Thursday, December 30, 2010

$5000 DC homebuyer tax credit renewed

Congress renewed the $5,000 DC homebuyer tax credit for another two years as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, the office of Congresswoman Eleanor Holmes Norton (D-DC) announced earlier this month.

The DC tax incentive will be retroactive for 2010 and continue through 2011.

"First-time homebuyers of a principal residence in the District, who meet income limitations and other eligibility guidelines may qualify for a one-time tax credit for up to $5,000 of the amount of the purchase price," Joe Gentile, vice president of Federal Title & Escrow Company, said.

To qualify as a first-time homebuyer in the District of Columbia, a homebuyer and his/her spouse must not have owned a home in DC during the one-year period before the date of purchase, said Gentile, adding that a homebuyer who owns property outside of DC may still be eligible for the $5,000 tax credit, as long as they qualify as a first-time homebuyer in the District.

DC's $5,000 homebuyer tax credit was first introduced in 1997 and has been renewed every year since.

"As the economy emerges from the Great Recession, [tax incentives] for our residents to buy houses could not come at a better time," Norton said in a statement. "House prices will not be as low as they are now for years to come. These tax incentives, which can only be used in the District, will also help stabilize the city's economy and to accelerate our economy's recovery."

Our website contains more information on the $5,000 DC homebuyer tax credit, including how to qualify and where to access the proper tax forms to claim the credit.

Thursday, December 16, 2010

A quick guide to VA loans

Active-duty service members and veterans may be eligible for a home loan guaranty program offered the Department of Veterans Affairs (VA), for purposes of purchasing or refinancing a home.

What is a VA guaranteed loan?

It is a loan that is made by a typical mortgage company, savings and loan, or bank, in which the VA guarantees a portion of the loan amount, thereby protecting the lender against loss if the mortgage payments are not made.  The purpose of this program is to encourage lenders to provide veterans with more favorable terms on loans.  For example, allowing the veteran to more easily negotiate interest rates, pay fewer closing costs, avoid having to pay mortgage insurance, and in most cases, not requiring a down payment when purchasing a home.

Who is eligible?

·         Veterans.  You will need a Certificate of Eligibility in order to prove you are qualified to receive a VA loan.  You can either apply online, your lender can obtain the Certificate online on your behalf, or you can apply by mail, by using VA Form 26-1880.

·         Active duty personnel.  An original statement of service signed by the adjutant, personnel officer or commander of your unit or higher headquarters, identifying you and your social security number, as well as your date of entry on your current active duty period and accounting of any time lost during that period must be provided.  

·         Reservists/National Guard Members.  If you are still active duty in the Reserves or Guard, an original statement of service signed by the adjutant, personnel officer or commander of your unit or higher headquarters, showing the length of time you have been a member of the Reserves or Guard is required.  Said statement must document at least six years of honorable service.

If you were discharged from the Reserves or Guard, you must submit copies of adequate documentation showing at least six years of honorable service.  (Examples of adequate documentation include NGB Form 22 -- Report of Separation and Record of Service, or NGB Form 23 – Retirement Points Accounting, or their equivalents).

·         Some surviving spouses.  You must apply for the Certificate of Eligibility by mail using VA Form 26-1817.  In order to qualify, the veteran spouse must have died after service, and the VA determines if the death resulted from a service-connected disability.

What if you had a VA loan before?

If you still own the property, you may still have remaining entitlement to use towards another VA loan.  

If you have sold the property or paid your previous VA loan in full, or if a qualified buyer has assumed your previous VA loan, your full entitlement would be restored, allowing you to use it again towards the purchase or refinance of another property.

How Do You Get a VA Loan?

The process to obtain a VA loan is similar to applying for any other loan.  First, either you or your mortgage lender will need to obtain your Certificate of Eligibility.  Next, if you are purchasing a home, you will need to sign a contract, and apply for a loan with the lender of your choosing.  An appraisal will then be completed with a VA approved appraiser, to determine the value of the property.  Once the appraisal has been completed, the loan process proceeds as normal and you settle on the property and move in.

Costs of Obtaining a VA Loan

A funding fee must be paid by all veterans using the program, unless you are exempt as a result of disability compensation.  The funding fee amount ranges from 0.5% for interest rate reduction refinancing loans to 3.3% for subsequent users of the program.  In addition, you can expect to pay normal closing costs for the VA appraisal, credit report fee, loan origination fee, discount points, title search and title insurance fees, recording fees, state or local transfer/recordation taxes (if applicable), and survey fees.  You can obtain an online quote of title fees, recording fees, transfer/recordation taxes, and survey fees on our website.

Maximum VA loan county limits for 2011 released

The Department of Veterans Affairs Loan Guaranty Program recently published county “limits” to be used for VA Loans closing between January 1, 2011 through September 30, 2011. The limits for Fiscal Year 2012 have not yet been released.

Please note, these limits do not reflect a maximum amount that an eligible veteran is permitted to borrow, but rather, reflects the VA’s maximum guaranty amount for a particular county. The maximum VA guaranty amount for loans over $144,000 is 25% of the 2011 VA limit. For example, an eligible veteran may borrow up to $818,750 to purchase a property in Washington, DC (2011 VA limit), with the VA guaranteeing 25% of the loan amount, or approximately $204,687.50.

The limits listed below are for some counties in Maryland and Virginia, as well as for the District of Columbia. View a complete list of the county limits for 2011. [Please note, if your county is not listed on the county limits chart on the VA website, the 2011 limit is $417,000.]

STATE
COUNTY 2011 VA LIMIT
DC
District of Columbia
$818,750
MD
Anne Arundel
$500,000
MD
Frederick
$818,750
MD Howard $500,000
MD
Montgomery $818,750
MD
Prince George's
$818,750
VA
Alexandria $818,750
VA
Arlington
$818,750
VA
Fairfax $818,750
VA
Falls Church
$818,750
VA
Fauquier
$818,750
VA
Loudon
$818,750
VA
Manassas
$818,750
VA
Prince William
$818,750

Wednesday, December 15, 2010

The Real Estate Settlement Observer

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Title company fees matter

Most reputable title companies now maintain robust websites with a disclosure of their title charges/fees, making it simple for prospective homebuyers to compare title company fees and select their title company.  

According to a recent analysis, less than 10 percent of homebuyers and refinancing homeowners chose to select their own title company – despite the fact that it was their legal right to choose a title company.  Instead, the overwhelming majority of those homebuyers and refinancing homeowners deferred to their real estate agent or mortgage lender to choose the title company on their behalf.

Why?

Because most homebuyers do not realize the potential cost-savings associated with selecting their own title company.  They do not realize that a simple online search for comparing costs among local title companies could save a thousand dollars or more.  

In fact, many real estate agents and mortgage lenders are not aware of this simple fact.  It is incorrectly assumed that all title company charges are equal.  

My “Best Friends” advice is as follows:

  • Choose a title company yourself – don’t leave the task to others.

  • Choose a title company that clearly discloses their title fees and title insurance rates on their website.

  • Choose a title company that is independent – not a title company affiliated and sharing profits with your real estate agent’s brokerage or your mortgage lender’s company.

  • Choose a title company that has been in business for at least 10 years.

  • Choose a title company that conducts closings by licensed real estate attorneys – not notaries or settlement agents.

  • Choose a title company with positive user reviews. Check out Yelp, ActiveRain.com or Google for starters.

Follow my “Best Friends” and you will end up at the closing table of a reputable title company AND pay less.

6 real estate headlines: 12-15

A daily dose of headlines for real estate agents, mortgage lenders and consumers.
America's most stable housing markets
Forbes
: The picture may look bleak on the national and regional levels, but zoom in and there are plenty of cities where home prices are rising.
Tax appeals swamp U.S. towns as property values decline
BusinessWeek
: The backlog of cases from taxpayers seeking to lower property-tax bills of more than $100,000 rose to 14,236 this year from an annual average of about 6,000 during the past decade.
At least 3 more years of housing trouble 
Reuters: The housing market will remain depressed, with record high foreclosure levels, rising mortgage rates and a glut of distressed properties dampening the market for years to come.
Borrowers wait for lower mortgage rates and lose
Forbes
: Now those in the market to buy or refinance have to decide whether to take what's available or wait - and run the risk that rates will keep rising.
Using Google Maps to find foreclosures
The Atlantic: You can add foreclosures to the list of searches that Google excels at executing.  It's both incredible and awful to see just how foreclosure continues to plague the U.S.
Home values tumble $1.7 trillion in 2010
CNN Money: This year's drop in home values is 63% bigger than the $1 trillion dip in 2009, and brings the total value lost since the housing market's peak in 2006 to a whopping $9 trillion.