There is a lot of chatter in the media how people need to put more money down when buying a home in Lynchburg, Bedford County or Campbell County Virginia.

While down payment requirements have increased for some programs, it is still possible to buy a home with less than five percent and also NO money down. Yes, you did read you can buy a home without a down payment.

The loan program that allows for you to qualify with as little as 3.5% down is one that is guaranteed by the FHA and the ones that allow for no down payment are those guaranteed by the VA and USDA.

Granted, there are restrictions with each of these programs that can include maximum loan amounts based on your location with FHA loans, income and property requirements for those offered by the USDA, and your qualifying status as an eligible Veteran.

However, the ability to purchase a home in the Lynchburg, Campbell County or Bedford County area with less than five percent down is still a possibility for millions of Americans.

Also, keep in mind that sellers may still offer concessions in the form of paying closing costs which can also decrease the amount of funds you may be required to have to purchase your next home in Bedford County or Campbell County or Lynhcburg MLS area.

Most people have no qualms about making an annual trek to their family physician to check their health. However, when was the last time you had your mortgage checked out? As a mortgage is often the single largest payment someone makes each month, it can also be the cornerstone in which a financial plan is based.

With interest rates near all time lows right now, many people may still be able to restructure their mortgage to free up cash that can be appropriated to other asset building investments or debt relief.

Pick up the phone and call your mortgage professional this month to determine if the mortgage you have still matches with your short and long-term financial goals. At a minimum, you may find that you are in great shape and no changes are needed. However, you may also find that you may be able to improve your situation.

In either case, you should be able to sleep better at night just knowing that you have checked to ensure that you are still on the path to where one day, you will either no longer need a mortgage or will have enough liquid assets to help you manage the situation to the best of your abilities.

Sometimes if I didn’t laugh I’d cry.  I choose to laugh.  I don’t care who tells you what about real estate in Lynchburg Va it is not easy to sell your home.  It is not easy to buy a home.  The home buying process is complicated.

Real Estate VooDoo Doll

Sometimes we have to jump through a lot of hoops to get to the settlement table.  This is what makes using a professional buyers agent or sellers agent so important in this real estate market.  As a professional we have a few tricks up our sleeve.  When necessary we must use a little real estate voodoo to get a house sold.

Recently a client of mine who purchased a home in the Lynchburg MLS area, in August of 2009 asked me about the new $6.500 federal tax credit for the “move-up” buyer.  This is available immediately upon enactment November 6, 2009. She wanted to know if she was eligible.  Here are the guidelines to qualify:

1. You must have owned and used your current home as your principal residence for 5 consecutive years out of the last 8.
2. Your adjusted household annual income cannot exceed $125,000 if you file your taxes as single or $225,000 if you are married and filing  jointly.
3. You have to sign a contract to purchase a replacement residence before April 30, 2010 and close on it by June 30, 2010.

This is potentially huge for many people who never thought they could qualify for a tax credit since they have owned their home for some time.  In fact many of my clients nose were out of joint because they felt they were hard working folks and never got a tax credit for purchasing a home.

Just because the $6,500 tax credit feature has been “labeled the move-up credit”, it  does not mean that you must purchase a bigger or costlier home.  You could always downsize & still take advantage of the credit.

If you have more questions about this topic or another real estate topic in the Lynchburg MLS area I’d be happy to talk with you.

Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to  $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.

In addition, you may be able to benefit from additional housing related provisions, including the following:

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Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

As always, if you have any questions about your specific situation or would like to discuss how you may benefit from this program, please call or email me. I’ll be happy to sit down with you.

After nearly two years of a downturn in the real estate market many people are hoping that the House and Senate will expand the tax credit to some existing homeowners and  extend the $8,000 tax credit for first-time home buyers until spring of next year. 

However, as of the writing of this post we don’t know yet what will happen.

We do know what has happened.  What has happened is that studies indicate that about 400,000 people bought a home and took advantage of of the tax credit.  Which sounds wonderful until you get to the bottom line where it has cost the tax payers over $30,000 for each home sold. Personally makes me wonder if this really is a good thing after all.  I think there is an argument that the free market could recover on it’s own.

None the less there are more plans on the table for the tax credit in a hope to be more inclusive and freeing up some credit for consumers.  While the uncertainty whether the extension will really pass remains in the air, the Senate is contemplating offering a new credit up to $6,500 for some existing home owners.  This new tax credit could be available to all home buyers who have been in their current home for a consecutive five-year period in the past eight years.

