Your Way Home Arizona – Funds Allocated
Some news in on the Arizona Department of Housing’s “Your Way Home AZ” down payment assistance program: The program has committed all of the allocated funds and no new applications will be taken.
If you have already gone under contract on a home under this program and you’ve taken the homebuyer class, then you’re in the clear.
If you were considering using the program but haven’t acted yet, then it is too late, but you may still qualify for the other program offering a Tax Credit to homebuyers. Contact us for more information… The Concierge Service Team 928-854-5511.
HOME BUYER TAX CREDIT Provisions & Guidelines
This really helpful, informative article from my friend Lonnie Stevenson at Evergreen Home Loans should really help answer some of the questions you might have about the new Home Buyer Tax Credit.
If you would like a PDF version of this document, please let me know. Just give The Concierge Service Team a call at 928-854-5511 or email Dominic@TCSTnow.com
You can also contact Lonnie Stevenson, Certified Mortgage Panning Specialist at Evergreen Home Loans at 928-854-9400 or LStevenson@evergreenhomeloans.com
General Rules:
- A “first time home buyer” is defined as someone who has not owned a home in the last three years. If you are a “first-time home buyer”, your tax credit will amount to 10% of the purchase price of your new home not to exceed $8,000.
- A “long-time resident” is defined as someone who has lived in the same primary home for 5 out of the past 8 years. If you are a “long-time resident”, your tax credit will amount to 10% of the purchase price of your new home not to exceed $6,500.
- The tax credit does not need to be paid back if you continue living in the home as your primary residence for three years without selling it
- The home must be purchased for less than $800,000 before May 1, 2010. If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010.
- Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit
- You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent (child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews, nieces, and others
- If you are married, both spouses must qualify for the credit
- If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the total credit taken cannot exceed $8,000 (or $6,500 for “long-time residents”). Alternatively, if only one of the unmarried buyers qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit.
- The credit applies even if you have co-signers on your mortgage loan
- The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others
How does the tax credit work?
A tax credit is kind of like a gift certificate that you can use to pay your taxes – it reduces your income tax bill on a dollar for dollar basis. Imagine paying your bill at IRS Restaurant, and then later getting an IRS Restaurant gift certificate.
Normally, you would need to go back to IRS Restaurant and buy more food in order to use your new gift certificate. But what if IRS Restaurant allowed you to just turn in your gift certificate for cash? That’s how the home buyer tax credit works! All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check for $8,000 (or $6,500) – just like the example of IRS Restaurant that allows you to exchange your gift certificate for cash! Remember though, you’ll receive the $8,000 (or $6,500) from the IRS AFTER you purchase your new home, so you cannot use the funds to help with your down payment.For more information about the home buyer tax credit or other recent updates to the mortgage and real estate markets, just give me a call. I would be happy to assist you with your mortgage in the purchase of your new home!
To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed in this communication. I recommend that you consult with properly licensed legal, tax and investment advisors for specific advice pertaining to your individual situation.
A Close Look at Existing Home Sales
My friend Katie Murphy at Hi-Tech Mortgage here in Lake Havasu City emailed this to me this week. It’s an excerpt from the 10/23/09 Existing Home Sales report by Steven A. Wood, Chief Economist for Insight Economics:
Existing Home Sales ROSE by 9.4% in September to 5.57 million, compared with market expectations for a smaller increase to 5.35 million. - This increase has lifted sales to their highest level since July 2007.
- Over the past year, existing home sales have increased by 9.2%. However, this is 23.2% below their September 2005 record high.
- About 45% of sales were estimated to be to first-time home buyers, spurred by low prices and the home buying tax credit from the government.
- About one-third of sales were estimated to be distressed.
The Inventory of Homes Available for Sale FELL by 7.5% to 3,630k. With this decline, the inventory of homes available for sale is now 15.0% below its year ago level. This reduced the months supply to 7.8, its lowest level in since March 2007. This is supply is significantly lower for relatively low priced homes and substantially higher for relatively high priced homes. However, there appears to be a large “shadow” inventory of homes available for sale, both from homeowners who have kept their homes off the market because of low prices and from financial institutions temporarily holding foreclosed homes off the market.
