Congress giving homebuyers a $6,500 tax break

By STEPHEN OHLEMACHER, AP

Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include buyers who already own homes. The House could vote on the bill as early as Thursday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn’t owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

“This is probably the last extension,” said Sen. Johnny Isakson, D-Ga., a former real estate executive who championed the credits.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

“We are still in a world of economic hurt, and Congress must continue to act boldly and creatively,” said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. “With the right mix of tax breaks and investments we will get through this recession and get folks working again.”

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

“For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home,” Bond said. “And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place.”

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.

The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.

The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.

“It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns,” said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

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The bill is H.R. 3548.

As I was doing my weekly reading, I stumbled accross a couple articles about common questions first time home buyers may have. I decided to compile a few for your knowledge. What are your questions, first time home buyers or not? I will add them to my blog with my own professional answers!

Why should I buy, instead of rent? A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up most of your monthly payment for most of the years of your mortgage. You can also deduct the property taxes you pay as a homeowner. In addition, the value of your home may go up over the years. Finally, you’ll enjoy having something that’s all yours – a home where your own personal style will tell the world who you are.

How does purchasing a home compare with renting? The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing. Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

Can I become a homebuyer even if I have I’ve had bad credit, and don’t have much for a down-payment? You may be a good candidate for one of the federal mortgage programs. Start by contacting one of the HUD-funded housing counseling agencies that can help you sort through your options. Also, contact your local government to see if there are any local homebuying programs that might work for you. Look in the blue pages of your phone directory for your local office of housing and community development or, if you can’t find it, contact your mayor’s office or your county executive’s office.

What if my offer is rejected? They often are! But don’t let that stop you. Now you begin negotiating. Your broker will help you. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs that wouldn’t normally be expected. Often, negotiations on a price go back and forth several times before a deal is made. Just remember – don’t get so caught up in negotiations that you lose sight of what you really want and can afford!

So what will happen at closing? Basically, you’ll sit at a table with your broker, the broker for the seller, probably the seller, and a closing agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you’re signing. After all, this is a large amount of money you’re committing to pay for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a “good faith estimate” of how much cash you’ll have to supply at closing, and a list of documents you’ll need at closing. If you don’t get those items, be sure to call your lender BEFORE you go to closing. Be sure to read our booklet on settlement costs. It will help you understand your rights in the process. Don’t hesitate to ask questions

What should I look for when deciding on a community? Select a community that will allow you to best live your daily life. Many people choose communities based on schools. Do you want access to shopping and public transportation? Is access to local facilities like libraries and museums important to you? Or do you prefer the peace and quiet of a rural community? When you find places that you like, talk to people that live there. They know the most about the area and will be your future neighbors. More than anything, you want a neighborhood where you feel comfortable in

How can I find out about local schools? You can get information about school systems by contacting the city or county school board or the local schools. Your real estate agent may also be knowledgeable about schools in the area.

What other tax issues should I take into consideration? Keep in mind that your mortgage interest and real estate taxes will be deductible. A qualified real estate professional can give you more details on other tax benefits and liabilities.

What questions should I ask while looking at homes? Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete. Ask questions until you understand all of the information they’ve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list.

What does a home inspector do and how does an inspection figure in the purchase of a home? An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs,that are needed. The Inspector does not evaluate whether or not you’re getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.

It’s a good idea to have an inspection before you sign a written offer since, once the deal is closed, you’ve bought the house as is.” Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection t clause gives you an ‘out” on buying the house if serious problems are found,or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.

Do I really need home owners insurance? Yes. A paid homeowner’s insurance policy (or a paid receipt for one) is required at closing, so arrangements will have to be made prior to that day. Plus, involving the insurance agent early in the home buying process can save you money. Insurance agents are a great resource for information on home safety and they can give tips on how to keep insurance premiums low.

What is earnest money and how much should I set aside? Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.

What are home warrenties and should I consider them? Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner’s insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped.

How large of a down payment do I need? There are mortgage options now available that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you’ll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you’ll also need money for closing costs, moving expenses, and – possibly -repairs and decorating.

What is included in a monthly mortgage payment? The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner’s insurance, and mortgage insurance (if applicable).

What should I look for during the final walk through? This will likely be the first opportunity to examine the house without furniture, giving you a clear view of everything. Check the walls and ceilings carefully, as well as any work the seller agreed to do in response to the inspection. Any problems discovered previously that you find uncorrected should be brought up prior to closing. It is the seller’s responsibility to fix them.

What can I expect to happen on closing day? You’ll present your paid homeowner’s insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc.

Once you’re sure you understand all the documentation, you’ll sign the mortgage, agreeing that if you don’t make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses. You’ll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed.

You’ll pay the lender’s agent all closing costs and, in turn,he or she will provide you with a settlement statement of all the items for which you have paid. The deed and mortgage will then be recorded in the state Registry of Deeds, and you will be a homeowner.

Email me with your questions!!

questions & answers from www.hud.gov

Legislation that requires lenders to notify borrowers of their eligibility for loan modification if they are at risk of losing their homes to foreclosure went into effect Monday.

Senate Bill 628 was championed by Sen. Suzanne Bonamici (D – Northwest Portland/Beaverton) during the 2009 Legislative Session and signed into law by Gov. Ted Kulongoski in July.

Under the new law, before a lender can foreclose on a property, the lender must send the borrower a notice explaining that the borrower may request a loan modification and may also request a meeting with the lender. Loan modifications can lead to lower monthly payments that will enable some borrowers to keep their homes.

“The statistics on foreclosures in Oregon are alarming,” said Bonamici. “In Oregon, the foreclosure rate more than doubled in the last year. This new law delivers real help right now for struggling families across the state.”

One of the key problems in the foreclosure crisis is that lenders and borrowers aren’t communicating, she added. The new law changes the foreclosure process to promote discussions about realistic options for the homeowner.

Under SB 628, lenders must include with foreclosure notices information about homeowners’ rights and a loan modification request form. In addition, the lender must respond to a borrower’s request for loan modification and, if requested by the borrower, participate in a meeting

To ensure compliance with the law, lenders must record an affidavit describing how they complied with the statute.

SB 628 also directs the Department of Justice to appropriate funds for additional housing counselors to help homeowners through this process. These funds will come from a legal settlement against a national mortgage company.

Homeowners who receive a foreclosure notice should take one of the following steps immediately:

• Call their lender to set up a meeting to discuss a loan modification. The

meeting can be in person or by phone.

• Complete and return the loan modification request form provided in the foreclosure notice within 30 days.
• Call 1-800-SAFENET and ask to be referred to a nonprofit foreclosure counselor. The counselor can help the homeowner request a loan modification.

For more information about foreclosure and the new law, Oregonians should call the Department of Consumer and Business Services at 503-947-7854 or go to www.foreclosurehelp.oregon.gov.

I have been reading a fabulous book lately that I really wanted to share with you.  It’s called “The Power of Focus” by Jack Canfield, Les Hewitt, and Mark Victor Hansen. These authors also took part in writing the Chicken Soup for the Soul series.  It’s not just another self improvement book that you read and then it lands on the bookshelves for the next several years.  This book is interactive with homework assignments at the end of each chapter.  For those looking for some serious change in their lives, both personal and professional, this is the book to read.  It’s introspective, enlightening and not for the faint of heart.  It makes you ask the tough questions and requires you to take action for a real permanent transformation.

At Keller Williams Realty we have been reading this in our current book club.  This is a book that can also be read more than once and continues to open your eyes. Our Team Leader has encouraged us to complete the homework assignments in the book and to re-read the book each year. You can review the transformations that you took a year ago and remind yourself what your strengths are and how to utilize them. It has been a joy to examine this book with 15 other motivated professionals.

Not only is this book perfect for the professional setting, these wonderful authors have also written The Power of Focus for College Students, The Power of Focus for Women, and The Power of Faithful Focus.  I encourage you to pick up a copy for yourself, your spouse, and your older children. You won’t be disappointed.

The Power of Focus

Facebook is all the rage, but is it here to stay or just another passing fad? Recently my daughter set up a Facebook page for me to network with friends and business associates.  In just a few short months I have reconnected with old high school friends, a realtor that sold me a house 17 years ago and relatives I only used to talk to once every 4 years when someone either died or got married. I am also able to see photos of their kids, vacations, and get status updates as to their day to day activities. But come on…I don’t really want to know if someone is finally catching up on 7 years of back taxes, although I am sure the IRS would be interested and I really do not want to be poked or prodded, take any ridiculous trivia quizs (particular the IQ test) and invited to join the mafia….even if my nickname is Baby Face Nelson.  Kidding aside, it’s a great way to stay in touch and share ideas, hopes and dreams. Recently one of our Keller Williams associates lost a son and he received over 700 messages on facebook from those wanting to send their condolences. He was overwhelmed and touched.

