The First Time HomeBuyer magazine » Alex

IRS Videos on YouTube May Help You Get a Bigger Refund.

Alex — Thu, 25 Feb 2010 19:10:25 +0000

The IRS has produced a series of videos that may help this years tax payers a bigger payback come April 15. The videos are featured on YouTube and cover new and little known tax deductions centered around the departments Recovery Acts, such as Making Work Pay, Vehicle Tax Deduction, and the New HomeBuyer Credit. Head over to the IRS’s YouTube channel and check them all out. Videos are available in English as well as Spanish. For more information on all recovery acts by the IRS go to IRS.gov/recovery.

Thanks Harland!

Seven-Year-Old Offers Loss Leader to Sell Parents Home.

Alex — Thu, 24 Sep 2009 13:56:06 +0000

…and the children shall lead them – to buy homes. CBS news reports in a slightly different story around extending the home buyer credit to include not just first-time home buyers but also move-up buyers. In this piece, reporter John Donovan observed Bella Segal, a seven-year-old girl who has set up a lemonade stand in hopes of helping her parents sell their home. She says “I was thinking that we could sell lemonade to get people to come see the house”. She’s selling the lemonade with cookie for $.50. Pony up $500,000+ and she’ll give you the cookies, juice and the house.

Kids say the darndest things.

While some home buyers are living it up with waving $8000 checks from their happy little palms, the middle market may still be struggling. After all many move up buyers are technically first-time home buyers who now need to relocate. After seeing her skills, forget what Bernake has to say. I’ll wait to hear what ideas little Bella has up her sleeve.

Source: CBS

Tax Credit Cheating: A No – No.

Alex — Tue, 18 Aug 2009 14:05:04 +0000

It seems that when you’ve got an opportunity to receive significant monetary assistance towards the purchase of buying our first homes, the existence of others trying to cheat the system for ill gotten gain rears its ugly head as well.

The Washington Post and Tulsa World news sites have both reported on instances where some type of tomfoolery has been attempted to get one of the tens of thousands of $8,000 tax credit checks offered to first-time homebuyers who purchase a home before December 1 of 2009.

The problem is the IRS calls this fraud.

Last month a tax preparer in Florida entered a guilty plea on federal charges of fraud in connection with the first-time-buyer credit. He’s awaiting sentencing and faces up to three years in prison, a $250,000 fine or both.

This fraud comes to consumers in various ways such as online ads from internet tax preparers claim to make your reporting job easier. The IRS even has a whistle blower award for those who help the government shine a light on those suspected of this fraud. You can download the form here.

http://www.tulsaworld.com/business/article.aspx?subjectid=15&articleid=20090807_15_E4_DearAc114636

Goodbye $8,000 Homeownership credit.

Alex — Tue, 18 Aug 2009 13:57:36 +0000

Yes it’s true. According to the National Association of Realtors, the last day to take advantage of receiving a check for up to $8,000 for buying a home as a first-time homebuyer (barring any rumored extensions) is November 30th , 2009. I know what your thinking “I thought it was December 1st?”

Technically the language is, before December 1st. So to be eligible to receive the credit by the end of this year you must have a closed deal – keys in hand – with all papers signed and submitted by November 30 2009 at 11:59PM. After that, the check you’d been banking on from the government turns into a pumpkin.

Given that it takes on average 45 days days to close on a home you’ve put an offer on, your most likely deadline to get an offer in is October 15. So time is tight. Some savvy sellers are beginning to become aware of this situation and are taking their place at the drivers seat of these transactions. Goodbye buyers market?

Not quite yet, but it’s not too late to take precautions to get the home you want and position yourselves to get that check by the end of the year. Realtor John MacGilvary offers 3 suggestions for first-time buyers:

Write a heart-felt letter to the seller letting them know how much you love their home and that you will take great care of it.
Structure your initial offer with your very best price and terms.
Be prepared to make offers on a least one home per week until you find a seller willing to work with you.

These are tips to literally take to the bank.

Source

Adventures in Homebuying: Multi-Unit properties.

Alex — Tue, 18 Aug 2009 13:54:29 +0000

Chicago real estate agency ‘Starting Point Realty’, which works exclusively with First Time Home Buyers, recently put out a release relaying a couples’ journey towards purchasing a multi-unit property as their first home.

The release also chronicles the rise and fall of multi-unit sales by investors who did not actually live in the property (Non-Owner Occupied), and the increase of inventory of these types of properties. In one specific area of Chicago, Lincoln Square, the multi-unit inventory outpaces that of single family homes.

Starting Point also notes that under FHA programs the buyer can put down as little as 3% toward the purchase of a home. And with the rise of foreclosed homes, FHA’s 203K loan program enables buyers can wrap the cost of repairs into their total loan amount – significantly reducing out of pocket expenses.

Starting Point Realty’s “human subjects”, Michelle Fischer and Joshua Knight went where few buyer dare to tread, selecting a home whose inspection came back noting massive repairs would be needed – not to mention the pair will now be landlords. Michelle stated “We’ve only owned the building for a few months and we’ve already made some major repairs, but we knew that going into it. Having a knowledgeable real estate agent and inspector is crucial when buying a multi-unit building so you know what you’re getting into”. Click through to the press release to read more. Is this is a home ownership route you’ve been considering?

