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As you may have heard, the $8000 Federal Tax Credit for 1st-Time Home Buyers has been extended.

In addition, several new key elements have been included  into this legislation.

The $8000 First Time Home Buyer Tax Credit was due to expire on November 30th. In my humble opinion, this has been one of the few bills our elected officials have created that has genuinely stimulated our economy and given much needed tax relief to those who can really use it!

Here’s the full scoop on the extension and what else has been added:

1st-Time Home Buyers Credit

Many aspects of this tax credit remain the same as before:

• First Time Home Buyers will still get a tax credit of 10% of the home purchase price, up to the maximum of $8000.

• It applies to both partners of a married couple who haven’t owned a principle residence for at least 3 years prior to the purchase.

• If you claim this tax credit, you must continue to live in the home as your principle residence for 3 consecutive years.

• This credit is a ‘dollar-for-dollar’ reduction of your income tax amount and can be refundable. For example, if you qualify for the full $8000 tax credit, but only owe $6000 in taxes, you could receive a refund for $2000 from the IRS.

• If you buy your home in 2009, claim it on your 2009 tax return. If you buy your home in 2010, you can claim this tax credit on either your 2009 or 2010 tax return.

• You don’t qualify if you purchase the home from a lineal ancestor or descendant, i.e., your parents, grandparents, children, or grandchildren.

What has changed:

• you must be under contract to purchase the home no later than May 1st, 2010, and the transaction must close no later than July 1st, 2010.

• There is now a cap amount being imposed. For purchases made after November 6th, 2009, the tax credit will not be allowed for homes costing more than $800,000.

Repeat Home Buyers Tax Credit

This is a new tax credit that is now available for the rest of us who have owned homes in the past.:

• If you’ve lived in the same house for 5 consecutive years, you qualify.

• The tax credit is 10% of the purchase price, up to a maximum of $6500.

• If you buy your home in 2009, claim it on your 2009 tax return. If you buy your home in 2010, you can claim this tax credit on either your 2009 or 2010 tax return.

• You don’t qualify if you purchase the home from a lineal ancestor or descendant, i.e., your parents, grandparents, children, or grandchildren.

• This new Repeat Buyers Tax Credit only applies to home purchases made after November 6th, 2009.

An added note for Active-Duty Military:

Active-duty military members who are serving overseas on official extended duty for at least 90 days during 2009 and the first four months of 2010 have an extra year to take advantage of these credits.

For additional information on these tax credits:

Consult with the Internal Revenue Services Home page; go to the Smart Money website; and CNN Money.com

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, Crabbing in the Hood, Facebook, Twitter, or e-mail:  kitsapagent@gmail.com

Posted in Buyers | 5 Comments »

Tags: $8000 1st time home buyers tax credit, first time homebuyers, IRS, Kitsap County WA real estate, repeat buyers tax credit

According to an article on Forbes.com, the popular $8000 Tax Credit afforded to First Time Home Buyers is very close to being extended through April of 2010.

Here is an excerpt of that article:

“An $8,000 federal tax credit for first-time homebuyers that is set to expire at the end of the month inched another step closer to getting extended until April. The Senate voted 85-2 yesterday to move the bill to a final vote, and senior members of Congress said that they expected the bill to pass next week.”

With everything else that’s been going on in Washington of late, i.e. massive debt to bailout Wall Street, dismal ‘Cash for Clunkers’ program, government take-over of Health Care, indecision on Afghanistan, etc., it’s encouraging to see progress on legislation that is truly effective for a change, and makes a difference for taxpayers and the economy.

This would be great news for many first-time home buyers here in Kitsap County WA and people who have been considering purchasing their 1st home. I have some great folks who have been extremely patient in awaiting word on their short sale contract for a home out in Lakeland Village, outside of Belfair WA. This extension would be wonderful news for them!

For more information on the $8000 Federal Housing Tax Credit for 1st-Time Home Buyers, go HERE!

