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Beware: Mortgage Loan Modification Scams

by Mark Brace

Earlier this week the National Grand Rapids Foreclosures Mitigation Counseling (NFMC) Program held a web-ex about the Loan Modification Scam Alert campaign. Due to the growing number of scams, Congress asked NeighborWorks America to launch a national public education program; the campaign empowers homeowners to protect themselves against loan modification scams, to find trusted help and to report illegal activity to authorities. Keep yourself informed and aware, visit this website to stay educated www.LoanScamAlert.org.

Buyers Who Wait May Lose a Lot

by Beth Braverman

Potential home buyers who delay have a lot to lose.

First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don’t pay enough taxes to cover the credit. (Like a Rebate Check)

Other factors that should spur buyers:

Low mortgage rates. If the Federal Reserve stops buying mortgage-backed securities at the end of March, 30-year rates will almost certainly rise to more than 6 percent.

Rising prices. About 30 percent of markets are already experiencing price increases. Prices are falling in 12 percent of markets, says Fiserv (but that only helps if you want to live there).

Source: Money Magazine, Beth Braverman (03/02/2010)

Home Buyers Don't Hesitate in West Michigan

by Mark Brace

Just wanted to post some thoughts. I've had several clients of the last 2 weeks that have missed getting homes because the market is starting to get crazy. A couple reasons for not getting these homes.

1. Hesitating on whether they want to write an offer or not.

2. Not writing a strong enough offer, I have been in at least a dozen multiple offer situation in the last 2 weeks. Just write your best offer and buy the home.

Side note to this: The federal tax credit is ending Dec. 1, 2009 and everyone is panicing to get a home before the deadline. This is particularly affecting homes in the under 120K range.

3. Not getting the offer in on time.

Side note to this: Is not having your pre-approval letter ready at the time you wanted to make an offer.

I guess the moral of my blog would be, be prepared to write a good offer, or the home you like may be gone.

First Time Home Buyer’s Credit: A Breakdown of the Details

by Mark Brace
 
With all the buzz surrounding the credit for first time home buyer’s that the American Recovery and Reinvestment Act of 2009 includes, it may be hard to decipher all the details to see who and what exactly are included. This Act is summarized as “A bill to create jobs, restore economic growth, and strengthen America's middle class through measures that modernize the nation's infrastructure, enhance America's energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief, and protect those in greatest need, and for other purposes.”
 
According to a recent news release by the U.S. Department of the Treasury, home buyers who qualify can now take advantage of the stimulus package for their 2008 taxes, which need to be filed by April 15. An important thing to be aware of is that automatic extensions can be issued to many taxpayers until October 15, which would allow the credit to be available earlier. The estimated tax liability must be paid when the extension is filed. Those who qualify may also apply the tax credit towards their 2009 taxes.
 
"For first-time home buyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit. This important change gives qualifying home buyers cash they do not have to pay back," said Doug Shulman, IRS Commissioner.
 
Here are the specifics:  
 
Who: Any first time home buyer, defined as an individual who has not owned a home in the previous three years. If the buyer is a married couple, both spouses must meet the individual qualifications. Unmarried couples, where one meets the qualifications but the other does not, may assign the tax credit to the one who qualifies.
 
There are also restrictions due to a person’s Modified Adjusted Gross Income, or MAGI. Modified Adjusted Gross Income (MAGI) is an individual’s Adjusted Gross Income with certain amounts added back such as foreign income, foreign-housing deductions, student loan deductions, IRA contributions and deductions for higher-education costs. To determine this with certainty, a visit to a qualified tax accountant would be essential.
 
The tax credit is available to for individuals whose Modified Adjusted Gross Income (MAGI) is $75,000 or less, and married couples with a MAGI of $150,000 or less. If a person purchases in 2009 and can show that they will qualify for the tax credit they can have their employer reduce their payroll deductions per pay period thereby realizing some or all of the credit during 2009. Also, if the tax credit exceeds the income tax due, the difference will be refunded to the tax payer.
 
Individuals whose MAGI is more than $75,000 but less than $95,000 qualify for a pro-rated portion of the potential $8,000 credit. Married couples whose MAGI is more than $150,000 but less than $170,000 qualifies for a pro-rated portion on the tax credit.
 
Individuals who have a MAGI of $95,000 or more and married couples who have a MAGI of $170,000 or more do not qualify for the tax credit. Resident aliens and nonresident aliens may qualify for this tax credit.
 