Source

An Extension to the $8,000 Home Buyer Tax Credit?

Alex — Tue, 21 Jul 2009 12:24:57 +0000

Jerry Giovaniello, a National Association of Realtors’ lobbyist, feels as if there might be a shot – about 50-50 – of congress extending the credit beyond the December 1st cut-off.

That’s not all that’s in the mill on Capitol Hill. A new bill could require an inspection to determine the energy efficiency of a home before it’s sold. For home buyers, especially in the northeast, home energy prices are a post-sale “gotcha” that can reak havoc on the most iron-clad family budgets. This can leave buyers scrambling to make ends meet at the high end of the spectrum.

According to the article posted by Las Vegas Review Journal, a home buyer credit increase to $15,000 is also on deck, but would up costing the Treasury. Giovaniello is betting that current home buying challenges, which are now plaguing the children of many in seated in Congress, could work in his favor.

The Road to 850: Proven Strategies for Increasing Your Credit Score – Book review

Alex — Tue, 16 Jun 2009 13:43:26 +0000

A few weeks ago I ran into an old friend. While we caught each other up on what had been happening since we last saw one another, he asked what I did. This question led to his sharing credit-score issues he’s grappling with, specifically how to maintain and keep his score high and avoid the fluctuations many of us experience when we monitor our reports.

Around the same time, a book came across my desk for review, The Road to 850: Proven Strategies for Increasing Your Credit Score by Al Bingham (Paladin Press). Many books explain credit scores, but I prefer suggesting books on complicated topics such as credit scores and reporting to be simple and easily digestible to novices. More importantly, it should allow the reader to take simple actions, although some are not easy, toward hitting their particular goal. The Road to 850 seemed like it might be that type of book.

In 1995, credit scores were made officially available, and 850 is the highest score that reporting agencies give to represent creditworthiness. The author begins the book by explaining the cost of your credit score. Nowadays your credit score can affect everything from your job and career choices to what you’ll pay for insurance. For example, a score of 680 could cost you about $20,000 more than an 850 score on your home mortgage. The same difference can add an extra $150 annually to your insurance premium.

The book mentions the three major reporting agencies, Equifax, Experian, and TransUnion, and explains what gets reported to them and what they report. It gives insight into how your score is derived. Each line is well explained to make sense out of a report that can look confusing.

Confusion of credit scores is common, and for good reason. Even if you know your score and are familiar with how to read your report, there are additional credit-scoring models that may show you one score when you’re at home and another when your lender pulls a report for you. To keep confusion to a minimum, the author recommends that you use one service for your credit-score monitoring, just to see how you much your score has gone up or down.

It’s been widely noted that inquiries from various financial institutions may affect your score. The author explains how reporting agencies classify inquiries by who made them, whether it is a bank, utility company, mortgage lender, finance company, or others. Multiple inquirers have minimal impact on your score, but when you shop for a home or car, auto and mortgage inquiries can be handled differently from other inquiries. The classic model gives fourteen days to choose financing when you are shopping for a car or home.

The author recognizes how life events may have an affect on your score. He goes into details on events such as moving, divorce, foreclosure, and bankruptcy, among others. He gives healthy caution on the use of credit-repair companies, because some can do more harm than good.

Finally The Road to 850 lists the credit score codes, the sometimes-cryptic sentences that accompany a report, and enlightens us on their true meaning. He also strongly recommends that you contact a service professional with matters that pertain to you specifically.

After heading down The Road to 850, I’ve found it is a book I’ll refer to my old friend. Take a look for yourself. It’s worth it.

Kiplinger writer shares her home buying tale, and offers tips.

Alex — Fri, 24 Apr 2009 18:00:51 +0000

Cameron Huddleston’s first time home buyer experience may be similar to some of you who’ve recently walked the seemingly winding path to home ownership. The big difference here is she gets to share her experience, and very timely home buying tips, with the entire world as a writer for Kiplinger.com.

The home buying process while generally an enjoyable experience overall, may have some hurdles along the way. With her husband in tow (or maybe it was the other way around), they both learn important actions to take regarding searching for a home online, home inspections, and the closing process to name a few. The move had been initiated by Cameron’s husband needing to relocate for a new job. Unfortunately, in some respects, they had to learn a couple lessons the hard way.

For instance, during what I’d call a worrisome game of ‘Whose house is this?’, Cameron recounts arriving at “their” new home to find the original owners still occupying the space – and not packed.

Whoa…

So with all of that behind her and just a little but wiser, Cameron offers her own 7 crucial tips for first-time buyers:

Lay the groundwork.
Take your time.
Realize you won’t find the perfect home.
Accompany the inspector.
Pay attention to the little things.
Be ready to negotiate.
Don’t spend all your money on the down payment.

P.S. Number 7 is my number 1.

California First-Time Home Buyer Program Turns $1,000 Into $4,000.

