by Phoebe Chongchua
The first-time homebuyer Federal tax credit for $8000, record-low interest rates, and nationwide median home prices dropping to the lowest point in five years, makes this an enticing time to consider buying a home. By the way, that tax incentive isn't truly just for first-time buyers -- it's defined as those not having owned a home in the last three years. Research and knowing your options are critical. Check with your tax accountant for more details. Note that the deadline is rapidly approaching to cash-in on this tax incentive, which runs out November 30th.
According to an article in August in the Raleigh News & Observer, 10.8 percent of buyers are motivated to buy due to Federal and state tax incentives. So far only 1.14 million buyers have filed for the credit but many more are expected to file for it on their 2010 returns. However, the National Association of Realtors reports that the first-time homebuyer figure in July was still about 10 percent below the average for the past six years.
There are many aspects to consider when buying your first home. Your price point, location, lifestyle, expert help, mortgage programs, inspections, how quickly you want/need to move, the list goes on. It can seem like an overwhelming process for first-time buyers. In fact, some shy away and continue to rent simply because they don't know who to turn to or where to begin. Today there are more resources than ever available with just the click of a mouse; however, that can create information overload! But if you take a breath and relax, I'll sort through some important factors for home buying. And even if you're a seller, it's good to review this material because it helps to remind you where first-time buyers' mindsets are when they make an offer on your home.
Give yourself more time than you think you need. Due to the housing crisis and credit crunch, the mortgage process can take even longer than it did previously. Searching for a home is averaging about 12 weeks while getting the mortgage process wrapped up can take up to 60 days, according to information released by National Association of REALTORS 2008 Profile of Buyers and Sellers.
Give yourself plenty of time to understand how much home you can afford, what kind of loan is most suitable for your needs, and, of course, plenty of time to select the home that fits your lifestyle. First-time homebuyers often don't have a lot of comparison shopping experience. Frequently they're just getting started. What is acceptable for a rental is likely different from what first-time buyers expect and accept when purchasing their first home. However, first-time buyers must understand that shopping for a home is akin to shopping for a mate … there are always some compromises that are necessary. If you don't allow enough time, you'll find that it will lead to headaches, rushed decisions, and, in the end, you may feel pressured to buy something that you have not had enough time to completely consider—maybe because you have to relocate and start your job.
Never skip an inspection. You simply can't spot everything that could be wrong with the home. While not all sellers do it, some hire an inspector to inspect the home when they list it on the market. However, the burden of the inspection typically falls on the buyer to pay for it. And the information you receive is invaluable. Hiring a certified inspector to give the home a once-over will help you discover problem areas that your agent can then negotiate for repair work or price adjustment. Also, note that the home inspections (yours and the sellers) may differ; examine both, this way you'll learn more about your potential home.
Frank Schulte-Ladbeck, a licensed home inspector says that when you get your home inspection be certain to have everything turned on. In one case, "The water valve to the house was turned to almost off. When you turned it on to regular pressure… [the seller] had water spurting out of almost all of the faucets because all of the O-rings, the seals, had all dried so much that they were just allowing water to spill right out of them," said Schulte-Ladbeck.
Use experts to help prepare. Having a team of experts who can expedite your search by finding the most suitable properties for you will save you endless hours of looking. Also, the right mortgage expert simplifies the loan process. You'll be guided through the home-buying process instead of becoming overwhelmed by the options, paperwork, and tasks. Using the best specialists can truly make buying your first home a wonderful experience.

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by Broderick Perkins
If the Obama administration's proposed Consumer Financial Protection Agency passes into law, that agency would oversee many consumer financial products, including the title insurance, which is now largely state regulated.

But consumers don't have to wait for the political infighting to subside before they get good service for a decent price.
Understanding the process can shave hundreds of dollars off the price and protect you from abuse.
Here's a brief primer on title and escrow services.
• Title companies are hired, in part, to issue title insurance protection for home buyers and lenders. Lenders require the service to protect them against loss resulting from claims by others against your new home.
The title company investigates the title to make sure it is clear of any encumbrances, such as liens or judgments, forgeries or fraud and any other title anomalies and then issues a policy to protect you from any claims that turn up later. Because title searches are conducted each time the home changes hands or, perhaps, during a refinancing, the searches rarely turn up title claims, but you have to pay for the search.
• Escrow services provide a neutral third party, through which is funneled the paperwork, money, transaction instructions and other details of a home purchase or mortgage refinance. The companies hold onto, and then exchange, disburse and transfer deeds, other documents and monies related to the transaction.
In some areas, escrow attorneys provide the escrow service. In other areas, combined title and escrow companies do the work. In most cases, title and escrow services are purchased as a package.
Local custom dictates who -- the buyer or the seller -- pays for what, or the costs can be negotiable between the buyer and seller.
All the expenses associated with title and escrow costs from tiny recording fees to title insurance premiums can add up to thousands of dollars, and those fees can vary widely from one company to another.
What many real estate consumers overlook is that they can also negotiate with the title and escrow companies and shop around for the best deal.