Home Prices continued to decline compared to their year ago levels. Over the past year, average prices have fallen by 6.5% while median prices have tumbled by 8.5%. Year-on-year prices have declined in 37 of the last 38 months and are still falling moderately, partly reflecting a shift in the composition of sales to lower priced homes and partly reflecting the much lower prices associated with distressed sales.
Bottom Line: Existing home sales peaked during the summer of 2005 and fell steadily through November 2008. - Since then, there has been a moderate recovery in sales.
- However, a significant number of the sales are of distressed properties, which is depressing home prices.
- The inventory of homes available for sale has fallen substantially over the past year and is now only modestly above “normal” levels.
- Anecdotal evidence suggests a substantial ‘shadow’ inventory that would come onto the market if sales (and especially prices) were to pick up.
- Home prices have been falling on a year-on-year basis for 3 years but there is some evidence that the pace of decline is beginning to slow.
Daylight Savings Time – Falling back this weekend everywhere except for here!
Don’t forget that there’s a time change happening this weekend everywhere…Well, almost everywhere except for here. Arizona is one of only a couple states who do not participate in Daylight Savings Time – our clocks always stay the same!
So, remember that all your friends in different states are about to “Fall Back” an hour – and they’re going to be on different times come Sunday morning.
Daylight savings time ends at 2:00 am on November 1, 2009 and the clocks in our neighboring states will be set back 1 hour.
Record Streak Continues for Pending Home Sales
Interesting article emailed to me from the National Association of Realtors this week:
Pending home sales have increased for seven straight months, the longest in the series of the index which began in 2001, according to latest survey. The Pending Home Sales Index rose 6.4 percent to 103.8 from a reading of 97.6 in July, and is 12.4 percent above August 2008 when it was 92.4. The index is at the highest level since March 2007 when it was 104.5. Lawrence Yun, NAR chief economist, said not all contracts are turning into closed sales within an expected timeframe. “The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules,” he said. “No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month.”
We’re experiencing similar things in Lake Havasu City. We’ve had continued increased sales activity, and short sales are definitely taking some time to close. If you are interested in taking advantage of the First Time HomeBuyer Tax Credit you should be making an offer right now! It needs to close by the end of November to qualify.
Good News for the Economy!
Katie Murphy at Hi-Tech mortgage emailed me these statistics today:
MORE ECONOMIC GOOD NEWS
More economic indicators continue to better market expectations. This past week Consumer Credit fell by $10.3 billion in June, compared with market expectations for a $5.0 billion decline. This is the forth double digit decline in the past 5 months. Households have been aggressively deleveraging. This is not a good signal for consumer spending as credit conditions are tightening. The Unemployment Rate fell by 0.1 percentage points in July to 9.4%, compared with market expectations for an increase to 9.6%. The rate fell off slightly because a large number of people dropped out of the labor force. This was the first decline in unemployment in more than a year. While good news, the drop was due to a smaller labor force, not an increase in employment. Hourly, Weekly Earnings and The Average Workweek rose from a record low of 33.0 hours. A longer workweek is a typical signal of an expanding economy, suggesting that the recession, if not already over, will be shortly. Best news is that labor input is starting Q3 on a flat footing, indicating that Q3 will likely show moderate growth. Factory Orders rose by 0.4% in June, compared with market expectations for a 0.9% decline. This is the third straight month of growth, suggesting that demand for manufactured goods has begun to stabilize. This gives hope to excess inventories lowering and production to again rise. Pending Home Sales rose by 3.6% in June. It has increased for the fifth consecutive month to reach its highest level since June 2007. What’s Ahead? – Wells Fargo chief economist John Silva says the recession is winding down as economy is rebounds. His concern has turned to inflation. The Fed is now turning attention to the growing credit turmoil in commercial real estate and the potential economic impact of inflation.
“What’s Going On with Inflation and Interest Rates?”
Lonnie Stevenson at Evergreen Home Loans just emailed me this note:
If you’ve seen the news lately, you know concerns about inflation are increasing. But what does it really mean to you?
