Brian Ripp ~ Your Bay Area & Fremont Real Estate & Financial Agent

Home buyer credit extension heads to Obama Congress passed a bill this week extending the deadline to close escrow and qualify for the federal home buyers tax credit. President Obama is expected to sign the bill extending the deadline to Sept. 30, 2010, instead of its original June 30 deadline.

KEEP THIS IN MIND

 • The bill extends the deadline to close escrow for home buyers who entered into a home purchase contract by the April 30 deadline. First-time buyers may be eligible to receive up to $8,000 and qualified existing homeowners may receive up to $6,500 if the home buyer closes escrow by Sept. 30.

• Home buyers entering into sales contracts May 1 or later are not eligible for the federal tax credit, but they may qualify for the California home buyer tax credit.

• The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® worked closely with members of Congress to extend the deadline. Estimates from NAR show nearly 180,000 home buyers nationwide would have missed out on the tax credit if the deadline was not extended, including nearly 17,700 home buyers in California.

• Many of the home buyers who would have missed out on the tax credit are in the midst of purchasing a short sale or foreclosure, which generally take longer to close due to the amount of paperwork involved in the transaction.

You know that when you are seeking a mortgage you should shop around for the best rate.  But because interest rates fluctuate, it is a good idea to consider locking your rate.  A rate lock, also called a “lock-in”, is a lender’s guarantee that you will get a specific interest rate and number of points if you purchase a home within a certain period of time.

If you do not complete your home purchase or refinancing agreement before the lock expires and interest rates happen to rise, you will pay the higher rate.  If interest rates happen to drop during the lock period, however, you cannot take advantage of them unless you rewrite the lock and pay an additional cost.

Before locking in a rate, keep these tips in mind:

• Get your guaranteed rate lock in writing.
• Lock in as many of the costs as you can, including the interest rate and points.
• Shop around.  Examine both the terms of the contract and its cost.  Some lenders charge an up-front fee, while others offer the service at no cost.

Governor Schwarzenegger today signed AB 183 providing $200 million for home buyer tax credits.  The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).  Buyers also must be at least 18 years old and be unrelated to the seller.  First-time buyers are defined as those who have not owned a home in the past three years.

 If you are interested in purchasing a new home, you’ll need to research your financing options.  One major part of financing is the annual percentage rate (APR).  As you enter into a deal, you will likely know your area’s prime interest rate, but you also need to learn about the lender’s APR.

 The APR is the final rate the lender charges you annually.  After adding on any loan fees that are involved and points that will be charged, the final rate will usually be higher than the prime interest rate.

 When applying for a mortgage, the lender must notify you about the APR within three days of receiving your application.  The APR may change before final settlement, but there are limits on how much it can change.

 So while shopping for a mortgage, make sure you know the annual percentage rate, as well as what you will have to pay for points, application fees and mortgage insurance.

 Being fully informed is the only way you will be able to make the best decision.

Foreclosures and bank REOs are pulling a new wave of novice investors into the market, some of whom are just a little clueless.

They see the price and they say, wow! I can buy that house and turn it into a rental.  But they don’t understand the local market, they don’t understand landlording, and don’t even necessarily visit the property.

 What are some of the key rules for freshman class investors?

      Number one: Due diligence is never optional. You’ve got to understand the local market – and that includes not just where prices are headed, but specific market demand for rental real estate in this price segment, and even the local government’s plans for the area where you’re thinking of buying.

      Number two: Buy with a written plan – that’s right, just like the large professional investors use, with an entry strategy and an exit strategy. How long are you going to hold onto the property, how much will it earn you during your period of holding?

      And what’s the endgame – a sale to another investor? Conversion to condos? Tear it down and build something that’s closer to the underlying real estate’s highest and best use?

      Write it all down, that way you can analyze it better.

      Number three: Calculate the actual costs of the property in advance – not just the bargain basement price, but how much you’ll need to fix it and feed it – the management costs, rental commissions, vacancy costs, taxes, to name just a few.

