It’s a Great Time for Housing Deals

Paying off an underwater mortgage and buying a better home could be the best tactic in this troubled market.

“If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?” says Christopher J. Mayer, a Columbia Business School economist.

With 15-year fixed-rate mortgages at about 4.5 percent, it also makes sense to pay off the mortgage and keep the house. “At this point,” says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, D.C., “if they don’t have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to.”

Source: The Wall Street Journal, M.P. McQueen 

Home Buyer Tax Credit: How It Works

First-time homebuyers in 2008 can take an income-tax credit on their purchase, thanks to passage in Congress earlier this year of the first-time home buyer tax credit.

The definition of first-time homebuyer is generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.

The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.

If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.

The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit

Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.

[Editor’s Note: The credit is set to expire in mid-2009, although industry groups, including the NATIONAL ASSOCIATION OF REALTORS®, are encouraging Congress to extend it. NAR is also encouraging Congress to make the credit available to all buyers and to eliminate the repayment requirement. More detail on how the credit works is available from NAR on REALTOR.org.]

Source: Chicago Tribune, Mary Umberger

Real Estate Investing!!

I just received my new read from Ron Draluck- Mortgage Planner with Sunshine Mortgage Corp.
“Push Button Investing In Real Estate The Safe, Systematic Way To Create Wealth In Residential Real Estate”

I’m excited about this book, while I receive much information from self proclaimed “R.E. GURUs” and those who claim their book holds the key to R.E. Wealth and freedom- Ron is one of the few  investors I  know with investment property not acting as a slum lord. 🙂

6 Creative Ways to Afford a Home

1. Investigate local, state, and national down payment assistance programs. These programs give qualified applicants loans or grants to cover all or part of your required down payment. National programs include the Nehemiah program, www.getdownpayment.com, and the American Dream Down Payment Fund from the Department of Housing and Urban Development, www.hud.gov.

2. Explore seller financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you would do with a mortgage.

3. Consider a shared-appreciation or shared-equity arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors’ names are usually on the mortgage. Companies are available that can help you find such an investor, if your family can’t participate.

4. Ask your family for help. Perhaps a family member will loan you money for the down payment or act as a co-signer for the mortgage. Lenders often like to have a co-signer if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your down payment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6. Consider a short-term second mortgage. If you can qualify for a short-term second mortgage, this would give you money to make a larger down payment. This may be possible if you’re in good financial standing, with a strong income and little other debt.

Buying Makes Sense in These 66 Metros

It’s more affordable to buy than to rent in many U.S. markets, according to data compiled by the National Low Income Housing Coalition.

Of the 100 most populous metro areas, 57 have average three-bedroom rental costs higher than the cost of a 6-percent interest rate loan for a typical low-priced house, the coalition said in a just-released report. That means people renting two-bedroom apartments would be better off buying a low-priced home in 24 of the 100 largest metro areas.

However, when determining if it’s better to buy or rent, credit history is a crucial component to consider. A prospective buyer who is credit worthy of a 6 percent mortgage will pay a third less in monthly payments than someone who qualifies for an 8 percent loan.

And in many cities that can be a difference of hundreds of dollars and push them over the line to where renting actually makes more sense.

These are the top 10 markets where it makes sense to buy rather than rent. The full list of 66 markets is available at MSN.com.

  1. McAllen-Edinburg-Mission, Texas
  2. San Antonio, Texas
  3. New Orleans-Metairie-Kenner, La.
  4. Houston-Sugar Land-Baytown, Texas
  5. Dallas-Fort Worth-Arlington, Texas
  6. Rochester, N.Y.
  7. Syracuse, N.Y.
  8. Buffalo-Niagara Falls, N.Y.
  9. Jackson, Miss.
  10. Austin-Round Rock, Texas

Source: MSN Real Estate, Marilyn Lewis

Top Places to Buy an Old House

This Old House magazine, is forever on the hunt for the greatest old houses. In the July issue, the magazine identifies 12 neighborhoods nationwide that it considers the best old-house neighborhoods in the United States.

The winners were chosen because of their architectural diversity, the preservation momentum in the area, and neighborhood amenities, including walkability, services, and the level of community.

The magazine also identifies

dozens of other good neighborhoods.

Here are the magazine’s top 12:

 

 

·     Centre Park Historic District, Reading, Pa.: five-bedroom townhouse can be purchased for about $60,000, a large Queen Anne for $135,000, and a mansion for less than $600,000.

·     Hampton Heights Historic District, Spartanburg, S.C.: homes range from $50,000 for a 1930s Arts and Crafts fixer-upper to $250,000 for a restored Queen Anne.

·     Galena, Illinois: a Greek Revival or Second Empire home can be bought for as little as $130,000.

·     Kempton’s Corners, New Bedford, Mass.: prices run the range in this area, starting at $180,000 and then running as high as $800,000 for a Victorian.

·     Old Louisville, Ky.: a rehabbed manse might cost about $275,000, with prices topping out at $800,000.

·     Pleasant Ridge, Mich.: prices range from the low $100,000s for a modest bungalow to more than a million for a big Colonial Revival or Tudor.

·     Victorian Flatbush, Brooklyn, N.Y.: fixer-uppers are available for $600,000 to $900,000; a restored home will run you upward to a million or more.

·     Albany, Ore.: home prices in Albany’s national historic districts range from $90,000 for a run-down Italianate to $400,000 for a fully restored one.

·     Georgetown, Texas: price tags on fixer-upper bungalows can be purchased for as little as $90,000; grander homes can run in the millions.

·     Centralia, Wash.: homes in the Edison District range from $250,000 for an 1,800-square-foot Craftsman to $600,000 for a massive Queen Anne.

·     New Castle, Del.: a brick Federal in good shape will run you $385,000, while large historic homes with river views cost close to a million.

·     Washington, Ga.: Antebellum mansions run as low as $350,000, while a 2,000-square-foot Victorian cottage might go for $130,000.

Source: This Old House online, by Keith Pandolfi, Allison Goldstein, Taryn Lonergan, and Melissa Thomas