Being a devils advocate, I have to wonder how much this could help, because this does not allow those that purchased a home during the real estate boom to qualify.  Many people did purchase between 2004-2005.   In many cases this would mean if you did not jump on the real estate bandwagon then, you could be eligible for a tax credit if you did now.  For some reason this logic leaves me scratching my head.

Yes, I would agree, the real estate market has gotten  better since last year.  However, I am still seeing a decrease in Lynchburg area step-up home sales and the  Lynchburg real estate market for homes priced over $25o,ooo in this area than in the past.    Including current homeowners with the tax credit could be motivation for some homeowners that would not otherwise consider selling and buying another home, maybe.  I have my doubts though.

Washington has also discussed raising the income limits for the extension to $125,000 for single tax payers and $250,000 for joint taxpayers.  This would make the bill more inclusive.  The current plan being discussed and may be adopted states that purchase agreements must be ratified by April 30, 2010 and must go to settlement by June 30, 2010.

The vote still faces the full Senate and the House.  There is speculation that they may have a final vote by the end of the week.  No one knows if the extension will come to pass and even if it does who is to say this is what propels the real estate market forward.

I don’t mean to sound negative however, I think it will take more than a tax credit.  I also think people need to feel more secure in their jobs and more confidence in our economy.  Unemployment is still at a high.  Until unemployment  is on the way back down I don’t see people moving around a lot in this area. We may see some and this may help a bit. But as soon as I say that, on the flip side, I am reminded of the tax revenue that is not being generated as a result.  Remember Lynchburger’s are historically very conservative and slower to move than larger metropolitan areas.  What is your take?  Do you agree or disagree?

This video is a great example of how the home buying process could go when purchasing a bank owned or foreclosure property. It is very humorous but there is truth in the humor.

Have had a lot of emails and phone calls lately with regard to Lynchburg MLS.

I have been notified that our system is down and could be down for the next 24-48 hours.  They were replacing our server when the system crashed and are now in the process of restoring the data through backup.  They hope it would be down no longer than 24 hours but it could take up to 48 hours to restore.

There are two pieces of legislation that are impacting the real estate industry since the tightening of the lending practices.   These changes could lengthen the closing dates for purchase transactions.  I have seen it happen many times, even to well qualified buyers.

The first piece of legislation is the Home Valuation Code of Conduct (HVCC) which went into effect May 1, 2009.  The intent was to shield appraisers from undue influence from loan officers and lenders but installing a “fire wall” between the lender, underwriter and realtor from the selection of the appraiser.

HVCC also requires that borrowers receive a copy of their appraisal within three days prior of closing.  This means mailed within three days before closing.  The firewall required by this legislation means that the time that the appraiser actually gets the order to do the appraisal is longer and may take as much as two weeks or more after the agreement has been ratified.   Thus getting the appraial mailed within three days prior to closing is a challenge in some cases.

Housing and Economic Recovery Act – The HERA (Housing and Economic Recovery Act) amends and inpacts many different aspects of getting a mortgage such as:

1. The disclosures required for the borrowers
2. The timing of the delivery of such disclosures.

This minimum time requirement has forced the change of closing dates in quite a few transactions for buyers in the past few months.  Many times in mid-stream there are changes in the loan supplication that affect the Annual Percentage Rage (APR) and the entire process has to start all over.

Until these disclosures have been provided to or mailed to the borrow the only fees the lender may collect from the borrower is the credit report fee.  This could delay many aspects of the application process such as the appraisal.

Lastly the lender has always been required to provide a Truth in Lending (TIL) statement, which is the detail of the total expected costs that should be expected over the life of the loan.   The HERA states that should anything change in the loan application that could change the APR by more than .125% a new TIL must be reissued to the borrow a minimum of three business days before closing.  There are many things that could affect the APR such as:

1. Borrower accepting a higher rate of interest than initially qualified by floating their rate at application
2. A change in the loan amount
3. A change in product
4. A change in the closing date
5. Any changes in fees

There is more that I could say about the specifics of these legislative implications but my focus here is just to give you the basics.  In this climate I am recommending to buyers and sellers that we do not write into purchase agreements short closing time frames especially when financing is involved.  Ideally I would recommend no less than 45 days from ratification.

If you need information on how this will effect your real estate closing I would be happy to review your specific file individually.  Just give me a call or email me and I promise to follow up right away.