homesintuscanyhills.com Blog

Did you purchase a home after April 8, 2008 or are you considering making a home purchase prior to July 1, 2009? 

If you answered yes to either of these questions, then you may want to consider if the maximum $7,500 First Time Homebuyer Tax Credit is for you. First, listen to an IRS audio interview, then read the FAQ information below from the IRS on the first-time homebuyer credit to understand if you qualify and why you may want to take advantage of up to $7,500 available to you either this year or on your 2009 return. This bi-product of a recent stimulus package does expire on July 1^st, 2009, so if you are considering adjusting your buying timeframes, sit down to discuss with an experienced Realtor.

A: Two unmarried individuals buying a principal residence may allocate the credit among the individual owners in any reasonable manner.  The total amount allocated between the owners may not exceed the smaller of $7500 or 10% of the purchase price of the house.  

Q: Can a person with an ITIN, who qualifies as a resident, take this credit?    A: Resident aliens with an ITIN are eligible to take the credit. Q: I don’t owe taxes and did not have taxes taken from my paycheck, do I qualify for the credit?   

A: Yes, the credit is fully refundable, and you can claim the credit even if no taxes were withheld from your paycheck. 

Q. Who cannot take the credit?    A. If any of the following describe you, you cannot take the credit, even if you buy a main home:  

• Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above. 
• You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild. 
• You stop using your home as your main home. 
• You sell your home before the end of the year. 
• You are a nonresident alien. 
• You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. 
• Your home financing comes from tax-exempt mortgage revenue bonds. 
• You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008

With an increase in leasing costs by more than 12% in Santa Clara County and a decline in housing prices, buying a home may make more sense for some than continuing to rent. Mortgage rates are at historical lows and more pressure is expected to reduce rates to stimulate the housing market. 

If you are unsure about the inputs for the calculator, contact me for a general guideline of rates for property taxes, mortgage, closing costs, insurance and homeowners dues. Keep in mind that all inputs may vary based on property type, location, current rates, etc.

Ginnie Mae:  http://www.ginniemae.gov/ypth/index.asp?Section=YPTH 

Yahoo! Business: http://biz.yahoo.com/pfg/e10buyrent/  Dinkytown.net (very comprehensive): http://www.dinkytown.net/java/MortgageRentvsBuy.html 

Asking $3,595,000

Exquisite Queen Anne Victorian, steps from Downtown in Almond Grove. Custom built w/ incredible detail. Immaculate condition, very private setting at end of cul de sac, stunning landscaping w/ trex decking & beautiful wrap around porch. Large master suite w/ sitting area & his & her walk-in closets. Private hot tub on deck from master. Walk-in wine cellar & vineyard. Huge bonus room. Stunning!

Beds: 5+, Baths: 3.5, Sq Ft: 4,126, Lot: 14,376

3 Massol Court, Los Gatos, CA 95030

For more info, contact me!

The housing rescue bill, signed into law July 30, 2008, is full of goodies and not-so-goodies for homeowners and those who aspire to be homeowners. Here are some highlights.

First-time homeowner tax credit

The law will extend a tax credit of up to $7,500 to first-time homebuyers. A first-time homebuyer is defined as someone who hasn’t owned a home in three years.

The tax credit is for 10 percent of the purchase price, up to $7,500, but phases out for higher-income homeowners. Homeowners are eligible for the tax credit if they bought after April 8 of this year and before July 1, 2009.

This is a tax credit, not a deduction. It reduces the homeowners’ tax bill by up to $7,500 for the tax year in which the purchase was made. If you buy a house this year, you get the tax credit for the 2008 tax year — the one with a filing deadline of April 15, 2009. If you buy a house next year by the end of June, you get the tax credit for the 2009 tax year. It’s a one-time credit; you don’t get to keep taking it year after year.

There is a catch, and that is that the money has to be repaid over 15 years, starting two years after you buy the house. That makes the tax credit an interest-free loan. If you take the full $7,500 tax credit, your income tax bill will increase by $500 a year for 15 years. If you sell the house before then, you’ll have to pay Uncle Sam the remaining balance.

Complex issues, such as divorce, death, sale of the house at a loss and conversion of the house into a vacation home are accounted for in the law.

Forgiveness to allow refinancing into FHA

A lot of people have fallen behind on their mortgage payments after the rates went up on their adjustable-rate mortgages, or ARMs. And they can’t refinance into fixed-rate loans because their homes have lost value, and they owe more than their houses are worth.

The housing rescue law seeks to help these people get out of trouble. It encourages lenders to forgive some of their debt so they can refinance at lower amounts into mortgages insured by the Federal Housing Administration, or FHA.