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by Broderick Perkins
The U.S. Treasury is poised to announce a finalized plan to expand mortgage relief efforts to include short sales.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance.
It's a strategy to avoid foreclosure, but banks have been more likely to let a home go into foreclosure, rather than short sell it, even if it means holding the property during moratoriums set by some jurisdictions.
That's because short sale bids often come in well below the last appraisal, real estate agents don't want the extra work involved and buyers fear a four-to-five month transaction period that could end in a no-deal scenario.
To help move more distressed properties through the clogged pipeline, the Treasury, under the Making Home Affordable's Home Affordable Modification Program (HAMP) is expected to announce a $1,500 closing cost incentive for those who agree to short sales or deed-in-lieu deals (the deed is transferred to the lender, avoiding the more costly foreclosure proceeding).
The Treasury will also pay the lender $1,000 for accepting a short sale or deed-in-lieu deal.
Earlier this year when the plan was first announced, there was also a provision to pay second lien holders up to $1,000 to relinquish their claim in such transactions.
Thus far, Refinancing Fannie Mae or Freddie Mac mortgages under the Home Affordable Refinance Program (HARP) and HAMP mortgage modifications have been the "go-to" foreclosure options among federal mortgage relief programs.
Some 260,000 homeowners have refinanced under the HARP program since January, according to the Federal Housing Finance Agency.
FHFA also said during the second quarter this year there were 11,700 short sales and 202,200 trial loan modifications under government programs.

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Written by: Steve Cook Thu, November 5, 2009 Beyond Today's News, Crisis Programs Print


After the Senate gave final approval last night without a dissenting vote, the House of Representatives voted overwhelmingly this afternoon to pass legislation containing an extension and expansion of the homebuyer tax credit, completing Congressional action and sending the tax credit to President Obama for his signature, possibly as early as tomorrow.

The $8,000 homebuyer tax credit for first-time buyers, due to expire in 25 days, will be extended through April 30 of next year and buyers will have an additional two months, until the end of June, to close. First-time buyers who are in process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.

For the first time, the new legislation makes buyers who already own a home eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.

The legislation takes effect December 1 and is not retroactive. Both credits are available only for primary residences, not second homes or investment properties.

In the House debate, Speaker Nancy Pelosi (D-Calif.) took the floor to say the homebuyer tax credit was helping a new generation of Americans live our their dream og homeownership and financial independence. Debate on the homebuyer credit was overwhelmingly positive and the legisltion passed 403 to 12.

However, several leading economists have voiced concern about the $16.7 billion.cost of the credit and the wisdom of spending up to $400,000 per homebuyer to stimulate real estate sales and White House support for extending the credit has been lukewarm at best. However, it is virtually certain that the President will sign the legislative package, which contains an expansion of unemployment benefits as well as the tax changes.

In the Senate, the homebuyer tax credit was amended to a bill expanding unemployment benefits by 20 weeks for those who have exhausted their benefits, a vital issue for Democrats. The latest unemployment numbers are due out tomorrow and Congressional leaders are rushing the unemployment bill to the White House so that he can show compassion by signing on the same day more job losses are announced.

The legislation included provisions added to address complaints of fraud. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

A number of economists have voiced concern about the $16.7 billion.cost of the credit and the wisdom of spending up to $400,000 per homebuyer to stimulate real estate sales, however their views had little impact on the outcome. The White House has been lukewarm at best. A survey released yesterday by Campbell Communications/Inside Mortgage Finance found that the credit gives existing homeowners only half as much incentive to buy a home as first-time buyers. Because of the lesser value of the credit and the higher median price of move-up homes, the credit only accounts for two percent of the cost of an average move-up home as opposed to four percent of a first-time buyer’s starter home, according to the study.



The legislation also contains a provision supported by the National Association of Home Builders. It helps larger companies strapped for cash with net operating losses (NOL) this year or in 2008.



Ordinarily these companies can carry back these losses for only two years to qualify for a tax refund. The provision would make this process extends the carry-back to five years for either 2008 or 2009. The tax break will now apply to losses in either 2008 or 2009, and the income cap will come off.



Both tax breaks - the homebuyer credit and the change to net operating loss - will be offset by tax changes affecting foreign tax credits, chiefly important to large multinational corporations, according to the Senate Finance Committee.

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