Home Buyer’s Down Payment FAQs

Home Buyer’s Down Payment FAQs

With today’s combination of lower home prices, some of the lowest interest rates the industry has ever offered, and the $8000 tax incentive for first-time buyers, buying a home has never been so attractive. The only real hurdle left for many Americans is coming up with a down payment. With this in mind, we’ve put together some of the most frequently asked questions we get about down payments in today’s market.

Q. Are there any no-down payment programs left?

Yes. While it’s true that most of the popular no-down payment programs disappeared in the wake of the subprime mortgage collapse, there are still two longstanding government-backed programs that offer mortgages with no down payment: the USDA Rural Development Program and the VA Loan Program.

A USDA Guaranteed Loan is a government-insured, 100% purchase loan. This means there is no down payment required if you – and the house you intend to buy – qualify for the program. Not all areas qualify, but you’d be surprised at how many neighborhoods in your area do. There are income and other limitations, but if coming up with a down payment is challenging, you might want to consider this program.

If you or your spouse is a military veteran, you may qualify for a 100% financed loan from the US Department of Veterans Affairs. More than 29 million veterans and service personnel qualify for this service benefit. Give us a call to find out if you’re one of them.

Q. Are there any other government-insured programs that can help someone struggling with a down payment?

Yes. In 1965, the federal government created the FHA loan programs to encourage homeownership throughout the country. FHA-insured mortgages offer many benefits, including a minimum down payment of 3.5%. FHA-insured loans have grown in popularity recently due to the seller’s ability to pay closing costs up to 6% and a temporary increase in loan limits up to $729,750 in certain high-cost areas, which allows more potential buyers to utilize this program.

Q. May I use a gift from family members as part of my down payment?

Yes. In many cases, immediate family can provide monetary gifts to be used as a down payment. There are restrictions of course, and strict documentation will be required, but we will gladly walk you through the finer details of this process. Be sure to mention this option when you’re filling out an application with us.

Q. May I use funds from my IRA for my down payment?

Yes. First-time home buyers can use funds from an IRA under certain circumstances for a down payment. The rules regarding this option, however, can be complicated, especially with a Roth IRA, and it’s important to understand any and all tax implications before tapping into these accounts. Please talk to your tax professional before making any decisions. If you don’t have one, we’ll gladly refer you to one we work with on a regular basis.

Q. May I use the $8,000 tax credit as my down payment?

No. At the time of the writing of this article, qualified first-time home buyers do not have direct access to the $8,000 credit to use as a down payment. In May, HUD officials made an announcement to the contrary, but statements backing the announcement were quickly withdrawn from the HUD website. This doesn’t mean that HUD and lawmakers will not allow this in the future. We’re following this issue closely and will let you know if anything changes. Just keep reading our newsletters and other materials we send to you or give us a call and we’ll let you know if any progress has been made.

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$100 million new CA home tax credit nearly gone

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$100 million new home tax credit nearly gone

The Franchise Tax Board (FTB) recently announced that the $100 million allocated by the state in new home tax credits will soon be gone. The FTB has received more than 9,800 applications, claiming nearly $95 million as of June 17, and plans to accept 12,000 applications to allow for duplicates, revisions, or invalid applications.

This tax credit is available for qualified buyers who, on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date. To apply, an application for new home credit must be completed by the buyer and seller within one week after the close of escrow and faxed by the escrow person to the FTB at (916) 845-9754.

The FTB will continue to report the certificates issued on a weekly basis until the full $100 million has been allocated. FTB expects to complete processing all certificates in August. Each applicant will receive a notification indicating the amount of credit allocated or denied.

Requirements of the credit

* The home must be a “qualified principal residence” as defined under California Revenue and Taxation Code Section 17059(b)(1). The home must:
o Be a single-family residence, whether detached or attached.
o Never have been previously occupied.
o Be occupied by the taxpayer for a minimum of two years.
o Be eligible for the property tax homeowner’s exemption under California Revenue and Taxation Code Section 218.
* For over three successive taxable years, the total credit allocated among owners that occupy the home must not exceed $10,000. (Multiple qualified buyers that occupy the home will be allocated credit based on the amount paid and their percentage of ownership.)
* Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.
* FTB may request documentation to ensure buyers have complied with the requirements of the credit.

Contact FTB

Phone:

* 888.792.4900 (press 5)
* 916.845.4900 (not toll-free)

Email: wscs.gen@ftb.ca.gov
This is not a secure email address. Please do not send confidential information.

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Foreclosure Prevention: New Program Shows Big Jump #realestate

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The government seems to finally be making progress in its efforts to stem the foreclosure crisis. Housing and Urban Development officials say that lenders extended loan modification offers to 40,000 borrowers who were struggling to pay their mortgage in the second week of June. That is nearly triple the weekly average of about 15,000 workouts loan servicers had extended in the prior 10 weeks since the government’s latest foreclosure prevention plan was announced.

“Foreclosures were becoming a self reinforcing problem for the housing market,” said HUD head Shawn Donovan, speaking at last week to journalists at the National Association of Real Estate Editors annual conference. “Already, we are seeing signs that the housing market is better off than when President Obama took office.” See the book: House of Cards: The Faces Behind Foreclosures.

Of all the problems related to the financial crisis, rising home foreclosures has been one of the most persistent and toughest to solve. One plan, Hope for Homeowners, which was launched by the government with much fanfare last fall, has helped just 51 borrowers get lower-cost loans. Another program, the Hope Now Alliance, which is a voluntary effort put forth by lenders, has reached over 4 million borrowers. But it is estimated that less than a quarter of those borrowers assisted in the lenders’ program ended up with more affordable loans. In fact, many of the borrowers “helped” by the Hope Now Alliance have actually seen their monthly fees to up, as lenders spread unpaid balances over future months, rather than forgiving part of what was owed.

In March, the government launched Making Home Affordable program. The plan’s biggest difference is that the government agrees to pay servicers a few thousand dollars per loan they modify, depending on when they make the offer and how successful it is. The longer the homeowner stays current on the loans, the more a loan servicer would receive. The government also pledged $10 billion to offset the losses that banks and mortgage investors might suffer because of the modifications.

At first the plan, like the ones before, seemed to get off to a slow start. But in the past few weeks, the government’s efforts seem to be attracting more and more lenders who are willing to lower monthly payments and make other modifications that will help troubled borrowers keep their houses.

Still, some consumer advocates say the government’s latest effort does not go far enough. Even if the 40,000 modifications—a—week pace is sustainable, that means the government’s plan will only reach just over 2 million troubled borrowers in the next year. That’s far fewer than the estimated 6 million American homeowners who are at risk of facing foreclosure in the next year or so. And those estimates of likely foreclosures have been rising recently.

“It’s too early to tell how many people the program will help,” says Ken Wade, the head of NeighborWorks, a national foreclosure mitigation counseling service. “Servicers are still not responding to troubled borrowers as fast as they should.”

By Stephen Gandel Monday, Jun. 22, 2009

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• Obama Administration to Expand Housing Plan (time.com)

Time.com Quotes of the Day

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As a blogger I have always appreciated TIME Magazine delivered to my home to read through the traditional paper pages, particularly before bed. Its on the nightstand. But I also relish the online search engine and ability they give me as a blogger to share it online, so I’m glad they spoil us both ways. This posting is self updating.

“It is either sublime or ridiculous that one of the most important tools available to Iranians protesting the June 12 presidential election is Twitter… Twitter is basically a toy for flirting and telling people what your cat is doing. But in one of the Internet’s great Velveteen Rabbit moments, the toy has become real.” this week in TIME. Gotta love it.

Share this posting please as it will open minds to what human consciousness is thinking. Isn’t it about TIME.

The value of the house on the date of death becomes the property’s new tax basis

DEAR BENNY: My parents’ house is paid off. The house is in my father’s name only; my mother has his power of attorney (and I have hers). My father is in a nursing home, recovering from a stroke, but we do not foresee him coming home (he’s 86); he’s wheelchair bound, and conversant, though with some short-term memory problems.

My father’s last will and testament leaves everything to my mother. Is there any reason to get my mother’s name added to the deed? If so, what are the legal steps one should follow to get it done? If it is done, I assume it should be joint tenants with rights of survivorship? –C.H.

DEAR C.H.: Normally, I don’t recommend putting children on title with the parents, as there can be taxable consequences. In your situation, however, I think your suggestion makes sense.

While we don’t like to think about death, it is inevitable. When both of your parents die, whoever inherits the house will get what is known as the “stepped-up” basis. That means for tax purposes, the value of the house on the date of death becomes the new tax basis of the property.

Currently, when your dad passes, you will have to probate his last will and testament. However, if your mother is added to title as “joint tenants with right of survivorship”, she will automatically own the house at that time, and probate will not be necessary.

Your mother should also have a will. In fact, in addition to a will, all of you should have a general durable power of attorney, a durable power of attorney for health, and a living will. Just make sure that your father is mentally competent at this time to prepare all of those documents.

An attorney can assist you with all of this.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column.

The 2009 First-Time Home Buyer Tax Credit: Bringing the Dream of Homeownership Within Reach from the National Association of REALTORS.

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Breaking news: Tax Credit Can Be Used on Closing Costs.

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer’s income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

Leonardo DiCaprio sells Malibu home: listed for $7,999,000

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HOT PROPERTY

Leonardo DiCaprio sells Malibu home that he had listed for $7,999,000

Actor’s bluff-top home has two bedrooms and two bathrooms, glass walls, ocean views as well as beach access.

By Lauren Beale

June 13, 2009

Actor Leonardo DiCaprio has sold a bluff-top contemporary in Malibu that had been listed at $7,999,000.

The main house has two bedrooms and two bathrooms in 2,374 square feet. Walls of glass frame ocean views in the living room. A guesthouse has two one-bedroom suites, and a stairway leads to the beach.

DiCaprio, 34, put the property on the market in mid-November. He purchased it for $6.35 million in 2007, according to public records.

The three-time Oscar nominee has the lead in the upcoming thriller “Shutter Island,” scheduled for October release. Last year, he starred in “Body of Lies” and “Revolutionary Road” and was ranked as the fifth-highest-paid actor in Hollywood by Forbes magazine. Among his acting credits are “Blood Diamond” (2006), “Catch Me if You Can” (2002) and “Titanic” (1997).

He is a producer of “Greensburg,” a series in its second season on Planet Green about a community in the Midwest rebuilding after a 2007 tornado. The actor-environmentalist-producer-writer-Lakers fan wears many hats — literally. After studying photos of DiCaprio courtside at Staples Center since 2004, Canada’s National Post observed last month that it looks like he never wears the same baseball cap twice.

The listing agents were Katie Bentzen and Sarah Kosasky of Bentzen Levin Real Estate, Malibu.

Ex-talent manager knows best now

Former talent manager Sandy Gallin has put his 42nd residential project — a more than 12,000-square-foot remodel and expansion in Bel-Air — on the market at $32 million.

The late-’30s Paul Williams-designed traditional was home to “Father Knows Best” actress Jane Wyatt until her death. Gallin purchased the house in 2007 for $7 million, with the intention of tearing it down and building a two-story contemporary.

“I bought it for the land and the view, and five days after I closed escrow, I heard from the landmark conservation board that I couldn’t tear it down,” he said. “I was ready to have a heart attack.”

But the result is a seven-bedroom, 12-bathroom home that blends Williams’ traditional style with the contemporary architecture of Scott Mitchell, who has worked with Gallin on about half a dozen houses. Among the signature Williams design elements is a two-story circular entryway with a sweeping staircase.

Gallin wanted to replace Wyatt’s terraced gardens with more flat yard space and built three sets of retaining walls, one of which serves as a wall along the new 140-foot infinity pool. He estimates he spent more than $7 million on hardscape, trees and other landscaping.

To make the interior contiguous, he chose reclaimed white oak for floors throughout the house and wood for the ceilings and walls of many rooms, spending more than $3 million on the wood and labor. Gallin, whose extensive credits have included TV and film production and managing the musical talents of Barbra Streisand and Dolly Parton, has reinvented himself by rebuilding and flipping expensive houses. Frank Sinatra, “Survivor” producer Mark Burnett and sax player Kenny G all purchased Gallin properties.

Although he had thought this would be his last project, this latest home is “too big for one person,” Gallin said. “I need to definitely build another.”

The listing agents are Ernie Carswell of Teles Properties, Beverly Hills, and Kurt Rappaport, Westside Estate Agency, Beverly Hills.

She did it again: Spears drops price

Britney Spears’ Beverly Hills Post Office-area villa is back on the market at $6,499,000, according to the Multiple Listing Service.

The pop star most recently listed the house in September at $7.9 million and reduced the price to $7,195,000 before letting the listing expire in March.

The Italian Renaissance-inspired home, built in 2001 in a gated community, has six bedrooms and 6 1/2 bathrooms in about 7,500 square feet. There are marble, hardwood and mosaic tile floors and carved millwork. The master bedroom has a fireplace and his-and-her bathrooms. The landscaped grounds include a swimming pool and a gated motor court.

Spears, 27, launched her comeback “Circus” tour in New Orleans in March. Named after her sixth studio album, which debuted late last year in the No. 1 spot on the Billboard 200, the tour is in London through mid-June before moving on to other parts of the United Kingdom and Europe.

Tomer Fridman of Ewing & Associates, Sotheby’s International Realty, Calabasas, has the listing.

Priorities change for former linebacker

Former NFL and XFL linebacker Mike Croel and his wife, Cassaundra, have sold their Sunset Strip-area home for $1,912,000.

The renovated contemporary has four bedrooms and 5 1/2 bathrooms in 5,380 square feet. There are four fireplaces, high ceilings and exposed wood, creating the feel of a ski lodge inside the house. The walled compound includes a guesthouse and a lagoon pool.

Croel, 40, was the NFL defensive rookie of the year in 1991 when he was a member of the Denver Broncos. He also played for the New York Giants, Baltimore Ravens and Seattle Seahawks. In the XFL, he was with the Los Angeles Xtreme.

The Croels are looking at Beverly Hills-area homes with easier access to schools, according to Ernie Carswell of Teles Properties, Beverly Hills. Carswell shared the listing with Sarah Blanchard of the same office.

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Credit for Early Termination and FREE Curve if switch from ATT or Verizon to SPRINT Nextel

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In Los Angeles I use and fully endorse SPRINT Nextel and exclusively for my T-mobile and AT&T readers that switch to SPRINT Nextel my buddy Jeff can get you:

• A FREE Blackberry Curve this JUNE!

•Any reader porting from T-mobile will get a $200 credit!
2 year contract required. Other porting credits avail on a case by case basis especially for medium sized and larger companies.

•Any reader porting from AT&T or Verizon gets a $100 porting over credit with a free 1st month of SPRINT Nextel service.
2 year contract required. Other porting credits avail on a case by case basis especially for medium sized and larger companies.

*On average SPRINT Nextel customers save $980 annually over AT&T and Verizon.

SPRINT Nextel Simply Everything $99 VS. AT&T equivalent for $174 monthly
SPRINT Nextel Simply Everything $99 VS. T-Mobile’s $139 monthly
SPRINT Nextel Simply Everything $99 VS. Verizon’s $164 monthly

How? Contact SPRINT Nextel Senior Account Executive jeff.t.feldman@sprint.com

Make sure your mention that Carlo or Visionary Realty News (VRN) referred you for Jeff’s full attention and service!

And if you have existing SPRINT Nextel Service for use with the Prē or want to Accessorize or buy your Palm Prē product no matter what service you have then do so with my full recommendation at the official Palm Store.