BenjaminWills.com

Passion, it is a word I have heard many times, but in 2009 I rarely felt the kind of passion I experienced in the past. To put this in context, let me tell you about my journey in 2009.

I had been in the mortgage business for 30 years which allowed me to realize most of my personal and career goals. I celebrated 30 years of marriage to a women I love more everyday. My three sons are all basically on their own now (still two in school) and they make me proud to be their father. My career included several successful management rolls where I built and managed groups that ranked in the top 1% of the firms I worked for.

What was lacking in my life? A new goal that I cared strongly about that would motivate me everyday. In 2010, I am committed to helping 100 underserved families become homeowners. This goal has feed my passion for helping families realize the dream of homeownership. By following my passion, I could give back to the community that had given me so much and do what I do best, educate.

I have designed a seminar presentation called “Pathways to Homeownership” to help spread the word about government sponsored new homeownership programs for families of modest income with little or no money down. The seminars are scheduled monthly at the North Raleigh Regional Library with the first one being Tuesday, February 2, 2010 from 7:00 to 8:00 pm.

If you know anyone that is interested in attending these seminars or have a recommendation on venue for these seminars, give me a call or pass on my information. I truly need everyone’s help to realize my goal of assisting new homeowners realize their’s.

The top article in the NYT today addresses the fragile housing recovery and points out the possibility of another decline in values. Read entire article at: http://tinyurl.com/ya5hlz2

My view is that we will not see a sustained housing recovery until unemployment drops. When people are afraid that they may lose their jobs they put off major purchases. When people do lose their jobs and their house is worth less than they can sell it for they are more likely to go into foreclosure. The combination of the fear of unemployment and the potential for more foreclosures will continue to weigh heavily on the housing market for some time.

I believe we still have several more years of weakness in the housing market. This is great news for buyers as they should be able to continue to find bargains but not so great for sellers who will need to continue to price aggressively if they want/need to sell quickly.

I am looking forward to the prospects of a continued housing recovery in 2010, especially in the Triangle market, but am also aware of how fragile the recovery is. I will continue to observe the market and let you know what I think next year!

Happy New Year

We sometimes lose sight of all we have to celebrate during these hectic times. For me personally, the crowded stores and busy roads cause me to complain sometimes (My wife will tell you I know more drivers name Dick this time of year than at any other time) but once I get over these petty inconveniences and focus on what I have to be joyous about I get back to celebrating. Here are a few things I am celebrating this holiday season:

1. Three wonderful children that are happy, healthy and kind.
2. A wonderful wife of 30 years that I love more each day.
3. A network of friends and family that help lift my spirits even when times are tough.
4. A passion for helping others that brings meaning and joy to my life.

I could go on and on but you get the point. So have a happy holiday season filled with joy and celebration and share your joy with the people in your life that matter most.

The following is reprinted with permission from Mortgage Market Guide
by Barry Habib and Sue Woodard

Homebuyer Alert…

For prospective homebuyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts for two reasons.

The first of these, the coming expiration of huge tax incentives, may be a bit more obvious to most borrowers. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time homebuyers and up to $6,500 for repeat homebuyers. The credit can be claimed only on contracts that close by June 30, 2010.

Secondly, beyond the waning benefit of the Federal income tax incentive, another form of stimulus will soon disappear, as the Federal Reserve winds down a program that has been keeping home loan rates artificially low.

Rate Alert…

The lowest rates of 2009 were driven down to their attractive levels because of the Fed’s Mortgage Backed Securities (MBS) purchase program. Home loan rates have an inverse relationship with the value of MBS. When these securities trade higher on the market, rates move lower and vice-versa. So when the Fed originally agreed to be a big buyer, it helped provide a market for MBS, which helped keep prices high and, as a result, helped push home loan rates low.

And while the Fed continues that program through the end of March 2010, the reality is that the Fed‘s “extension” was really more of a rationing intended to prevent home loan rates from spiking as the program is phased out. It’s sort of like weaning the market off of its life-saving treatment instead of forcing it to go cold turkey.

Already, some in the media have mistakenly reported the extension of the program through March as good news, telling consumers that rates will continue to decline, and remain low into the spring. This gives a false sense of security that homebuyers and refinancers simply cannot afford.

The problem is…

Those reports do not accurately report what’s going on or where rates are really headed. That can have a very costly impact on consumers who may miss out on historically low rates if they listen to these media outlets.

Here’s what’s really going on…

In May 2009, the Federal Reserve’s purchases of MBS peaked at an average of $25 Billion per week. As of November, the average weekly purchases dropped down to $14 Billion. At the end of November, the Fed had already used over 80% of the allocated funds for MBS, meaning less than 20% remained to be used over four months.

Making the problem worse is that the Fed now has less money available to purchase MBS while at the same time, the supply of these securities has increased as a result of refinance and purchase activity that was triggered by lower rates.

Why is that important?

As the Fed now has fewer funds to last through the remaining months of the program, its ability to keep rates low will wane.
As the Fed’s program winds down and ends, we’ll likely see two things happen.

First, we will probably see higher levels of volatility—with rates sometimes shifting dramatically in the middle of the day. That means it is more important than ever for buyers to work with a knowledgeable mortgage professional who has a finger on the pulse of the market at all times and can provide trusted, proven advice.

Second, since MBS will have less support from the Fed, rates are likely to rise over time.

