Monthly Update – March

By Rob Morel on February 28, 2009

During February there was a lot of activity by the government to finally do something to turn the housing crisis around.  The American Recovery and Reinvestment Act of 2009 was signed by the President and made law on February 17, 2009. The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.

There are many provisions in this bill that will have an impact on the financial markets and the housing markets so if you are a homeowner looking to refinance, or are facing foreclosure, or are looking to buy a home, it would be important to read about the provisions of the bill as it will most likely affect you and you could take advantage of its benefits. 

The part of the Recovery and Reinvestment Act that deals with the housing and financial markets is known as the Homeowner Affordability and Stability Plan, which will offer assistance to as many as 9 million homeowners, while attempting to prevent the destructive impact of foreclosures on families and communities.  Here is a nice concise fact sheet released by the Department of Treasury that gives an outline of the plan and highlights the main points:

Homeowner Affordability and Stability Plan Fact Sheet

Perhaps the most important feature for first-time home buyers is the new tax credit that the government is now offering.  This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim 10 percent of the purchase price up to $8,000, on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.  Here is the article on the IRS website:

Expanded Tax Break Available for 2009 First-Time Homebuyers

And here is the form you need to apply for the tax credit:

Form 5405

Finally, aside from all the government incentives, property prices have fallen to 2002 levels which in many cases is a 40% drop.  Here is the LA Times article that discusses this and also shows some graphs to illustrate:

Southern California home prices fall, affordability returns to normal

I would really appreciate any feedback you may have about any of these articles and if you want more specific information about how these will affect you or how you can take advantage of the new incentives, please don’t hesitate to contact me.

What’s New for February

By Rob Morel on February 4, 2009

There is a lot of uncertainty right now about the real estate market, the lending market, and the general state of our economy. Everywhere I go people have the same questions: Is it a good time to buy? Should I refinance? Can I qualify for a loan? Are interest rates going to increase or decrease? I have selected some articles that hopefully can answer some of your questions but because everyone is different and has a unique situation, please feel free to call or email me with your questions.

Most recently the House of Representatives passed President Obamas economic stimulus package of $819 billion dollars. This bill also needs to be approved by the senate and then needs presidential approval but there are some good features for the housing market in the bill, namely a $7,500 tax credit for first time home buyers. Originally this was a loan that had to be paid back but as the bill now stands, it would be a free credit to homebuyers. This article explains more about it: http://money.cnn.com/2009/01/29/real_estate/tax_credit_near/index.htm?postversion=2009012907

Also if you want to read more about the stimulus bill and its provisions I found this article helpful: http://online.wsj.com/article/SB123315486943524321.html

Finally, this is a good short article about mortgages if you’re planning on assuming a new loan or thinking about refinancing: http://www.businessweek.com/lifestyle/content/dec2008/bw20081230_361031.htm

I’d be happy to hear what you think about any of these articles.