. Hopefully, most perspective home buyers were just hibernating due to the weather, and the birth of this new spring season will get everyone out and about, looking to purchase the next home of their dreams.

    Spring is here,  meaning new hope, new beginnings, and better days for the mortgage industry. Somme incredible and historic low mortgage interest rates and federal tax credit expire very shortly. If you are considering a home purchase, now is definitely the time to stop thinking about thinking about it and to start doing something about it.

    Category: First Time Home Buyer, Mortgage Rates

  7. Home Buyer Tax Credit 2010: What First-Time Home Buyers Need To Know?

    By on March 10, 2010

    The home buyer tax credit deadline is almost up. If you’re a home buyer interested in taking advantage of the tax credit you may find some useful answers to your questions here.

    If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
    Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
    Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.

    For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
    Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount

    How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
    The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home-buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.

    If a single person (Taxpayer A) qualifies as a first-time home buyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time home buyer and then later that year they marry each other, is the credit still allowed?
    A. Eligibility for the first-time home buyer tax credit is determined on the date of purchase. If Taxpayer A, a first-time home buyer, buys a house and then later that year marries Taxpayer B, not a first-time home buyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit.

    Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?
    A. Yes. Taxpayer B is not a first-time home buyer and cannot claim any portion of the credit, but A may claim the entire credit, if the home was purchased as Taxpayer A’s primary residence

    It is not often in life we find ourselves afforded with a second-chance opportunity, considering the massive costs involved with this legislation, this is the last chance to take advantage of this tax credit if you qualify. The Senate, The House of Representatives nor the President of The United States of America may not allow any further extensions to this program once it expires in after April 30, 2010.

    If you qualify and would like to take advantage of this once in a life time opportunity, check our low current mortgage rates and call us today at 877-868-2503.

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    Category: First Time Home Buyer

  8. FHA Home Buyers Tax Credit: Clock’s Ticking for First-Time Home Buyers

    By on March 10, 2010

    Remember the Good Old Days? These are the Good Old Days!! tick tock… tick tock…

    clock_moneyTime is running out. Hurry before April 30th to take advantage of Federal Governments first-time home buyer tax credit. If you are considering parlaying the home buyer tax credit with an FHA approved mortgage, then you will want to also turn it up a notch and make sure you apply for your mortgage prior to April 5, 2010, when The Department of Housing and Urban Development (HUD), through it’s FHA program, will be raising the amount of the required upfront mortgage insurance by a half-percent, from the current amount of 1.75 percent to the new amount of 2.25 percent. View Today’s FHA Rates.

    • FHA will still allow a borrower to qualify for a FHA mortgage with as little as 3.50 percent down payment.
    • FHA may allow up to a 55 percent debt to income ratio (DTI) to qualify for this 3.50 percent down payment mortgage.
    • FHA will allow a borrower to purchase an owner occupied property and qualify up to a 55 percent DTI while including a non occupant co borrower.
    • FHA will allow maximum financing of 96.5 percent LTV (3.50 down payment) for borrowers related by blood, marriage or law (spouses, parent-child, siblings, stepchildren, aunts-uncles/nieces-nephews, etc.), or for unrelated individuals that can document evidence of a family-type, longstanding, and substantial relationship not arising out of the loan transaction.
    • Conforming loans (Fannie Mae and Freddie Mac) will not allow a loan with a Loan to Value Ratio of greater than 80 percent to qualify fro a mortgage if the debt to income ratio is greater than 45 percent at best. FHA will still allow a seller to contribute up to 6 percent of the Purchase price toward the buyers closing costs.
    • FHA will allow this 6 percent Seller contribution to be used toward the upfront mortgage insurance and/or to buy down the interest rate.
    • FHA will not allow the 6 percent seller concession to be used toward the 3.50 percent down payment FHA will allow the 3.50 down payment to be in the form of a gift from a related to the borrower or with an established “family type relationship”
    • FHA will also allow the buyer to borrower the money from a relative, then when they get this infamous Homebuyer Tax Credit back from the US Federal Government they can pay them back if it was not initially gifted to them.

    President Obama signed into law H.R 3548 The extension and expansion of the home buyer tax credit on Friday November 6, 2009.

    In case you haven’t heard the home buyers tax credit has been extended and expanded to include:

    1. Extension of the current $8,000.00 tax credit for first-time home buyers with a signed purchase contract by April 30, 2010, and closed by June 30, 2010
    2. Raising the income limits for singles to $125,000, and for married couples filing jointly to $225,000
    3. Offering a $6,500 credit for current home owners who have owned their current home as a principle residence far any consecutive five-year period out of the last eight years.
    4. Limiting the purchase price of the home at $800,000
    5. Members of the military, military intelligence, and foreign service who are on qualified extended official duty are not subject to the recapture fee, and individuals who have been deployed overseas for 90 days or more in 2008 or 2009 can claim the credit through April 30, 2011.

    The expansion of this credit for current home owners and/or people making more than $75,000 for single taxpayer, and $150,000 for married couples filing jointly, is effective and shall apply to residences purchased after the date of the enactment of this act.

    I am sure you have either heard someone else remark or possibly say it yourself, “Remember the Good Old Days.”  Well in spite of some of the serious economic challenges we are facing at this time as a nation, in some aspects with regards to home buying and/or refinancing your current mortgage, these ARE the Good Old Days we are currently living in, and we will be referring too these days as the Good Old Days in the future.

    For all home buyer’s tax credits these are the critical times. The clock is ticking for both first-time buyers & FHA home buyers.

    Category: FHA, First Time Home Buyer

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