In short, while rates are still very good, they may not be for long.
What should you do to protect yourself?

First and foremost, work with a knowledgeable mortgage originator who studies and monitors the market.

Second, don’t be fooled by media stories that only report the headlines and don’t understand the underlying implications of the Fed’s actions. If you ever hear something in the news but aren’t sure what it means to your situation, feel free to call or email me for in-depth answers and advice.

Finally, if you haven’t yet explored how the current rate environment might benefit you or someone you know, let’s arrange a time to sit down and discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.

I never thought that we would continue to see low rates this far into 2009. How much longer will the rates stay low and when will we see the inevitable rise? Interest rates today have not been this low since the 1940s; we are truly living in historic times. One of the main reasons that interest rates will increase soon is because the federal government will stop purchasing mortgage-backed securities, a main driver of low interest rates, on March 31, 2010. Many economists have theorized that once the government stops purchasing mortgage-backed securities interest rates will increase by three quarters of a percent. What that means to most of you is that rates will go from 5% to around 5 3/4 or 6%. That would still be historically low rates compared to where we’ve been for the last 20 years. This increase will have a significant impact on housing affordability and could impact a still fragile housing market. Every time interest rates rise fewer customers have sufficient income to qualify for new loans.

With only a few more months to go before rates creep back up to 6% we could be seeing the end of low rates for quite some time. My assumptions are based on the increase in economic activity, specifically housing activity, and eventually job growth. The Federal Reserve met today and confirmed that the mortgage-backed securities purchase program will end March 31, 2010 and that they are not anticipating extending this program passed the date. In addition they announced that Fed fund rates will remain low for an extended period of time because of recent economic indicators that point to signs the economy is improving.

I hope everyone has a happy and safe holiday season.

Seth Godin is one of the most relevant marketing experts today. I personally read his blog post every day and find tremendous value in his unique perspective and insight.

He just posted a free e-bookthat I highly recommend.

Enjoy

On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

TAX CREDIT OVERVIEW
Who Gets What?
First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible for FTHB Tax Credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?
The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
They do not use the home as your principal residence.
They sell their home before the end of the year.
They are a nonresident alien.
They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes, provided that the child meets the other requirements for the tax credit.

Information provided by: The Mortgage Market Guide
©2009 MSS, LLC. All rights reserved.

On Monday evening, I stopped by the market on my way home to get some mushrooms for a soup Cheri was making that evening. The gentleman in front of me was buying $50.00 in groceries and handed the cashier a wad of coupons. It looked as if there were more coupons than items purchased but, since I wasn’t counting, I don’t know if that was the case. Anyway, once all of the coupons had been rung up the cashier told the customer he needed to pay $4.79. Wow, I was impressed….but then he gave the cashier even more coupons to get the final cost to 19 cents! That’s right, 19 cents. The customer, with a grin from ear to ear, pulled a quarter out of his pocket to pay for his cart full of groceries. He had saved the remarkable sum of $50.75 on $50.94 worth of groceries. This is the kind of thing you only see on the cover of the Enquirer. I truly believed it could never actually be done.

I thought I was a good coupon shopper, but this guy had me beat. I still wonder…..was there something going on between him and the cashier? It sure seemed like he handed in more coupons than items. Inquiring

Great news on the First Time Homebuyer Credit - The House of Representatives has approved legislation that would extend and expand the credit. The House vote came after the Senate voted on Monday to approve the extension but we still need to be cautious as there is more work to be done before the legislation is complete and signed off by President Obama. Indications are that the final bill, agreed upon by both the house and senate, should reach President Obama for his signature by the end of this week and his administration has indicated that the president will likely sign the bill.

Under the current proposal the income limits will be raised for individuals with incomes up to $125,000 a year and couples earning up to $225,000. The extension would cover new home purchases under contract by April 30th and will require them to be closed no later than June 30th, 2010.

The big news for current home owners is that the tax credit will be expanded to non-first time homebuyers as well. The tax credit will be slightly different for non-first time homebuyers as the credit is reduced from $8000 to $6500. In addition they must have owned a home for at least five of the past eight years.

Keep in mind that this bill is NOT final and will require the presidents’ signature. Stay tuned, and be aware that even if it is approved, it could contain further changes. Continue to watch my blog for more updates.

Many customers ask me if they should go to the expense of having a Radon test performed before buying a home. So here are a few statistics to consider:

The Environmental Protection Agency (EPA) states that radon gas is found in one out of 15 homes across the U.S. They also state that it is the second leading cause of lung cancer, causing an estimated 15,000 to 22,000 deaths per year. Because of this significant health risk there are many resources dedicated to combating this potentially deadly gas.

Radon is commonly found in the earth beneath homes, in well water and building materials like rock, bricks, and concrete. Radon gas can then seep into the house via the cracks in the basement floors, drains, loose-fitting pipes and exposed soil. After the gas enters the home it becomes an airborne carcinogen - a cancer-causing agent.

This is why I recommend to my clients that they get their home tested, especially if radon gas is prevalent in the area. Home testing kits for radon gas can be obtained from most of the local home improvement or hardware stores. In addition, you can hire a qualified radon service professional to inspect your home or most home inspection companies offer this as an additional service.

If you would like more information on radon gas, visit www.epa.gov/iaq/radon.  This website has extensive information detailing prevention measures and contact information for certified professionals in your area.