$700 Billion September 24, 2008

How much is that anyway? The new government bailout plan that is being considered could come at a cost of $700 billion. 

Using numbers from the US Census Bureau, $700 billion is about equal to:

• About $2,300 per American
• About $6,000 per U.S. household
• About 85 percent of the New York State economy
• The combined economies of all U.S. states beginning with the letter “A”: Alabama, Alaska, Arizona, and Arkansas; plus Oklahoma.

The tally for all the various rescue measures launched by U.S. authorities this year runs to about $1.8 trillion. The $1.8 trillion is equal to:

• About $6,000 per American
• About $15,500 per U.S. household

When I was a teacher, I had a fun assignment for the kids to get their creative juices flowing, I had them write out what they would buy if they had to spend an outrageous amount of money. At that time we used the amount that Bill Gates was worth, and the kids had a great time investigating how much a jet costs, and how many mansions they could buy. It really makes me wonder what they would buy with $700 billion, and if this government program is really worth it. I would really just rather that they send each household a check for $15,000.

This Fall is a Particularly GREAT time to buy! September 12, 2008

With everything the real estate industry has been through, this fall may be the best time to buy we have seen in years. I really think the market is beginning to shake loose from it’s standstill and there are many reasons that you should buy now if you are thinking about buying a home.

* The market is beginning to stabilize. With the bailout of Fannie Mae and Freddie Mac, things are beginning to calm down, and home prices are beginning to rise again. Home prices are about as low as they are going to get.

* Interest rates are LOW and going down. Loans are very affordable right now.

* FHA has upped it’s Jumbo Loan limits to $729,750 in expensive areas. It’s going to take some of that back come Jan. 1, when the loan limit will shrink to $625,500.

* The $7,500 tax credit won’t be around forever!

The only drawback is that the popular Down Payment Assistance is going away. Previously, buyers could literally get into a home with no money down by asking the seller to pay their closing costs and down payment. This could have been a contributing factor to some of the foreclosure problems that got us all into this mess in the first place. People who really couldn’t afford a home were buying them. Now, the government is saying that, yes, you DO need to have some money saved up to buy a house.

Overall, I am very excited to be a REALTOR® in this market! Leave your comments below, and let me know what you think about the current real estate market.

Do you Qualify for a $7,500 tax credit? September 4, 2008

The Housing and Economic Recovery Act of 2008 provides a $7,500 tax credit for qualified first-time home buyers who purchased homes between April 9, 2008 and July 1, 2009. Do you qualify for the tax credit? Call me to find out for sure!

First-time home buyer– any buyer who has not owned a principal residence within the past 3 years prior to the purchase. For married couples, neither person can have owned a home in the past 3 years. Ownership of a vacation home or a rental property not used as a principal residence does not disqualify you from being a “first-time buyer”.

How do I claim the credit? When you file your federal income taxe return, you will claim the credit. No other forms or applications are necessary.

Income dependant– The credit received depends on your income. Partial credits may be available for people who earn more than the Adjusted Gross Income limits. Credit will be phased out until it reaches the limit where it becomes completely unavailable ($95,000 for single filers, $170,000 for joint returns).

Home purchased is under $75,000– Generally, the credit is equal to 10% of the qualified home’s purchase price, capped at $7,500. Most people will get the whole $7,500 credit, unless they exceed the income limits OR purchase a home under $75,000, in which case they will get 10% of the purchase price.

Credit is refundable– even if you do not have a tax liability, or your liability is less than $7,500 they will send you a check for the credit (a refund).

Repayment– This tax credit DOES need to be repaid to the government. Home buyers who receive the credit will need to repay the credit over 15 years (or when the home is sold, if there is sufficient capital gain) with NO interest. The credit will be repaid at $500 per year, starting 2 years after it is claimed. Basically, this is a zero interest LOAN from the government.

Some people are wondering if they should take this credit at all. That is a question for your tax accountant or financial planner. I think that if you do not need it for any specific reason, then you might not want to take it. However, if you have credit cards or other debts with interest, it might make sense to use this money to pay off those higher-interest debts.