It works like this: The lender has to forgive all the debt above 90 percent of the home’s current appraised value. If that leaves you scratching your head, here is a hypothetical example, using round numbers:

Sometime before Jan. 1 this year, you bought a house for $125,000 and got an ARM for $110,000 after making a $15,000 down payment. But the house lost value. Now it’s worth $100,000, based on an appraisal. Meanwhile, the ARM’s rate went up and you can’t afford the full payment every month.

Under this law, the lender would forgive everything you owe above $90,000. Let’s say that you owe $105,000 of that original $110,000 loan. The lender would forgive $15,000, and let you pay off the loan for $90,000. The lender would not be allowed to seek any of that $15,000 later.

That allows you to find another lender who would underwrite a $90,000 mortgage to be insured by the FHA. That loan amount would include the upfront FHA insurance premium of roughly $2,700.

Again, there is a catch. If you take refuge in this program, you’ll have to share your home-price appreciation with the FHA. If you sell the house (or refinance the loan) less than a year after refinancing into the FHA loan, the FHA gets all of the house price appreciation. The FHA’s cut decreases over the next five years — but never goes below 50 percent.

What does this mean to the borrower? Take the example above. You refinanced when the house was appraised at $100,000. A little over two years later, you sell the house for $120,000. You split that $20,000 difference with the FHA. In this case, because it’s between two and three years later, the FHA gets 80 percent. The FHA would get $16,000 and you would get $4,000.

The equity-sharing arrangement goes like this: If you refinance or sell less than a year after getting the FHA loan, the government gets 100 percent of the home price appreciation. If it’s more than a year but less than two years, the FHA gets 90 percent. The FHA’s cut then decreases by 10 percent until the five-year mark. Anytime after that, the FHA gets half of the appreciation, no matter how long you have the loan or own the house.

This arrangement will encourage homeowners to keep their FHA-insured mortgages for at least five years, but to refinance before home prices zoom upward again.

Working with home equity debt

The government has been trying all year to encourage lenders to forgive debt so homeowners can refinance their loans for lesser amounts and remain in their houses. Lenders have been reluctant to forgive the debt. The FHA-refinance plan is another way of encouraging debt forgiveness.

Among the sticking points: Many homeowners have home equity lines of credit or home equity loans. In most cases, these lenders will lose that entire loan balance under the FHA-refinance plan. The new law is low on specifics, but it gives the FHA permission to give second lienholders a cut of the home price appreciation proceeds that the FHA collects.

Down payment assistance soon to be a thing of the past

The new housing rescue law bans down payment assistance programs such as the ones offered by Nehemiah and AmeriDream. The ban goes into effect Oct. 1.

Down payment assistance programs took advantage of a loophole in the way the FHA treats down payments. To get an FHA-insured mortgage, the homeowner has to make a down payment of at least 3 percent. Homeowners don’t have to save even that much; the 3 percent can come as a gift from family members or nonprofit organizations.

Regulations don’t allow the home seller to provide the down payment money. That’s where down payment assistance programs come in. They are nonprofits. That allows the seller to give the 3 percent down payment money to Nehemiah or AmeriDream, and then Nehemiah or AmeriDream can turn around and “give” the down payment to the homebuyer as a “donation.”

Fannie Mae and Freddie Mac don’t allow sellers to indirectly give down payments to buyers. But the FHA has allowed this type of transaction for years. The FHA has long complained that down payment assistance programs artificially inflate house prices, and that loans using down payment assistance are more likely to default. But prominent congressional democrats have protected the down payment assistance programs on the grounds that they allow many minority families to become first-time homebuyers.

House Democrats wanted to keep the loophole open, and Senate leaders wanted to close it. With this law, the Senate won.

Property tax deductions for all homeowners

Under current law, you can deduct your property taxes from federal income tax — but only if you itemize deductions on Schedule A. That leaves out people who don’t have enough deductions to warrant filling out Schedule A. They have to take the standard deduction — and that means they can’t deduct their property taxes.

The housing law changes that. For homeowners who pay property taxes, it increases the standard deduction by $500 for single filers and $1,000 for couples filing jointly. This will be a boon to people, such as retirees, who own their houses outright, and therefore don’t pay any mortgage interest, so they can’t itemize.

You can’t increase the standard deduction by more than the property-tax bill. So if you’re married filing jointly and you pay $800 in property taxes, you get an $800 deduction, not a $1,000 deduction.

Loan limits extended permanently

There are maximum amounts for loans that the FHA will insure, and that Fannie Mae and Freddie Mac will guarantee. Those limits were raised temporarily this year. The new law raises limits permanently.