The fact is, inflation is a very serious issue, and it will likely be on the rise as 2009 proceeds…and along with it, home loan rates will likely rise too.
To help you learn more about this important topic, I’m sending you a link to a short video, featuring a personal friend and business mentor or mine as well as the nation’s foremost mortgage industry expert, Barry Habib. In this video, you’ll learn how inflation impacts interest rates and what the outlook is for down the road.
Because home loan rates will be on the rise, if you or any of your family, friends, neighbors or co-workers have been considering a purchase or refinance, now’s the time to act.
Please contact me today to discuss your specific situation, and feel free to forward this email and video link along to others that you think might benefit from it as well.
ARMS yet to reset in Arizona Housing Market
When an Adjustable Rate Mortgage period ends and the interest rate “resets” or the initial low interest rate changes to what is typically a higher interest rate, there is a chance that the possibility of foreclosure on the home could increase if the owners aren’t able to afford the new higher payment.
Arizona does have a number of loans that are set to peak during the month of September 2010, and then again during the month of December 2011.
It’s probably likely that these are for 5 year Adjustable Rate Mortgages that were made during the 2005 and 2006 during the peak of the market.
There isn’t any way to really track which of these loans are going to are going to make it to their reset dates. Many of these homes could already be in Foreclosure, or for some people, there might not be an issue at all. If the rate resets at a price that the borrower can afford – it’s a moot point. Life will go on as normal, and the homeowner will continue paying their mortgage.
We’ll continue to monitor the pulse of the market and keep you updated with information. New home loans are available at very attractive interest rates, home prices are very affordable and there are a number of new homes to choose from – so if you’re thinking about buying a home, now is a great time!
Interest rate projections
Just got a weekly update in my email on interest rate projections from Katie Murphy at Hi-Tech Mortgage -
Prime rate is at 3.25% and is expected to hold at that rate over the next couple months.
The Discount rate is 0.50%
Fed Funds Rate is 0.25%
11th District Cost of Funds is 1.832% – expected to drop to 1.737% after August 12 – expected to drop to 1.646% after September 23 and down to 1.465% after November 4th.
WHAT DO THESE RATES THIS MEAN?
Well, The Fed Funds Rate is the interest rate that banks charge to each other for overnight loans made to fulfill reserve funding requirements. The Prime rate usually runs about 300 basis points – (or 3 percentage points) above the Fed Fund Rate. The prime rate is used as an index to calculate rate changes to short term loans. The Discount Rate is the interest rate charged to commercial banks on loans they receive.
None of these rates are tied directly to the rate buyers pay for long term loans such as 30 year fixed rate mortgages. These rates will affect short term loans like credit card rates, and even some short term housing loans like Adjustable Rate Mortgages.
I’m not an expert on lending – but I know people who are! If you are thinking about making a home purchase right now – there is a tremendous opportunity right now to experience home ownership with low interest rates, low price and a pretty good selection of inventory available. Call The Concierge Service Team at 928-854-5511 or email us at Dominic@TCSTnow.com. You might also want to visit our MLS searching website http://blog.havasuhomesnow.com
Pending Home Sales Record Fourth Straight Monthly Gain
This just in from the National Association of Realtor’s Research update:
Pending home sales show a sustained uptrend, rising for four consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the latest survey. The Pending Home Sales Index increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004. Lawrence Yun, NAR chief economist, cautions that there could be delays in the number of contracts that go to closing. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”
In Lake Havasu City – the market pulse since the beginning of the year shows the following for single family home sales:
January 2009 – 85 Sold – $111,038 Average sales price – 140 Days on Market
February 2009 – 102 Sold – $108,031 Average sales price – 113 Days on Market
March 2009 – 148 Sold – $222,883 Average sales price – 128 Days on Market
April 2009 – 162 Sold – $266,544 Average sales price – 155 Days on Market
May 2009 – 137 Sold – $188,469 Average sales price – 115 Days on Market
June 2009 – 159 Sold – $151,478 Average sales price – 103 Days on Market
Things look to be continuing on that upward trend as the statistics for the first quarter of July already show a solid number- coming in at 54 home sales so far.