While attending the Keller Williams National convention in Orlando Florida last month I was introduced to a really cool technology gadget for both business and personal use.  It’s the Flip Mino HD handheld camcorder.  It’s currently the world’s smallest camcorder with high definition and cinematic widescreen capability.  It will take up to 60 minutes of video and has a USB port that will directly upload video to YouTube and MySpace.  It’s small and compact and simple to use…even this old dog can use this camera. At the low cost of $189 it’s a great was to capture those special moments and share with friends and family. Visit the flip website for more information.

A Sense of a Goose

When you see geese flying along in “V” formation, you might consider what science has discovered as to why they fly that way. As each bird flaps its wings, it creates an uplift for the bird immediately following. By flying in “V” formation, the whole flock adds at least 71 % greater flying range than if each bird flew on its own. People who share a common direction and sense of community can get where they are going more quickly and easily because they are traveling on the thrust of one another. When a goose falls out of formation, it suddenly feels the drag and resistance of trying to go it alone – and quickly gets back into formation to take advantage of the lifting power of the bird in front. If we have as much sense as a goose, we will stay in formation with those people who are headed the same way we are. When the head goose gets tired, it rotates back in the wing and another goose flies point. It is sensible to take turns doing demanding jobs, whether with people or with geese flying south. Geese honk from behind to encourage those up front to keep up their speed. What messages do we give when we honk from behind? Finally-and this is important-when a goose gets sick or is wounded by gunshot, and falls out of formation, two other geese fall out with that goose and follow it down to lend help and protection. They stay with the fallen goose until it is able to fly or until it dies, and only then do they launch out on their own, or with another formation to catch up with their group. If we have the sense of a goose, we will stand by each other like that.

Author Unknown

Every year, Keller Williams has a wonderful convention called Family Reunion. The point is to gather the agents from Keller Williams Realty from all over the country together to share, learn, and have a wonderful time together. This year, fortunately, it was based in Orlando, Florida, which was perfect, considering the weather we have had lately in Portland… (I took advantage of the beautiful weather there.)

The convention was AWESOME! Not only did I get the opportunity to spend quality time with the people I traveled with from our Sunset Corridor office, but I got to learn from the pros; the people who have learned what works! After returning from this trip, I am so motivated and have really been reminded what I love about this company and real estate. I learned how to make those changes from my every day routine so I can increase my sales and be more effective. I talked to many people who are very successful and they were so open and willing to share what has worked for them.

It was so refreshing to see all of the agents who really exemplify what this company is all about. Teamwork, sharing, helping each other, because, in the end, we are a team. We learned that Keller Williams is now the #3 real estate company in the country(!!!!) moving from the #4 spot last year, and that Keller Williams was the only company with profits this last year, and most importantly, there were no lay offs at the corporate level!

Also, our particular office, Keller Williams Sunset Corridor, won three awards!! Our hard work has paid off! We are very proud of our team leader, Beth King, and all of the hard work she has done to help us get where we are.

I am excited to return next year to the Family Reunion, which will be in New Orleans!

Here is a quote from the CEO of Keller Williams, Mark Willis:

“The success of Keller Williams Realty can be directly attributed to the hard work and perseverance of our associates and the soundness of our economic and organizational models,” said Mark Willis, CEO of Keller Williams Realty, Inc. “While others might be looking at this market and seeing fear and uncertainty, we have always approached it as our opportunity to shine and grow. And that mindset has paid off.”

Check out the full article here

Barbara Nelson
Keller Williams, Sunset Corridor
503-803-0562
barbara@noplacelikeportland.com

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During Thomas Jefferson’s presidency he and a group of travelers were crossing a river that had overflowed its banks. Each man crossed on horseback fighting for his life. A lone traveler watched the group traverse the treacherous river and then asked President Jefferson to take him across. The president agreed without hesitation, the man climbed on, and the two made it safely to the other side of the river where somebody asked him: “Why did you select the President to ask this favor?” The man was shocked, admitting he had no idea it was the President of the United States who had carried him safely across. “All I know,” he said, “is that on some of your faces was written the answer ‘No’ and on some of them was the answer ‘Yes.’ His was a ‘Yes’ face.”

 

Check out my new blog at http://activerain.com/blogs/rubyslippersinc

I will continue to post here as well, but it is just another place for my blogs to be read.

Thanks!

Barbara Nelson
Keller Williams Realty, Sunset Corridor
Direct: 503-803-0562
Office: 503-270-5604