What: The tax credit is 10% of the purchase price or $8,000-whichever is less on home purchases made before Dec. 1, 2009. New construction, condominiums, manufactured housing and even house boats qualify. The tax payer/owner must own and occupy the home for three years to not have to repay the credit.
 
When: Now until Dec. 1, 2009 for purchases, filing for the actual credit extends until April 15, 2010 when 2009 taxes will need to be filed.
 
Where: Any qualifying property in the United States. The tax credit is available on the IRS’s website. Visit the IRS's first-time home buyer page by clicking here
 
How: After purchasing, new owner would need to file Form 5405, which can be found at the above link.

Helpful Information for City of Wyoming Investors

by Mark Brace

The City of Wyoming recently made a policy change that is important to note of anyone currently owning or looking to purchase a rental unit within Wyoming units. Now, the Rental Registration Program includes one and two family rental units. While registration is free, there is a fee of $98.00 per unit, and a $500 penalty if the property is not certified or registered.

March 1, 2009 is the deadline for all rental properties to be registered. Program requirements state that inspections will occur on a biennial cycle. A Certificate of Compliance will be issued once inspections are completed and approved. If you have any questions contact the Rental Registration Inspector, David Rupert, at 616-249-3843.

 

For the registration form, please click below:

http://www.ci.wyoming.mi.us/Building/Rental%20Registration%20Form.pdf

 

 

 

 

Housing Details in New Stimulus Bill

by Mark Brace
Part of the new $787 billion stimulus plan signed this morning by President Obama brings not only great relief for current homeowners, but future home-buyers too.
 
There are three key benefits to buyers, and sellers will also benefit because of the incentive, provided to those looking to become first time homebuyers
1)     The tax credit will be raised to $8000. It will be a true credit, one that does not need to be paid back, so first time home buyers receive an indirect "reduction" in the price they pay.
2)     Interest rates have come down 125-150 basis points, making home ownership more affordable.
3)     The loan limits will be raised to $727,000 in high cost areas
 
This table from Scott DeWolf might also be helpful in deciphering some of the bill's details, with the major modifications shaded:
 
FEATURE
CREDIT AS CREATED JULY 2008
APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008
REVISED CREDIT –
EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit
Lesser of 10 percent of cost of home or $7500
Maximum credit amount increased to $8000
Eligible Property
Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence.
No change
All principal residences eligible.
Refundable
Yes.  Reduces (or can eliminate) income tax liability for the year of purchase.  Any unused amount of tax credit refunded to purchaser.
No change
Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit
Yes.  Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return).  Phases out above those caps ($95,000 and $170,000).
No change
 
Same income limits continue to apply.
 
First-time Homebuyer Only
Yes.  Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
No change
Still available for first-time purchasers only.  Three-year rule continues to apply.
Revenue Bond Financing
No credit allowed if home financed with state/local bond funding.
Purchasers who utilize revenue bond financing can use credit.
Repayment
Yes.  Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing.
No repayment for purchases on or after January 1, 2009 and before December 1, 2009
Recapture
If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale.
If home is sold within three years of purchase, entire amount of credit is recaptured on sale.  Applies only to homes purchased in 2009.
Termination
July 1, 2009 
(But note program changes for 2009)
December 1, 2009
 
 
Effective Date
Purchases on or after April 9, 2008 and before January 1, 2009.  Repayment to begin for 2010 tax year.
All revisions are effective as of January 1, 2009

First Time Homebuyers Tax Form

by Mark Brace

As part of Congress's stimulus bill, a generous tax credit is available to those buying a home for the first time. If you qualify, you may get up to $7,500 or 10% of the home's purchase price.

In order to obtain the Federal tax credit for first time homebuyers, you'll want to make sure you fill out the forms below.

While the stimulus bill is still changing within Congress, the latest buzz is that it will change to $8,000 for first time buyers only.

 www.markbrace.com/agent_files/1sttimehomeownertaxform.pdf

Top 6 Mistakes When Buying Foreclosures

by Mark Brace

Top 6 Mistakes in Order:

1.       Flying Solo - Not working with a Realtor

2.       Being unfamiliar with the law or process

3.       Thinking Short Term – “I can Flip it!”

4.       Seeing only the sticker – Not looking at the amount of repairs

5.       Searching too broadly – Target an area and get Grand Rapids Foreclosures listings ASAP.

6.       Taking no prisoners – Offering too low on already reduced prices

Nothing illustrates the devastation of America's housing bust more vividly than the abandoned properties now blighting the nation's communities. In the third quarter alone, foreclosure filings were reported on more than 750,000 properties in the United States, a 71 percent increase from the same period last year, according to RealtyTrac. But for real estate investors, one person's tragedy can be another's good fortune. With so many foreclosures on the market, "this is a once-in-a-generation opportunity for many people," says Steve Dexter, a foreclosure expert and author of the forthcoming book Buy and Hold Forever-Building Real Estate Wealth Far Into the 21st Century.

Still, the purchase of foreclosed property—an often complex and involved process—presents would-be buyers with plenty of opportunities to make costly mistakes. In an effort to help consumers avoid such pitfalls, U.S. News spoke with a handful of experts to create a list of six common blunders that individuals make when attempting to buy foreclosed properties.

1. Flying solo. While enterprising do-it-yourselfers can certainly get away with going through the traditional home buying process without an agent, foreclosed real estate is another matter. Such complex transactions require the expertise of not just any real estate agent but one with a background in buying and selling foreclosed homes. "In today's uncertain times it's important to be working with someone who has been through market cycles before," says Patrick McGilvray, president of TheHomeBuyingCenter.com, which links homeowners and owners of foreclosure real estate with potential house buyers. So unless you are truly a real estate expert, do some research and find an agent with foreclosure experience in your market.

2. Being unfamiliar with the law. It's important to remember that real estate agents aren't lawyers, and foreclosure laws can change significantly from state to state. "A lot of people don't realize [that] foreclosures are heavily regulated and every state has its own set of laws," says Alexis McGee, the president of Foreclosures.com. "If you don't have the language proper in your contract, or if you have even the font size wrong, it's criminal and civil damages-don't count on every Realtor knowing this." As such, McGee advises against relying on a real estate agent for legal advice. Instead, consumers should review the foreclosure laws in their state and then get qualified legal advice from a local real estate attorney.

3. Thinking short term. Since many foreclosed homes may decline further in value in the coming months, it's important that buyers approach the transaction from a long-term perspective." If you are not looking at a piece of foreclosed property from a 10-year time horizon-as an investor or as an owner occupant-then you will likely suffer," McGilvray says. So if you are just trying to cash in on a quick flip, don't buy a foreclosure. Only investors with the resources and patience for a long-term real estate investment and homeowners who can afford a fully amortized fixed-rate mortgage should consider buying foreclosed property, McGilvray says.

4. Seeing only the sticker. While the price you negotiate for a foreclosed home may be significantly less than its value just a few years back, many such homes may require substantial repairs. McGilvray says that anyone buying a foreclosed property should make sure to set aside an additional 10 percent of its price tag for repairs. "Make sure you have 10 percent, especially if the home is a few years old," he says. "It is amazing how quickly houses can deteriorate." Prospective buyers should keep these additional repair costs in mind when they are negotiating the home's price.

5. Searching too broadly. With so much inventory coming onto the market these days, it's easy for buyers to become overwhelmed. To that end, Dexter recommends that anyone in the market for a foreclosure target a specific neighborhood and contact an agent with experience there. Make sure to specify the type of property you are looking for in order to avoid being inundated with listings. Tell the agent, "I want all these kinds of houses in this neighborhood that are bank listings [and] I want to know about them all as they come on the market," Dexter says. The agent will then be able to shoot you all the listings that meet your requirements as they become available. "If [the buyer is] patient enough and they get plugged in to the flow of new bank listings coming in, they can pick up some awfully good deals."

6. Taking no prisoners. While buyers can certainly get good deals on foreclosed homes, it's a mistake to assume that banks will accept any and all offers. (Unless, of course, the listing specifically says so.) Banks aren't set up to sell houses, so they typically outsource their foreclosed properties to real estate agents, McGee says. In such cases, agents can receive listings in bulk, perhaps 50 at a time. While these agents want to get the properties sold off quickly, they also want to get a good price for the seller so that the bank will give them additional business in the future. "Saving face is important for them," McGee says. "A lot of people just assume that because this property is bank-owned they will just take half off. Well, that's just not true." As such, insultingly low offers have the potential to tank the negotiations over foreclosed homes, McGee says. So make sure you present your wholesale offer case well both in writing and verbally with the listing agent.