Alex — Wed, 22 Apr 2009 02:40:57 +0000

The Federal Home Loan Bank of San Francisco announced today that they will award $10 million in matching grants for buyers it serves in California, Arizona and Nevada. According to their press release, The Bank allocated $6.7 million for the Workforce Initiative Subsidy for Homeownership (WISH) Program and $3.3 million for the Individual Development and Empowerment Account (IDEA) Program to 32 members.

There are income qualifications for both programs (officially up to 80% of your regions median income) so you must contact your participating bank. Qualifying for the WISH or IDEA programs means that home buyers will see a $3 match for every $1 contributed. The money can be used for down payment and closing costs, opening a path to home ownership that is normally its’ greatest challenge.

For more info go to www.fhlbsf.com. Read the rest of this press release at Earth Times.

The Home Warranty: Peace of Mind for New Homeowners

Alex — Sun, 05 Apr 2009 11:26:43 +0000

What’s the warranty? Ask this question to a salesperson at your local electronics or appliance store, and instantly you’re presented with right-off-the-top-of-the-head answers like “ninety days,” or “one year parts and labor,” which might put your mind at ease when you make a major purchase. Even automobile manufactures aggressively tout their respective warranties to assure you of their product’s soundness and reliability in relation to what you’re paying.

Most of these purchases pale in comparison to the price of a home, yet rarely are any warranties offered or even asked for that protect you, the buyer, in the event an unforeseen repair rears its ugly head.

Why is this? Maybe we’re just excited to get our first home, and we’ve decided on a payment that is comfortable for us, so we forget to consider the hundreds of thousands of dollars the home cost to purchase. Hundreds of thousands of dollars–that’s a lot of money to someone just starting out. If your budget is tight, you may want to leave surprises like a water heater replacement, or an oven that decides not to work anymore, to chance. A good real estate agent may be able to sniff out potential problems by pointing out items that you may have overlooked; that’s part of their job. As we run around our potential home happily deciding where the flat screen will fit into the current décor, our agent must also be able to ground us by offing suggestions on how to handle potential problems that may arise from the home systems and appliances that you’ll be taking over once you buy. One tool that your real estate agent can suggest is a home warranty.

A home warranty is a guarantee given to the purchaser stating that the home, as well as key items in the home, is free from known defects and that the purchaser will receive repair or replacement of defective parts or items within a given time limit (usually one year).

*For a small fee, generally around $400, the warranty pays for repair or replacement of any covered home system or appliances. Typically you would be covered for the heating, electrical, plumbing, and the air conditioning. You will also be covered on major appliances like ovens, cook tops, dishwashers, and refrigerators.

Sometimes the seller may purchase the warranty beforehand to use as negotiation leverage or to help the home sell faster, especially if it’s an older home. A real estate agent may offer it as a post purchase gift. Many times the warrantee is purchased by the buyers to give them peace of mind regarding the whole transaction.

*Once you are in your home, if a repair or replacement is needed, you would pay only a deductible for the service–around $60, so you still have to come up with some money if your oven bites the dust, but it’s much less than if you had to purchase another one.

*The average costs to repair or replace mechanical systems in the home are as follows:

Furnace – $1,200 to $3,500
Air conditioning – $1,500 to $2,100
Water heater $375 to $425
Broken water pipe $100 to $600

As you can see, these costs can add up quickly. A home warranty helps control costs for new homeowners who may not be equipped to handle an additional payment load during the first year after closing.

There are a plethora of companies that offer home warranties. When you begin your search, comparison shopping should be an integral part of your decision. While all warranty companies offer essentially the same benefits, some may offer additional perks, such as extending the warranty longer than the first year, purchasing additional coverage for items not included in the original plan, and larger contractor networks, which are the local shops that would be handling your claim, should you need one.

Also, be sure to read each company’s contract completely before you sign anything. These contracts vary greatly, and while most cover some wear and tear items like switches and knobs. It’s rare to find any warranties that cover accidental damage, which could create an uphill battle for people who are unaware of the insurer’s policies.

Some new homeowners may opt to forgo the warranty offer in lieu of creating an emergency fund, a savings plan separate from their primary saving that would be used if an unfortunate situation were to occur with items in the home. A fund such as that one is a great idea and is recommended whether you have a home warranty or not. While costs for repairs may be lower with a warranty, it always feels better not to have an unexpected expense interfere with your day-to-day budget.

In addition to setting aside funds for emergencies, always be sure to confirm all potential contractor’s licenses and current insurance before they perform any service on your home. Most states hold the homeowner responsible for unfinished work left by contractors that do not have the proper credentials, so do some investigating, or you may get stuck with costly reworking of the original repairs.

Regardless of which route you take–home warranty or an emergency fund–having a plan to help control costs during the honeymoon phase of your new home does wonders for easing your mind, not to mention your pocketbook A home warranty, whether you, the seller, or the real estate agent purchases it, might be the tool you need for ease of mind.

Source: Based on a nationwide survey of the independent network of service professionals who estimate the range of retail costs for the repairs and replacements (courtesy: HMS National).