David's Blog from the Creative Coast & Carolina Low Country!

FIRST TIME HOME BUYERS, NEED TO ACT BY NOVEMBER 30th or SOONER!

With today's legislation that was signed by President Obama, people looking to buy their first home or for those that it's been at least three years since they owned, the time is right to buy. Hopefully, this will help people jump off the fence to the purchasing side, instead of procrastinating. Why should you buy?

The new home buyer will be able to claim $8,000.00 tax credit for either their 2008 or 2009 taxes. How does it work, this is based on the three scenarios that I found on CNN Money.

Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2:Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll withholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll withholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.

YOU NEED TO PURCHASE A NEW HOME BY NOVEMBER 30th TO QUALIFY, but you must stay in the house at least three years in order not to pay back the tax credit.

There are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)

Also in your favor, is that the mortgage interest rates are at their lowest in almost 60 years. Lenders do not see them staying this low, so if you are ready to jump, do so now. It is also a buyer's market, because of the large inventory. You have the opportunity to get a very good deal because the buyer is controlling the transaction. If you want your own home, this is a great opportunity, please take advantage of it.

For you buyers who are looking at Georgia's Creative Coast or the Carolina Low Country, contact me, I will help you find your house and walk you through the entire process from start to finish. I hope this information is helpful to first time buyers everywhere. They figure this will create 300,000 additional home buyers. I can be reached at 843-338-9087 or [email protected]

HAPPY HOUSE HUNTING!

Lease-Purchase Home Options in the Creative Coast

Trying to buy a house today is very confusing; on one hand they are telling you it's great time to buy and on the other hand they are telling you loans for such a purchase are limited or non-existent. There is another option, lease-purchase, it will get you in a house while the lenders start to make loans available over the next few months.     

As you know, the inventory of homes in Savannah, Hilton Head and Bluffton is quite large. This mass quantity of inventories was brought about by overbuilding, foreclosures and families either up-scaling or downsizing. Homes are not selling as quickly as they did three years ago, so home sellers need to get creative. The lease-purchase option works if the home for sale is vacant and the seller wants to cut down on their short term expenses. Most sellers who have purchased another home and still have not been able to sell their previous home are looking for a way to eliminate paying two mortgages. Some have pulled their homes of the market and have placed them in the rental pools or have done owner-financing or looked at the lease-purchase option.

In the near future, I would not expect to many lenders to extend credit to any buyer who does not apply a 20 per cent down payment towards the purchase price. In the past, people bought homes that they could not afford, with limited resources and with the promise that their new home would increase in value, creating equity too allow them to refinance in six to twelve months. The thought was their monthly mortgage payment would fall, Instead, more homes entered the for sale market driving home prices down. Many people are paying on homes that have lost their value because of the huge inventories across the nation.

My thoughts on how to purchasing a home now is to look at the lease-purchase option because of the limited access to money from lenders. Banks are going to have to start lending, thats how they make money. They are just going to be very strict about it. If you are interested in house, but fear you cannot get a loan presently you need to look at this option.

To start the process, look in an area you desire, have your agent call all the listings in that location to inquire about a lease-purchase. You will be surprised on how many sellers will accept this option. You will go through the same motions about agreeing on a price with the seller, but the closing will not occur anytime soon; you can do six to twelve months before you need to place financing.

This is my example on how put a deal together for a home that is listed at $200,000, just to make the numbers easier I am using $200,000. Negotiate the price down to around $190,000, put $5,000 down in escrow. This will allow the seller to know that you are serious and that at the end of the terms you will not walk away from $5,000. Next agree on a monthly rental price for the terms of the agreement, but make sure that at least 50 per cent of the monthly rental is applied to your down payment. So our deal is for twelve months with a rent of $1,400 a month, but $700 will be applied to the down payment. So around the tenth month of the deal, you will need to find your financing, but you will have already put some money toward that down payment.

                   $5,000  in escrow

12 x $700 = $8,4000

                  $13,400 towards down payment 

Now you may have to add to this amount, depending on were the markets are in the next year and what your credit score is. You just need to start looking when the interest rates are low, it might be better for you to close sooner. The downside is that if you fail to secure a loan, you will lose that $5,000 in escrow.

If you are interested interested in this option, contact me. I will do the leg work and I know some lending institutions that will be fair to you in both Georgia and South Carolina.

David 843-338-9087