For FHA-insured mortgages, the new limit will be 115 percent of the median home price in that area, up to $625,500. That provision will affect loan limits in higher-cost areas. In lower-cost areas, the current FHA limits won’t decrease.

For conforming mortgages — those eligible to be bought by Fannie Mae and Freddie Mac — the conforming limit will remain at least $417,000 for a single-family home. It can be higher than that. Starting next year, the new limit is either $417,000 or 115 percent of the area’s median home price, whichever is higher — up to $625,500. After that, the limits go up or down according to a price index.

More regulations on reverse mortgages

A reverse mortgage is an advance against home equity. It’s for homeowners age 62 or older, and the reverse mortgage doesn’t have to be repaid until the borrowers die or move out.

Because reverse mortgages are for elderly borrowers, there is concern that dishonest lenders and brokers take advantage of borrowers. Borrowers are required to get counseling first, to learn the pros and cons of reverse mortgages. The law will result in strengthened qualifications for counselors.

The law bars insurance salesmen from originating reverse mortgages and prohibits originators from requiring homeowners to buy annuities or insurance products. (There’s one big exception: The FHA insures reverse mortgages, and borrowers will buy that coverage.)

Finally, the law limits origination fees on reverse mortgages. They can’t exceed 2 percent of a reverse mortgage of up to $200,000. For a reverse mortgage amount above that, the limit is $4,000, plus 1 percent of the loan amount above $200,000. Origination fees can’t exceed $6,000 in any case. In future years, this upper limit is indexed to inflation.

Manufactured housing

FHA-insured loans for manufactured houses are limited to a maximum of $48,000 — a limit that has been in effect since 1992. That limit finally will be increased to about $70,000 and will be indexed to inflation. These are the limits for loans in which the borrower is buying only the manufactured home and not the land under it.

According to the Manufactured Housing Institute, the raised limit will make a big difference to thousands of families. Under the $48,000 limit, a lot of families can afford only single-section homes. The increased limit will allow more people to buy double-section homes — what are colloquially known as double-wides.

The law directs Fannie Mae and Freddie Mac to come up with new products and flexible underwriting standards for manufactured houses.

Veterans

Service members returning from active duty abroad will be given breaks, effective immediately now that the bill has been signed into law.

Some protections apply to service members whose military obligations affect their ability to repay debts — primarily, reservists and members of the National Guard who are called to active duty. They have to leave their jobs and, in many cases, take pay cuts.

For these service members, there are protections having to do with foreclosures and interest rates. If a service member had a mortgage before entering active duty, a lender can’t start foreclosure proceedings until nine months after the service member returns from active duty. Formerly, the protection period was 90 days.

Also, when someone with a mortgage is called up to active duty, the interest rates on all previously existing debt are capped at 6 percent. That goes for mortgages — and for home loans, that 6 percent cap extends until one year after the service member returns from active duty.

The Defense Department will be required to provide foreclosure-prevention counseling upon request to service members who are returning from active duty abroad.

Miscellaneous

Other provisions of the law:

·         It will establish an Office of Housing Counseling, which coordinate all federal housing counseling functions, as well as produce booklets that will be given to people applying for mortgages.

·         It will require licensing and registration of all mortgage brokers. Several states have begun to license mortgage brokers and share the information through the Conference of State Bank Supervisors; this law extends that initiative nationally.

·         It won’t ask questions about tornadoes. An earlier version of the bill would have commissioned a study into how to “mitigate the risks to manufactured housing residents and communities resulting from tornados.” The inquiry into this head-scratcher will have to wait for another bill; it was deleted in the final version that passed into law.

KB representatives state that the long awaited park is scheduled to open on August 19th. Full completion means that the final tasks must adhere to the City of San Jose’s guidelines. While the new park may appear complete toward the middle of July, the City requires a 30-day “grow in” period to allow the plants and turf time to settle in to their new home.

Asking $619,000

Charming Willow Glen home w/ a great yard for entertaining. Very clean & well kept. Includes front porch & back yard deck, plus covered patio in back. Fully fenced yard, sprinklers covering large lawn, lots of parking & extra storage unit in back. Home has updated kitchen w/ stainless appliances, dual pane windows, hardwood flooring & updated bath. Room for expansion. Great family neighborhood! 

Beds: 2, Baths: 1, Sq Ft: 864, Lot: 5,400

355 Hull Avenue, San Jose, CA 95125

Asking $915,000 – SOLD

Absolutely spotless home in Unincorporated Cambrian Park. Outstanding Carlton Elem, Union Middle, Leigh High Schools. Spacious upstairs master suite w/ bonus room for office, walk-in closet or work out room. Three downstairs bedrooms. Open living room and full wet bar w/ fridge, ice and water. 1998 Remodel. Large open 10K+ sqft landscaped lot with pool, RV parking + connection, kennel + dog run.

