NRVLiving - Real Estate. Simplified.

Dave Ramsey Tells You Whether He’d Use A Real Estate Agent Or Not

Jeremy — Tue, 10 Nov 2009 09:13:54 PST

Dave Ramsey, the guru of getting out of debt, talks a lot on his show about ways to avoid paying unnecessary fees and penalties, and encourages people to save far more than they spend – novel concept, right?

He had a question on his show in October, that a couple of people who listen regularly heard and sent me a link. The question had to deal with whether or not to use a real estate agent to sell a home. Economically, that makes sense – a $200000 home with no mortgage is going to net the owner ~ $200000 (minus closing costs, of course), while that same house will net the owner less if they use a real estate agent. Dave’s take? You get what you pay for (5 minute listen):

Dave Ramsey – 10/28/09 Show

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The State of the New River Valley Real Estate Market – October 2009

Jeremy — Mon, 09 Nov 2009 10:19:52 PST

The market update for October 2009 in the New River Valley is now available. You can also read and download the report here.

Oct 2009 Market Report

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What the Buyer Credit Extension Means for New River Valley Home Sales

Jeremy — Sun, 08 Nov 2009 22:29:12 PST

The tax credit extension has been signed into law, and now people far and wide are wondering if it’ll create a Monopoly-like run on buying properties and collecting checks.

I was thinking today about how the tax credit extension might affect home buyers in the New River Valley, and I’ve come to the conclusion that there really is no clear answer to that. I know that I’ve worked with a lot of first-time buyers this year, and several of them have said that they would not have purchased if the $8000 was not available to them. For that reason, I know that it had an impact in our area – but that credit was limited to just first-time buyers. This new credit, signed by the President on Friday, provides for up to $8000 for new homeowners, and up to $6500 for people who are changing homes (some restrictions apply). With the stroke of a pen, we’ve opened up pretty substantial credits to the entire real estate buying market. Will it take?

Do not pass Go, do not collect $200. I don’t think so. I’m not trying to be the pessimist, I just don’t think $6500 is going to make someone decide to buy a new house. It will certainly help those who have sold their homes and are looking for new ones, but they would have been looking anyhow so the $6500 is just a nice little Christmas bonus. Overall though, I think we’re likely to look at the extension after it’s expiration date in 2010 and say that the $8000 tax credit for first-time buyers continued to be well utilized, but that the “move-up” component of the extension didn’t hit a home run.

My two cents … that’s why they pay me the big bucks to write this blog.

What do you think? Will the extension in its’ new form have an impact, or will buyers still buy simply because they needed to buy anyhow?

Photo from woodleywonderworks.

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Like It Or Not, The Home Buyer Tax Credit Becomes Law

Jeremy — Fri, 06 Nov 2009 12:29:41 PST

Well, I’m admittedly many hours late on this, but as of this post it’s being reported that the President has signed H.R. 3548, the bill that deals with, among other things, an extension to the first-time buyer tax credit that was put in place earlier this year.

I’m asuming that most people don’t care about the gobbly-goop of the bill, nor do they care about the particulars of the Special Amendment that deals directly with the tax credit extension. If you do, you can read it in its’ entirety here, and find the Special Amendment here. For everyone else, here are the highlights:

the credit must be used on principal residences only
a credit of up to 10%, or $8000, of the homes’ purchase price is eligible to first-time home buyers
the original credit had an income limit of $75000 for a single person, and $150000 for a married couple – that level has been increased to $125000 and $225000, respectively
the length of time to claim the credit has been extended to May 1 2010 (contracts must be signed before that date), and you must close on that contract before July 1 2010
additionally, what’s being called a “move-up” component has been added, as well … for homeowners who have lived in the home they are selling for five consecutive years (of at least eight years total), they’re eligible for a $6500 move-up credit

That’s pretty much it, from everything I’m reading. To recap, all you need to do is (1) go under contract before May 1 2010, (2) close before July 1 2010, and (3) submit to the IRS your HUD-1 statement from closing along with this form. I’ve said that I’m in favor of the credit, but I have to admit that I’m really struggling with this latest extension. Namely, I’d like to know where we’re going to get the money for this … seems like the tax payers are the ones who are footing the bill for their own credit. I know that’s an unpopular position, particularly when I’ve had the pleasure of working with so many people this year who were able to buy their first home because of the tax credit, but at what point does all the spending stop?

Nevertheless, it’s signed sealed and delivered at this point. The ink is dry, the photo ops are done.

For more information and FAQs about the extension, NAR has put together a list of things to consider:

Q. Existing homeowner credit: Must the new house cost more than the old house?
A. No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.

Q. I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
A. Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

Q. I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
A. Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phase-out range).

Q. I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
A. No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Q. I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
A. Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight, what he did since 3 years doesn’t impact eligibility.

Q. I am an eligible first-time homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
A. You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Photo from TMAB2003.

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Why Do New River Valley Rates Change So Much?

Jeremy — Wed, 04 Nov 2009 02:21:26 PST

Mike: Why was I quoted a rate of 5% yesterday and 5.25% today? Do rates change that fast?

Brandon: Mike, Interest Rates change constantly, just like the stock market. There are certain economic indicators, such as unemployment data, consumer price index, retail sales and consumer confidence, that effect interest rates. A good rule of thumb is that, in most cases, you can watch the relationship between stocks and bonds. When the economy is slow “bearish” investors move money out of stocks into bonds or mortgage backed securities, causing rates to decrease (or improve). When the stock market is going up “bullish” investors move money out of bonds which is considered a safe investment, and back into the stock market. As a result mortgage rates increase as the stock market increases.

Imagine that you had $1, and were deciding whether to hold on to it (no change) put in the stock market (help the stock market out) or put in the bond market (help rates out). Once you do that someone is benefiting. If you then put the money in the bond market and help rates improve but then take it back out there is a negative impact with bonds and rates increase. That is what we are seeing now with money moving out of bonds, causing stocks to increase. The government is still buying bonds to keep rates down but as we have said this will not last.

_______________________________________________________________

Brandon is a branch partner at Alcova Mortgage. He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order. You can reach him at brandon@alcovamortgage.com, or 877-552-7150.

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First-Time Buyer in Pulaski VA? There’s $1 million Available For You

Jeremy — Mon, 02 Nov 2009 06:31:47 PST

That’s right, $1 million has been set aside to help first-time buyers ease into the Pulaski VA real estate market. From WSLS.com:

The Virginia Housing Development Authority has set aside $1 million for the town of Pulaski for a reduced interest rate housing program.

Home buyers who qualify for the loan will receive a one half percent reduction in the standard VHDA interest rate.

To qualify, households must have an income between $34,500 and $46,000.

“A lot of people are looking for housing already and this just gives them a chance to get a reduced interest rate,“ said Pulaski Town Manager John Hawley.

As part of the program, the town will pay for the home inspection and waive any building permit fees.

Here’s a look at the complete news release from the town of Pulaski:

The Virginia Housing Development Authority (VHDA) recently notified the Town of Pulaski that it has been selected to receive a set-aside (reservation of funds) for the SPARC program (Sponsoring Partnerships and Revitalizing Communities). These funds will be available until June 30, 2010.

The SPARC loan is a program that reserves funds for localities and organizations to promote affordable housing to first-time home buyers. Homebuyers who qualify for a SPARC loan receive ½% (one half percent) reduction in the standard VHDA interest rate for first-time homebuyers. The Town of Pulaski for Round 8 currently has $1,000,000 (one million dollars) reserved by VHDA at the ½% reduction. A citizen who is interested in buying or building a home in the Town of Pulaski may want to consider applying for a SPARC loan through one of the VHDA approved lenders.

The Town has targeted households with an income between $34,500 and $46,000 to receive the ½% reduction in their mortgage. As part of the program, the Town will cover the cost of the required home inspection and waive any building permit fees. Connection fees for new construction will be waived. Houses may be purchased or built up to $225,100.

If someone is interested in this opportunity, they should work with an approved VHDA lender. The following three have agreed to work with the Town or you may check with your lender: Suntrust Mortgage, Bank of America and Stellar One; or contact the Town of Pulaski Managers Office at 994-8600.

So what would $225100 get you in the Town of Pulaski? A lot. There are currently 74 homes on the market in the Town in that price range, and the median list price is $119500. If you qualified, with a 1/2% interest rate reduction, a home inspection paid for, and an $8000 first-time buyer tax credit from the federal government, there’s a lot of money to be saved. Let me know if you’d like more details.

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A SCARY Halloween Story

Jeremy — Fri, 30 Oct 2009 09:39:57 PDT

A man is walking home alone late one foggy night, when behind him he hears:

BUMP ..

Walking faster, he looks back and through the fog he makes out the image of an upright casket, banging its’ way down the middle of the street toward him.

BUMP …

Terrified, the man begins to run toward his home, the casket bouncing quickly behind him!

FASTER! FASTER!

He runs up to his front door, fumbles with his keys, opens the door and rushes in, slamming and locking the door behind him!

The casket crashes through the door, with the lid of the casket clapping …

clappity BUMP …

… on his heels, the terrified man runs.

Rushing upstairs to his bathroom, the man locks himself in. His heart is pounding; his head is reeling; his breath is coming in deep, sobbing gasps.

With a loud CRASH, the casket breaks down the door, bumping and clapping toward him.

The man screams, and reaches for something … ANYTHING! … but all he can find is a bottle of cough syrup!

Desperate, he throws the cough syrup at the casket, and …

The coffin stops.

Happy Halloween.

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How To Apply For The First-Time Buyer Credit

Jeremy — Fri, 30 Oct 2009 00:36:00 PDT

I had a teacher in high school, Mr. Smith, who had a saying that’s stuck with me. I remember little from his government and US history class but this phrase:

Porkchop porkchop greasy greasy, man that test was easy easy!

Why do I remember that? Who knows. But it was the first thing I thought of when I found the form first-time buyers need to recoup their tax credit in 2009. Finally, something government-related is easy – Mr. Smith would be so proud.

The first-time buyer credit is set to expire a month from now, assuming the White House doesn’t extend it in some way, shape or form. See that ticker on the right side of the screen? If you haven’t gone under contract on your first home by October 30th, you’re likely going to miss the expiration of the first-time buyer credit.

Plenty of people (350000, according to NAR), including many right here in the New River Valley, have taken advantage of the credit so far in 2009, and some of my clients have already reported receiving their credit. It’s pretty easy to do, so get on it.

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Senate Close To Extending Tax Credit Deal?

Jeremy — Thu, 29 Oct 2009 10:23:00 PDT

See Saw

It looks like it, but this has been a very fluid situation over the last few days. I’ve not posted over the last couple of days about it, because it keeps changing so much that it makes it hard to keep up. Here’s the latest, as of 1:00pm on Thursday 10/29/09

Truth of the matter is, no one knows what the final outcome will be, but if I had to bet, the likelihood is that we see it extended in modified form. I’ve said I’m in favor of an extension, and I still am, but I have to admit that I’m getting tired of seeing us go into debt, as well. I’m struggling with this one, I really am.

Thanks to Span for the photo.

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Time Falls Back This Weekend

Jeremy — Thu, 29 Oct 2009 00:12:58 PDT

Saturday’s Halloween, and I’m sure you’re all waffling on your costume ides more than a Brett Favre retirement decision … no? Well, okay.

Once the festivities are over though, it’s time to catch up on a little sleep. Don’t forget to set your clocks back an hour on Saturday night – Sunday means the start of an extra hour of sleep!

Photo by Robbert van der Steeg.

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