Bellingham Real Estate Journal

Housing issues have saturated the economy locally & nationally. Home prices have fallen to levels we have not seen in years, depending on individual markets. The most recent report from the National Association of Realtors indicates that home prices for the month of January fell by 14.8%. The good news however is that in contrast to fallen home prices the number of homes sold in December increased. Homebuyers from east to west have been buying distressed properties at the rate of 45% of total sales.

Now is the time to buy! Whether you are a first time home buyer or a seasoned real estate investor, don’t miss out on a great opportunity. Almost half of the properties being sold today are either owned by banks or homes on which banks are accepting short sales, allowing them to be sold for less than what is owed. Interest rates are near all time lows and first time home buyers can take advantage of the temporary tax credit for purchases made in 2009.

So, don’t sit on the fence and watch the great opportunity of homeownership pass you buy. Even if you believe that home prices will continue to decline, there is no guarantee that interest rates will remain at these low levels.

Here is a final point to consider: Did you know that even if home prices were to decline another 10% but also during this time interest rates were to increase by 1.00%, your monthly P&I payment (principle & interest) would actually be higher? Talk to your lender and he will tell you that this is true. So, get in the game. To quote an old saying “If you snooze you loose!”.

Did you know that there are several benefits of being a homeowner? Check out the following points:

TAX INCENTIVES FOR HOMEOWNERS

• The interest you pay on your mortgage is tax-deductible, up to $1 million. This deduction applies to any kind of home, including a second home under certain conditions.
• As a homeowner, you can deduct the local property taxes you pay each year, too. This applies to both your principal home and any others you may own.
• If you (or even the seller) paid points to the lender to secure your mortgage, you may be able to deduct those points on your taxes.
• If you purchase a home in 2009 (and have not owned a property in at least three years) you can take advantage of the new homebuyer tax credit. It does not require repayment if you hold on to your property for at least three years! That is an incentive of up to $8,000!
• Mortgage Insurance Premiums - Thanks to Congress, MI premiums can be deducted in most cases by home buyers for mortgages issued after 2006 and before 2010 (although Congress may extend this provision). This one has income limits, so ask your tax professional for help.
• New Standard Deduction - Prior to 2008, only taxpayers who itemized their deductions could deduct state and local property taxes. New legislation changes this for 2008 and 2009. Qualifying tax payers who don’t itemize but pay property tax, get up to a $500 extra deduction; married filing jointly get up to $1,000.

There are some special incentives as well:

• Tax-Free Profits on Sale - When you sell your primary residence, you can make up to $250,000 in profit if you’re a single owner, twice that if you’re married, and not owe any capital gains taxes.

Other Benefits - Ask your tax professional about Penalty-free IRA payouts for first-time buyers, home improvement deductions, energy credits, and even moving expense deductions.

It is a dream we all have - to own our own home and stop paying rent. But you might fee trapped, you might fee like you are stuck in the renter’s rut with no way of rising up out of it and owning your own home. Well, the truth is, there are some little known facts that can help you get over the hump, and transfer your status from renter to homeowner. Consider the following points:

You CAN buy a home with much less down than you think

You CAN ask the Seller to pay your closing costs

You CAN buy a home even if you have problems with your credit rating

You may be able to find a seller to hold a second mortgage for you (that is called “owner financing”)

You CAN & SHOULD get pre-approved for a home loan. You might think that you don’t qualify, but you won’t know for sure if you don’t ask. There are so many different loan programs available for all types of borrowers - you own it to yourself to inquire about your eligibility. There is no cost or obligation to make the inquiry. If you don’t qualify right away, your loan consultant can help you to reach that goal by creating an action plan (things that you would have to bring in order to qualify for a home loan). You might be only a few steps away, so take the time to explore your options now! If you don’t know where to go and who to ask, just call or email us, we are glad to help.

There are some other financial benefits of being a homeowner. Watch for our next blog!

Great news for those wanting to purchase property this year! President Obama signed the $790 billion stimulus package, which includes an up to $8,000 tax credit available to first time home buyers (those who haven’t owned in at least three years) for the purchase of a principle residence on or after January 1, 2009 and before December 1, 2009. The other good news is that the tax credit does not require repayment. You just have to hold onto the property for at least three years!

So, why not prepare yourself to jump on the boat and take advantage of this opportunity. It’s a great time to buy. Mortgage rates are exceptional low and with an almost 10 month housing supply there are lots of properties to choose from.

Having said that, make sure your finances are in order. Remember, because of increased delinquencies and today’s tougher economy, lenders have tightened standards for both new purchases and refinances. And while mortgage financing is certainly available and affordable to everyone who qualifies, you’re going to need a solid credit score, you’ll need to be able to document your income, and, if you’re purchasing a new home without a special government program from the VA or USDA, you’re likely going to need a down payment as well - at least 3.5% for an FHA loan. And there’s no stimulus bill or bail-out plan that is going to change this. So, if you’re looking to purchase a new home in 2009, take the time to locate the following items:

• Your W-2s and tax returns for the last two years;
• Your last three months of bank statements; and
• Pay-stubs for the most recent 30 days.

If you have not checked your credit in awhile you might want to do so now. A lot could have changed since the last time you checked it, good or bad, and you don’t want any surprises that might alter your plans. Your local lender can review your credit for you and let you know if there is anything that needs to be addressed.