14506 Charmeran Avenue, San Jose, 95124

Beds: 4, Baths: 2, Sq Ft: 2,180, Lot: 10,625

Asking $1,395,000 – SOLD OVER ASKING

Tremendous opportunity to build dream home on huge ~20K sq ft (~100×200) flat lot w/ views on dead-end st. Outstanding LG schools. Quick walk through private access to Vasona Park. Terrific neighborhood just a short distance to town! Spacious family room, central A/C & heat, newer fireplace insert, dual pane windows throughout, original hardwood beneath carpet. Home needs TLC! Value in the land!

17401 El Rancho Avenue, Monte Sereno, 95030

Beds: 2, Baths: 1.5, Sq Ft: 1,398, Lot: 19,656

Asking $988,000 – Sold over asking with multiple offers

Updated & super clean home in desirable “Birdland” Community. Outstanding Stocklmeir Elem, Cupertino Middle & Fremont High. Brand new gleaming Beech hard wood floors, new carpet in master, built-in master closet organizer, beautifully updated landscaping & inviting resurfaced pool. Sliders from family room & master to entertainer’s backyard. Newer roof, electrical, stove & dishwasher. Fresh Paint.

Beds: 4, Baths, 2, Sq Ft: 1674, Lot, 6,000

April 23, 2008 – CUPERTINO, Calif. – Targeting the more than 10 million iPhone users expected by the end of 2008, Intero Real Estate Services today announced that it would be the first real estate brokerage in the country to use the iPhone home search application created by Terabitz. This application enables consumers to access property listings, photos, local neighborhood information, recent sales and driving directions on the go. The application is now available in Northern California and will expand to other markets in the near future.

Beginning today, any consumer can type http://intero.terabitz.com/iphone into the iPhone browser and receive instant information on the homes they are interested in. Buyers have the flexibility to search by city, state, zip, MLS number, price, type of home, and number of bedrooms/bathrooms. Results can be either mapped or viewed as a textual list. Users can then select any home and view the complete property listing datasheet, which includes information about the home, its features, photos, history and surrounding neighborhood. With a few additional clicks of the iPhone, consumers can also contact the agent, email the listing to a friend, and access information about local schools, restaurants and recent comparable sales.

“The iPhone search functionality that Terabitz has developed will definitely set Intero apart from our competition,” said Gino Blefari, Founder, President and CEO of Intero Real Estate Services. “The ability to remotely search MLS property listings and neighborhood information will be a powerful tool for bringing Intero agents together with the many online home buyers that use an iPhone.”

The iPhone application has access to nearly every property on the market at any given time. Because Intero can now offer this innovative search feature, it is not only be able to differentiate itself from other local brokers, but also from the large national home search sites that have no direct feeds to local MLS databases.

“Our iPhone application takes mobile real estate search mainstream,” said Ashfaq Munshi, CEO of Terabitz. “The user experience is fantastic and the amount of information we’ve integrated will empower consumers to conveniently shop for homes with the browsing ease of the iPhone.”

All the Information, Wherever Your iPhone Goes

The Terabitz iPhone application that Intero is able to provide to consumers is designed to provide every bit of information a buyer or agent would want to know about a home, its features, and the surrounding neighborhood. Every minor detail about a home is included – from heating and air conditioning to appliances, amenities, landscaping, and architecture. Furthermore, when iPhone users find a home they are interesting in, they can search the neighborhood, locate restaurants and schools and even check on the school’s academic rating.

In addition, the application utilizes rich and accurate digital map data and content from Tele Atlas to help consumers query places and points of interest (such as restaurants and schools) and then map that data to see where those establishments are located in relation to a specific property.

About Intero Real Estate Services

In less than five short years, Intero Real Estate Services has established itself as one of the premier real estate brokerages in the nation. In 2002, the founders formed Intero to fill a client service void that was missing in the real estate industry. In July of 2005 Intero was recognized by REALTOR® Magazine, the official magazine of the National Association of REALTORS®, as the fastest growing real estate company in the nation. Intero was ranked #1 out of the approximately 80,000 brokerages nationwide in growth of sales and transaction sides with 167.6% and 128.3% increases respectively. Currently, Intero has over 60 offices with more than 2200 sales associates serving Arizona, California, Colorado, Florida, Hawaii, Nevada and Texas.

About Terabitz

Terabitz is a venture-backed technology company located in the heart of Silicon Valley that was formed to help local brokers compete against the large national sites. The company’s mission is to ensure that brokers have all the tools, content and features to position themselves as the premiere real estate destination in their respective markets. For more information, please visit www.terabitz.com .