“Putting Pieces to the Real Estate and Mortgage Puzzle Together”

By Russ Boyd on January 16th, 2010

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As we begin the New Year there are several pieces to the real estate and mortgage market puzzle that I think will be helpful to home buyers, sellers and home homeowners.  Let’s start with the $8000 Federal Tax Credit. The credit is limited to 10% of purchase price not to exceed $8000 and the purchase price cannot exceed $800,000.  In other words, if you pay $810,000 for a home, no tax credit, buy it for $800,000 and you may qualify for an $8,000 federal tax credit. As amended and expanded, the Tax Credit can be used by first time homebuyers and, with some restrictions, by move up buyers as well.  To qualify, the sale must be in escrow by April 30 and close by June 30.  The tax credit can be used for the tax year 2009 or 2010 and does not need to be repaid as long as you meet the requirements.  Your REALTOR® or Tax Advisor can give you all the details. And speaking of tax credits, the Governor has proposed an extension and expansion of the 2009 state tax credit for California that was limited to new construction purchases only.  The $100 million allotted in the 2009 program was gone within five months.  The proposal put forth in the Governors state of the state address would be for all homes, not just new construction and $2billion would be allotted for the tax credit by the state.  Remember, it just a proposal and must be approved by the somewhat contentious California Legislature.

Rates continue in an historic low range, so really there is nowhere to go but up. Rates jumped up at year end, however have drifted back down this past week.  The long term consensus is that conforming rates will rise to 6% by the end of 2010, which is still low by historical standards.  There are three primary categories of conventional loans today.  For conforming loans up to $417,000, rates are very near 5% on single family homes. The second category is high balance conforming loans up to $729,500. This segment runs .375% to .50% higher in rate than conforming.  Today, that would be the mid 5%’s or slightly less.  And then we have Jumbos.  Lenders offering competitive jumbo financing are few in number.  At best add .375% to .50% to the high balance conforming rate or somewhere between 5.75% and 6% for a 30 year fixed rate. The best rate in any category is with at least 20% down on a single family with credit scores above 720. FHA Loans are available up to $729,500 with as little as 5% down and scores in the mid 600’s. You may have heard that pending home sales have increased for 9 months in a row until November.  As expected the number of pending contracts fell as buyers waited for the federal tax credit to be renewed.  This chart shows the history of pending home sales going back to 2003.  Red reflects contractions and green, expansions.  While it is expected that the pending home sales will continue to expand, the expansion may be negligible in December and January due to the holidays.  This chart reflects further indication that the bottom of the market was a little over one year ago. A question that comes up, especially with first time home buyers, is “how should I take title”? To shed some   light on that subject I’ve put together helpful tips in the Quick Links Section of our Resource Center Home Page. Quick Links are located in the right sidebar at the top of the page. In these complex times, I am always available to answer your questions or discuss you concerns.  Simply call, text or email me for a prompt response. Now, more than ever buyers and sellers will benefit from the advice and guidance that an experienced REALTOR® can provide. If you are in the San Francisco Bay Area, I invite you to start at our Resource Center, www.AboutBayAreaHomes.com. There you will find links for active home listings, including bank owned and short sales, home loans, market activity reports, home seller strategies, staging and decorating, a suite of 19 calculators, plus my book, “Let’s Make a Deal, The insiders Guide to Buying and Selling Real Estate” and more. Of course I am always available to discuss your real estate or mortgage related questions or concerns, just call, text or email me for a prompt response. Russ Boyd and his team professionally assist buyers, sellers and homeowners in the Peninsula Communities of the San Francisco Bay Area. They serve clients in San Mateo, San Francisco, Santa Clara, Alameda and Contra Costa counties. Licensed as a Real Estate Broker by the California Department of Real Estate, 01264240.