Information Taken From: "The Top 6 Mistakes of Foreclosed-Home Buying" By Luke Mullins, U.S. News Nov. 18th 2008

Federal Housing Tax Credit - Detailed Breakdown

by Mark Brace
 Important things to know about the Tax Credit:
*The money is not immediately available to the home buyer! The buyer must fill out a specific form when filing their 2008, or 2009 tax returns. (Note, buyer can file an amended tax return to their 2008 tax returns if they buy a house in 2009, and still get the tax credit in 2009 instead of waiting!) They then receive the money as though they would be receiving a tax refund. Please know this is not a tax refund or a tax deduction, this is essentially a 0% interest loan.
*Must be a first time home buyer OR buyer can not have owned a home in the last three years.
*Buyer can claim a credit of up to 10% of the purchase price, with a max credit of $7,500.
*Repaid over 15-years with no interest.
*$500 per year repayment at time of doing taxes each year.
(Example: If buyer was expecting $1,000 back on taxes, buyer would only receive $500 back. If buyer had to pay $500 on taxes, buyer would actually need to pay $1,000. Caution - if buyer cannot come up with money at tax time there are penalties and fees!)
*If buyer bought/buys the house in 2008, and filed for tax credit on 2008 tax returns, buyer would not need to start repayment until 2010. (Credit available to home buyers after April 9th, 2008)
*If buyer buys a house in 2009, and filed for tax credit on 2009 tax returns, buyer would not need to start repayment until 2011. (Credit available for home buyers up until June 30th, 2009) (Please note the above - tax credit available immediately in 2009 IF buyer files amended tax return for 2008)
*Full $7,500 available for singles with gross income of $75,000 per year, OR joint filings with gross income less than $150,000 per year. The tax credit phases out from there until single filing reaches $95,000, and joint filings reach $170,000. After which no tax credit is available.
     *Important! If buyer is expected to pay (example) $4,000 in taxes on returns, and is applying for the $7,500 tax credit, the buyer would actually only receive $3,500. Vice versa if buyer is to receive $1,000 back on taxes, buyer would actually receive $8,500 back.
*No restrictions on location or type of house.
*No restrictions on what the money is used for. Can be used for remodeling, paying off credit cards, etc.
*Tax credit is not available for nonresident aliens, or if the home is anything other than a primary home.
*If buyer sells house before repayment period and has no gain on the sale, buyer will not be expected to pay the credit back. If the buyer has a net gain, the "recapture" cannot exceed the amount of buyers gain.
 
If you would like to investigate further, please visit www.federalhousingtaxcredit.com or call me anytime.
 
Information Provided by:
Zac Ellerbroek
Independent Mortgage Broker - Treadstone Mortgage
By now you've probably heard that Prudential Real Estate ranked "Highest in Overall Satisfaction for Home Sellers among National Full Service Real Estate Firms" in J.D. Power and Associates' 2008 Home Buyer/Seller Study. Of course, we are very proud of this distinction, as it underscores the quality of our affiliate companies and their hard-working sales professionals. We also realize the extensive marketing opportunities presented by this distinction. Accordingly, we've negotiated complete marketing rights for the study and for our favorable ranking. Prudential Real Estate has exciting plans to promote this distinction in a variety of venues and media. Likewise, each Prudential Real Estate affiliate will be able to display the J.D. Power and Associates trophy and award language on their advertisements, websites, business collateral and much more.

Displaying blog entries 1-10 of 15

Contact Information

Mark Brace, Realtor, ABR, GRI, CRS, SRES, e-PRO, A
Berkshire Hathaway HomeServices Michigan Real Estate
3000 East Beltline NE
Grand Rapids MI 49525
Direct: (616) 447-7025
Cell: (616) 540-7705
Fax: (616) 447-7025

Berkshire Hathaway HomeServices - Michigan Real Estate is a full service, locally operated real estate brokerage company backed by the strength of a solid national and global brand. Our full service businesses include Residential, Commercial, Relocation, Mortgage, Insurance, Home Services and New Homes & Land. Our core values, service philosophy, cutting edge technology, and most importantly our people are what make us the leading real estate company in Michigan. We are committed to providing the highest quality real estate services possible and making each customer's experience one that surpasses their expectations.