If you’ve ever wondered what all is involved in buying a home, check out my fun and informative series entitled “Adventures in 1st-Time HomeBuying.”

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

Posted in Buyers | 4 Comments »

It’s like a bad dream, a horrible nightmare, or worse, another mindless installment of ‘Saw’ or ‘Friday the 13th!’

Another one of my transactions has fallen prey to the ‘Curse of the VA Appraisal!’….

What began as a seemingly normal and relatively smooth contract between my Sellers (a beautiful ranch-style home on acreage in Lofall/Poulsbo WA) and some wonderful Buyers, has suddenly spiraled into the deepest, darkest recesses of VA hell – a place where common sense, fairness, and consistency cease to exist, and the massive wheels of government bureaucracy inch along painfully slow, impervious to any outside reason or influence.

I’ve been down this road before, unfortunately. Such is the risky Russian roulette of VA financing. It’s a Luck of the Draw, a crap shoot. It’s Forest Gump’s Box of Chocolates – “Ya never know what yer gonna get!”

You have enough VA transactions and you just figure your number will eventually get called up.

Whenever I take on a new listing, I usually talk to the Sellers about offering the property for purchase to VA Buyers. In our market (Kitsap County WA) you run the risk of missing out on a large segment of potential Buyers if you don’t offer it for VA financing. However, there are certain times when it’s not advisable to market a given home to VA Buyers.

With my last listing, it was a no brainer. The home was fairly new – built in 2000. It had been well-maintained, and the new 35-yr. composition roof was only a year old. The only questionable feature was the rear deck. It didn’t have any railings or handrails. But based on my previous experience with similar situations, the VA Appraisers always used the WA State Building Codes to determine an acceptable height limit before railing needed to be installed. If the deck was more than 30 inches above the ground, then the deck was required to have railings around the perimeter and handrails on each side of the steps. The highest point of my Sellers deck from ground level was 24 inches, so I figured the deck would pass the VA appraisal.

The VA appraisal was conducted, we came in at value and with NO conditions! Yippee! Hooray!

Or so we thought!….

A few days before we are scheduled to close, the Buyers Lender calls and says that the VA Regional Office in Denver has reviewed the appraisal, and based on pictures of the deck, has determined that it’s a safety/health hazard, and is requiring railings and handrails to be installed prior to closing. The VA Appraiser was asked to amend the appraisal and specify the railings as a condition for financing.

Somewhere in a big office building in Denver, a VA bureaucrat is attempting to justify their salary and decides to conjure up some mystical number of 18 inches. Where did this number come from? Do they have a dartboard in the break-room? Do they yell over to the person in the adjoining cubicle and say “Pick a number between one and 30?” No ones knows. We’re the frickin’ VA, dammit! You want the loan? Then install the railing, period!

Never-mind that the Buyers would much rather install the railings themselves, after the sale goes through. They have a particular style/design they want to use to make it their own.

Never-mind that my Sellers are going to install the very minimum required to pass, and it will most likely be removed by the Buyers once they occupy the house.

So there’s my scary story for this Halloween season. Maybe for Christmas, Santa will bring me a nice smooth VA transaction?…

UPDATE: Just as an update. I received this email today from the Buyer’s Lender, re-stating VA’s position on this issue:

“Yes, I spoke to our underwriting manager and she said since the SAR (staff appraisal reviewer) ruled that the deck needed a rail in order to be in compliance with VA guidelines regarding Safe, Sound, and Sanitary conditions. I also spoke to the VA office in Denver and the gentleman I spoke with gave me pretty much the same answer. (except not so kind) I also asked both parties if this was documented anywhere and they said the section of the handbook addressing the Safe, Sound and Sanitary conditions would cover this issue.“

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

Posted in Buyers | 7 Comments »

Tags: Kitsap County WA real estate, va appraisals, va appraisers, va buyers, va financing, va loans

The first step in the VA Loan Home Buying process is to firm up your financing and get pre-approved for your loan. This really sets the stage for all that follows and effectively drives your home searching adventures.

Ask you real estate agent for recommendations on some qualified, experienced local lenders/loan officers. A knowledgeable mortgage professional will be able to analyze and assess your financial status, and help determine the best loan product for your particular situation/budget.

One of my preferred lending partners is Cheri Kesti, Branch Manager and Mortgage Consultant with Windermere Mortgage Services here in Silverdale. I don’t recommend Cheri to my Buyer clients because she’s affiliated with Windermere. I endorse her because she consistently gets the job done, on time, and without a lot of added drama!

I’ve asked Cheri to provide some basic comparative information and the primary benefits of associated with using VA financing:

Cheri states “VA home loans are an excellent choice when compared to conventional, FHA, or USDA home loan options, which can often carry higher interest rates, or greater closing costs for the veteran or active-duty home buyer.”

Here are some basic highlights of the VA home loan:

• Lowest interest rate for zero down payment
• Lowest Buyer Paid-out closing costs
• No monthly mortgage insurance
• VA funding fee is waived if there is a service-related disability
• Applicable VA funding fee may be financed into the loan
• VA maximum loan amount is $700K with minimum down payment or $417K with zero down payment
• VA home loans are assumable
• Principal balance prepayment – without penalty
• The seller is allowed to pay up to 6% of the purchase price toward any or all of the following:

1. Buyer closing costs and permanent interest rate buydown
2. The VA funding fee (or any portion of it)
3. The buyer’s revolving or installment debt, prepaid interest, taxes, and insurance (not to exceed an additional 4% of the purchase price)

As stated above, the VA loan allows veterans 100% financing without paying private mortgage insurance. A VA funding fee of up to 3.3% of the loan amount is paid to the VA and is allowed to be financed into the loan. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. Since there is no monthly PMI, more of the mortgage payment goes directly towards the Buyer qualifying for the loan amount, allowing for larger loans with the same payment. In a refinance, qualified veterans and active-duty personnel may borrow up to 90% of reasonable value, where allowed by state laws.

VA loans allow veterans to qualify for loans amounts larger than traditional Fannie Mae or conforming loans. VA will insure a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills.

Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980 or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

Posted in Adventures in VA Loan Home Buying, Buyers | No Comments »

One of my most favorite and popular series I’ve authored since jumping into the blogging fray has been ”Adventures in 1st Time Home Buying!” a fun and informative collection of 10 articles created specifically to guide 1st Time Buyers through the home purchasing process.

As a veteran who proudly served on-board a submarine in the US Navy, my first two homes were purchased using VA financing. Living here in Kitsap County WA, home to the Bangor Sub Base and Puget Sound Naval Shipyard, many of my Buyer clients are Active-Duty military and choose VA loans when buying their homes.

Given the unique nuances and pros/cons of VA financing, I thought it would be helpful to publish a series of articles geared towards helping Active-Duty service members and veterans to better understand the VA loan process, and equip them to intelligently navigate the potential challenges they may encounter.

First, let’s dispel what is typically the most common misnomer about VA loans:

A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs, and may be issued by any number of qualified lenders, i.e., banks, savings & loans, credit unions, mortgage companies, etc.. However, neither the loan nor the money borrowed is provided by the VA.

The VA Loan began in 1944 through the original Servicemen’s Readjustment Act (also known as the GI Bill of Rights). The GI Bill was signed into law by President Franklin D. Roosevelt and provided Active-Duty Service Members and Veterans with a federally guaranteed home loan with no down payment. This program made the dream of home ownership a greater reality for millions of service people and veterans. The GI Bill has contributed more than any other program in history to the welfare of  our uniformed personnel, veterans, and their families.

In our next installment, we’ll compare the VA Home Loan with other loan products, and help to determine if VA financing is the best choice for you.

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

Posted in Adventures in VA Loan Home Buying, Buyers | 2 Comments »

Tags: active-duty, Kitsap County WA real estate, military relocations, PCS, va buyers, va financing, va home loans, va mortgages