If you don’t know these things up front you are flying blind. And there are few good surprises in real estate.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com  serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp

 Many Americans believe that a lack of money for a down payment and closing costs is the biggest obstacle to homeownership, according to National Association of Realtors (NAR’s) 2009 National Housing Pulse Survey.  Job security is also a major concern.  Two-thirds of those surveyed think layoffs and unemployment are a big problem, and 8 out of 10 think those issues are a barrier to homeownership.

While three-fourths of Americans say declining property prices have made homes more affordable, 8 out of 10 say it’s harder to a home in their area today than it was a year ago.  Nearly half (44%) attribute their inability to sell to the large number of homes for sale in their market.

But respondents do expect to see home prices stabilize in the near future.  Nearly 7 out of 10 expect local home prices to stay the same over the next three months, while only 18% expect to see further declines, the survey finds.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com  serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp

The evening news is beginning to sound more and more like the children’s fable, Chicken Little – who proclaims “the sky is falling!”  With unemployment on the rise and an uncertain economy, buying a house may be the last thing on your mind.  But if you’ve been waiting to purchase a home, now may be the perfect time.  Here’s why:

* It’s actually more affordable now.  According to the National Association of REALTORS, the housing affordability index, which measures home prices, mortgage interest rates and family income, is more favorable now than any other time since NAR started the index 1970.

* You get a break on taxes.  As part of the American Recovery and Reinvestment Act, first-time buyers (anyone who has not bought or owned a home in the past three years) can take advantage of a tax credit up to $8,000.

* Big selection and big discounts.  There is a large inventory of homes on the market, so you have a variety from which to choose.  Many builders and home sellers are also offering incentives to help move inventory.  Not only are home prices low, but mortgage rates are lower than they’ve been in years.

* Price of ownership.  Want to paint your bedroom midnight blue? Go ahead.  In your own home, you get to make the decorating decisions that reflect your personal sense of style.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com  serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp

A surge in home sales that started in some of California’s more affordable inland areas has begun to spread to several more expensive coastal areas, another indicator that the state’s real estate market may be in recovery mode.

·         Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.

·         Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.

·         Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed.  Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates.  Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.

·         Although the median price in the state has risen for four consecutive months, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers’ problems getting jumbo mortgages to make purchases.

Bottom line is – it appears that we have hit the bottom of the market (if not, it’s really, really close) and if you have considered buying a home or condo, now is the time to start the ball rolling.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com  serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp

First-time home buyers wanting to take advantage of the state’s $10,000 tax credit may have less time than originally expected.  California set aside $100 million to help home buyers purchase newly built homes, hoping to jump start the residential-construction market.  According to state officials, the tactic has worked well and is helping to get  home buyers into the market.  However, there only is approximately 20 percent of the program’s funding remaining.

The program launched in March, and as of June 3 nearly $24 million in tax credit certificates already had been issued, according to the state’s Franchise Tax Board, leaving nearly $76 million in credit available.  Many applications still are in the pipeline awaiting approval.  If all of the submitted applications are approved, only $17.5 million would remain in the fund. 

 The California state legislature is considering adding another $200 million to the program.  However, securing approval may be difficult due to the state’s estimated $24 billion budget deficit.  A bill to extend the program already has won Assembly approval and now is awaiting activity in the state Senate.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com  serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp

If you are purchasing a home, obtaining a loan is a big part of the process.  Before you choose a mortgage lender, you may want to talk to a few lending institutions and ask them some questions.  Then use the information you gather as a basis for comparing loans and choosing the one that’s right for you.  Here are some questions to consider:

 What documents will I need to provide?  You will need to provide proof of income and assets, but the amount of necessary paperwork will vary somewhat from lender to lender.

            How much time will it take to process my mortgage loan application? It typically takes between 30-90 days, however, the actual time will be determined by how soon the lender can receive an appraisal of the property, verify your information, and obtain a credit report.

            What is the lowest acceptable down payment?  The amount of the down payment will determine whether you need private mortgage insurance (PMI) and will be a factor in the interest rate and loan terms you can receive.

            What is the annual percentage rate?  Keep in mind that after the lender’s fees are added, the rate may be higher than what you were initially quoted.  Ask if you can lock in the rate for a specific time period.

   Getting a mortgage is just one step on the road to becoming a homeowner, but with a qualified real estate professional on your side, you’ll achieve your dreams in no time.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp