June 4, 2012 • 8:32 pm 0
Competition to Buy Remains High
February 23, 2012 • 5:16 pm 0
There are many types of mortgage loans available to homebuyers, and within each of these types there are many options:
Also, be sure to consider the programs that are available to first-time buyers through city, county, state and Federal entities. You may qualify for counseling services and/or down payment and closing cost assistance.
Once you’ve decided on a loan type, take the next important step. Getting pre-qualified and pre-approved for your loan is critical for many reasons. It can help you narrow your home search to save time, and help you get a clearer picture financially.
Equally important to knowing your credit score is staying familiar with current mortgage rates. These rates change on a daily basis, so it’s important to check them often during your home search.Below are several links to financial institutions that publish their rates daily as well as the different types of mortgages which you should familiarize yourself with.
Send us a message to nickbublik [at] cox.net for personal referrals to lenders we have worked with in the past!
November 9, 2011 • 2:52 am 0
If you’ve ever gone through the mortgage process, you know about closing costs. However, if this is your first mortgage, you’re still getting used to the concept of paying more money, beyond your down payment. Usually, closing costs are paid by the buyer, but with some mortgages (VA, for example) the seller can pay closing costs. A little-known fact is that a big part of costs and fees actually go to third parties who process the mortgage, as well as local governments as taxes. The money doesn’t go to the mortgage company.
Most people take closing costs and fees for granted and just pay what they are told. As an informed mortgage customer, you should ask your mortgage banker to walk you through each cost, and explain in detail what you are paying. The bottom line is that you don’t want to be surprised at the last moment. Imagine getting a call from your mortgage banker the day of your closing with a message that your closing costs are $1,200 more than you thought, and the only explanation is that the title company made a mistake. Chances are you may have to reschedule your closing to get the money together for the difference or have your mortgage adjusted to have the amount rolled in.
To avoid a situation like this, it’s a good idea to know exactly what the costs and fees are, how they are calculated, and why you (or the seller) have to pay them. Here’s a breakdown of the most common closing costs and fees with a rough estimate of average cost:
* Appraisal (up to $450) – This is paid to the appraisal company to confirm the fair market value of the home.
* Credit Report (up to $30) – A Tri-merge credit report is pulled to get your credit history and score. You cannot supply your consumer pulled report and the scores pulled form the internet from any place other than myfico.com are not real scores nor are they accurate.
* Closing Fee or Escrow Fee (generally calculated a $2.00 per thousand of purchase price plus $250) – This is paid to the title company, escrow company or attorney for conducting the closing. The title company or escrow oversees the closing as an independent party in your home purchase. Some states require a real estate attorney be present at every closing
* Title Company Title Search or Exam Fee (varies greatly) – This fee is paid to the title company for doing a thorough search of the property’s records. The title company researches the deed to your new home, ensuring that no one else has a claim to the property.
* Survey Fee (up to $400) – This fee goes to a survey company to verify all property lines and things like shared fences on the property. This is not required in all states.
* Flood Determination or Life of Loan Coverage (up to $20) – This is paid to a third party to determine if the property is located in a flood zone. If the property is found to be located within a flood zone, you will need to buy flood insurance. The insurance, of course, is paid separately.
* Courier Fee (up to $30) – This covers the cost of transporting documents to complete the loan transaction as quickly as possible.
* Lender’s Policy Title Insurance (Calculated from the purchase price off a rate table. Varies by company) – This is insurance to assure the lender that you own the home and the lender’s mortgage is a valid lien. Similar to the title search, but sometimes a separate line item.
* Owner’s Policy Title Insurance (Calculated from the purchase price off a rate table. Varies by company) – This is an insurance policy protecting you in the event someone challenges your ownership of the home.
* Natural Hazards Disclosure Report – Required by law in the state of California for the seller to give the buyer. Reports run between $90 to $150. May be required by other states.
* Homeowners’ Insurance ($300 and up) – This covers possible damages to your home. Your first year’s insurance is often paid at closing.
* Escrow Deposit for Property Taxes & Mortgage Insurance (varies widely) – Often you are asked to put down two months of property tax and mortgage insurance payments at closing.
* Transfer Taxes (varies widely by state & municipality) – This is the tax paid when the title passes from seller to buyer.
* Recording Fees (varies widely depending on municipality) – A fee charged by your local recording office, usually city or county, for the recording of public land records.
* Processing Fee (up to $1,000) – This goes to your lender. It reimburses the cost to process the information on your loan application.
* Underwriting Fee (up to $795) – This also goes to your lender, covering the cost of researching whether or not to approve you for the loan.
* Loan Discount Points (often zero to two percent of loan amount) – “Points” are prepaid interest. One point is one percent of your loan amount. This is a lump sum payment that lowers your monthly payment for the life of your loan.
* Pre-Paid Interest (varies depending on loan amount, interest rate and time of month you close on your loan) – This is money you pay at closing in order to get the interest paid up through the first of the month.
* Property Tax (usually 6 months of county property tax)
* Wood Destroying Pest Inspection and Allocation of Costs – If required by the lender or buyer, the inspection generally runs up to $125.00. Repairs can get expensive if evidence of termites, dry rot or other wood damage is found. example: Fumigation of a typical 1500 square foot house could run around $2,000.
* Home Owners Association Transfer Fees – The Seller will pay for this transfer which will show that the dues are paid current, what the dues are, a copy of the association financial statements, minutes and notices. The buyer should review these documents to determine if the Association has enough reserves in place to avert future special assessments, check to see if there are special assessments, legal action, or any other items that might be of concern. Also included will be Association by-laws, rules and regulations and CC & Rs. The fee for the transfer varies per association, but generally around $200-$300.
Closing costs and fees are part of a mortgage, and knowing what they are and how much they should be is a good idea. This will put you in a position to challenge a cost or fee that seems exorbitant. Even if everything is correct, you have the right to ask, and your mortgage company has the duty to explain – in detail – each and every closing cost and fee.
November 9, 2011 • 2:46 am 0
|Property Type:||Residential, Condominium|
|Style:||Two Level, Traditional|
|View:||City Lights, Hills, Ocean, Peek-A-Boo, Yes|
FHA OK! This home is situated in one of the best locations in the entire Villagio tract! This 3BD 2.5BA home is located @ the end of a cul-de-sac w/ no neighbors behind the home! One can enjoy a useful yard w/ a newer private spa, eating area & private backdoor gate that leads to a walking trail. The walking trail behind the home is perfect for walking dogs, kids or an evening stroll. The trail leads to a picnic table that offers a stunning 180 degree ocean view! This home also features a peek a boo ocean views that can be enjoyed from the secondary bedroom balcony and also from the backyard near the private spa. This model is one of the most sought after floor-plans that offer’s a large downstairs master suite with a large walk-in closet & full bath with dual sinks & large sky light. This open floor plan provides an abundance of natural light and tranquility. The kitchen is equipped w/ granite countertops and newer white appliances, newer carpet and paint and also wonderful bonuses.
January 11, 2011 • 9:03 pm 0
The so-called “Keep Your Home California program” launched today, aimed at keeping, you guessed it, more Californians in their homes.
The program offers four types of assistance:
Unemployment Mortgage Assistance Program (UMA) – For unemployed homeowners who wish to stay in their homes, this program can provide up to six months of benefits with a monthly benefit of up to $3,000 or 100 percent of the existing total monthly mortgage payment, whichever is less.
Mortgage Reinstatement Assistance Program (MRAP) – This program will provide up to $15,000 per household to reinstate mortgage loans that are in arrears due to a temporary change in household circumstance, such as active military duty.
Principal Reduction Program (PRP) – This program aims to reduce avoidable foreclosures by providing principal reductions to those who have experienced economic hardship while also being in a negative equity position. Servicers can match funds allocated through the program.
Transition Assistance Program (TAP) – The final option provides funding to those where foreclosure is unavoidable to pay for relocation fees, used in conjuction with a servicer-approved short sale or deed-in-lieu of foreclosure.
Eligiblity is as follows:
- Home must be in California
- You can only own a single property, a primary residence
- First mortgage must be less than or equal to $729,750 (conforming jumbo limit)
- Mortgage must have been originated on or before January 1, 2009
Call 888-954-KEEP or visit their website to see if you qualify.
November 16, 2010 • 12:47 pm 0
1. How can I get started with the Short Sale process?
Call us today at 949-939-7831 to schedule a confidential appointment where we can evaluate your situation.
2. What is a Short Sale?
A Short Sale occurs when the purchase price is or may be insufficient to enable Seller to pay the costs of sale, which include but are not limited to the Seller’s closing costs and payment in full of all loans or debts secured by deeds of trust on the Property due and owing to one or more Lender(s) and/or other lienholders. The Seller also does not have sufficient liquid assets to pay any deficiencies. The lienholders agree to release or discharge their liens upon payment of an amount less than the amount owed, with or without the Seller being released from any further liability.
3. Who Qualifies for a Short Sale?
In order to qualify for a Short Sale, the Seller must prove to the bank one or more of the following conditions:
Incidentally, these are also the most common reasons for a foreclosure.
4. Why Would a Lender Accept a Short Sale?
Why would a Lender accept less than they are owed? Because the alternative is a foreclosure. Just as with the borrower, there are significant consequences to the Lender if they foreclose.
5. Do Lenders approve all Short Sales?
6. What if a property needs work, can I still apply for a Short Sale?
Yes. In fact, Lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn’t. The Lender knows the risk of loss goes up when they foreclose on a property that needs lots of work.
7. What is a Short Sale Packet and What Needs to be in It?
A Short Sale package is used to determine whether a homeowner can afford the property. Most Lenders already have a standard package which they will send to the borrower upon request. The borrower is expected to provide financial information to include income and household expenses.
The Seller must fill out forms with the Listing Agent to be submitted to start the Short Sale process – and submitted with any offer. These forms include:
8. What are the Tax Consequences to the Seller of a Short Sale?
Before, the Seller was sometimes required to declare the difference between the loan principal and the amount the bank received as income on their tax forms, and pay tax on it. In November 2007, a law was passed that changed this. Effective January 1, 2008, “Forgiven Mortgage Debt” (the difference between the principal and the amount the bank received) is excluded from taxable income. There are restrictions. In order to qualify for this exclusion, the house must be occupied by the owner as a principal residence (not a summer home, vacation house, rental property, etc.). Investors do not qualify.
9. I have more than one mortgage on my property. Is that a problem?
No. Subordinate Lenders are more flexible than 1st mortgage holders.
What if I have 2 mortgages held by different Lenders?
When you have 2 loans with the same Lender, it is more beneficial to them, as there is no need to negotiate with another Lender.
When the two loans are with different Lenders, the process is a little longer, but the second Lender is the one who has more to lose if they don’t reach a settlement. This is because if the property goes to foreclosure, the first loan is the first one to be paid and the second usually nets nothing.
10. Do I have to be past due on my mortgage to be able to get the benefit of a Short Sale?
No, but it is likely that the Lenders’ guidelines will prevent them from formalizing a Short Sale if the loan is not past due. This means, for them, that the borrower has the means and can continue to pay on the loan each month. Please understand, however, WE ARE NOT RECOMMENDING THAT ANYONE STOP PAYING THEIR LOANS. In the current market conditions, it is possible that a bank would accept a Short Sale, even when the borrower is current.
11. What is a BPO?
A Broker Price Opinion (BPO) is when the Lenders contact their own Broker/Real Estate Agent and pay them to render an option on the condition, value and time on market for the property. This is because many Lenders do not have the knowledge of the market in California, because their offices may be in Texas, for example.
12. If a Lender saves so much money working out a Short Sale arrangement, why do they request so much information and why does it take so long for them to work a file?
The Lender wants to make sure that a borrower is truly having financial problems and is not one of those people who for various reasons just wants to stop paying for the property and the mortgage debt. If the borrower has liquid funds, the Lender will want the borrower to use them in the sales process. The Lender also wants to make sure the borrower is not selling the property to a related party for the sole purpose of locking in a reduced pay off. The bottom line is that the lender is going to manage the transaction with the objective of recovering the most money for the Lender. The time frames involved cover a multi-step negotiation process between the borrower and the Lender with either the Lender or borrower objecting to certain terms and making various counter proposals before coming to an agreement. Third party inspections and BPOs will also need to be done before the negotiations can be formalized in an agreement.
13. What is a hardship letter?
This is a letter that explains the borrower’s current financial circumstances, i.e. which circumstances have changed from when the house was purchased, and why the mortgage payments can no longer be made. These circumstances are what led to a borrower’s inability to make payments and to pay off the loan in full. This letter must be written by the borrower, and be sincere in demonstrating (with documentation) that it is the truth.
14. What types of information does the Lender require the borrower to submit?
Along with the Hardship letter, each Lender will have different forms that we will need to complete. All Lenders generally require various items such as two months of bank statements, pay stubs, past tax returns, W2, etc. Usually each Short Sale package that I submit is over 70 pages long.
15. How long does it take to complete a Short Sale?
The time frame for the Lender to receive and evaluate the Short Sale proposal is about 60 to 90 days from the time the offer and Short Sale Package are received. Buyers need to realize that this is a lengthy process. This is why it is very important to work with a Short Sale Specialist who knows how to manage the transaction. The other agent and the buyer may get cold feet at the end, and the transaction may fall through.
16. Why does the bank accept less than they are due?
They lose less money on a Short Sale. On average, Lenders lose tens of thousands of dollars less on a Short Sale versus a full foreclosure. It is simply in their best interest.
17. Why do lenders prefer to work with experienced agents?
In steeply declining markets, Short Sales are booming. Selling a home for less than the underlying mortgage often provides troubled home owners with their best chance of avoiding foreclosure and ruining their credit. A cottage industry of bankruptcy specialists and other self-described loan mitigators are trawling for clients, but Lenders would often prefer to work with real estate professionals in negotiating Short Sales for clients. Here’s why:
18. I owe more than my home is worth. Is a Short Sale my only option to get out of foreclosure?
You have other options, like a Deed in lieu of foreclosure. That is a perfect case to demonstrate to the Lender that if they do not accept a Short Sale, they are going to lose even more money than they are now.
19. Can you guarantee a successful Short Sale?
No. Anyone who says they can guarantee a successful Short Sale is delusional, has never worked a Short Sale, and is not someone you should hire. Our goal is to work out a successful Short Sale with the bank. However, there are a lot of variables that neither we nor any 3rd party negotiator has control over.
The only guarantee is that we will do all that we can to prevent a foreclosure.
20. What if the bank rejects the Short Sale proposal as presented? Am I still obligated to sell the home to the buyer?
No. Under a traditional sale, you could be sued for specific performance if, as the Seller, you did not meet the terms of the contract. However, a Short Sale requires the approval of the contract by the bank. In the scenario where the bank rejects the packet, we would need to correct the items that caused the rejection and re-submit.
21. What’s the difference between a Short Sale and an REO?
A Short Sale occurs prior to the bank foreclosing on a defaulting Seller. Should the Seller or the bank not receive an offer that’s acceptable, the bank will foreclose on the Seller and sell the home at a public auction. Should no one outbid the bank for what is owed, the bank purchases the home back and that property becomes an REO (Real Estate Owned).
22. Is it possible to start a Short Sales process when foreclosure has taken place?
If the homeowner was evicted or the property was sold at auction, a Short Sale is not possible.
23. What are the requirements from the property owner?
Sign a listing agreement with the realtor.
List the property for sale.
Vacate the home following close of escrow.
24. How does the Short Sale process generally work?
There are a few important distinctions between selling your home traditionally and selling your home through a Short Sale.
Your mortgage company is thoroughly involved in the selling process. The bank will review a whole host of documents and will need to agree to a Short Sale proposal. The proposal will consist of your hardship letter, proof of your hardship, a listing agreement, a sale agreement with a buyer, sample HUD-1, a CMA, and other requested documents.
As a result of their involvement, the home will need to be listed for sale “As-Is” with you not making any repairs requested as a result of the inspection. Also, any agreements must be submitted to the bank for approval. This takes time and so as a result, it may be a number of weeks before a Short Sale is approved.
If the home has both a first and second mortgage, both will need to be negotiated independently, which may further delay the process.
All commissions and closing fees are set by the bank upon agreement of the Ahort Sale and as a Seller, you will not receive any proceeds from closing.
Purchasers looking for an opportunity to own a home below market value should look into Short Sales. However, there are a few things you must remember before you make an offer.
Be Patient. Short Sales Take Time!
Among the chief complaints I hear from Buyer’s Agents and Buyers is the amount of time required to get a response to their offer on a Short Sale. This comes from a general lack of understanding of the process that is occurring between the Seller, the bank and their vendors. Here is a summary:
This entire process can take a few weeks or a few months. Most Loss Mitigation departments are handling tens of thousands of files and your negotiator may be handling 2,000 Short Sales personally.
If the home has a second mortgage, the process will take even longer!
Rarely is the first and second mortgage with the same bank. If if that is the case, the two mortgages may be handled by different negotiators. That means that it could take an additional couple of weeks to get a response from the second mortgage after a response has been received from the first. The banks work on a time line so if the second takes too long or if the listing agent doesn’t communicate properly, the process with the first will have to be restarted all over again.
If the home has multiple leins, it could take even longer.
The listing agent doesn’t know what the bank will accept unless an offer has been received beforehand.
In a normal real estate transaction, a Seller will list a house for sale at a price that is acceptable for them. In a Short Sale, the bank / investor on the actual loan has the final say on the price and they donít share what they will accept with the Seller or their agent until an offer is received. This puts the listing agent in an awkward position and could result in a home being listed for sale below what the bank is willing to accept.
25. Does it cost you anything for a Short Sale?
No, the bank covers all of the fees for the Short Sale including real estate commissions and fees generated by the escrow company and/or 3rd party negotiator.
October 13, 2010 • 1:09 pm 0
Many first-time home buyers seem to be confused as to who pays for what in a typical real estate transaction. We decided to provide our readers with a general guide that works for most transactions. Remember, the seller pays the real estate commission, not the buyer! There’s no excuse not to use the help of a REALTOR®!
Closing Costs – Who Pays For Wh
|The SELLER can generally
be expected to pay for:
|The BUYER can generally
be expected to pay for:
September 27, 2010 • 2:32 pm 0
The most important thing you can do to prepare your home for sale is to get rid of clutter. Make a house rule that for every new item that comes in, an old one has to leave. One of the major contributors to a cluttered look is having too much furniture. When professional stagers descend on a home being prepped for market, they often whisk away as much as half the owner’s furnishings, and the house looks much bigger for it. You don’t have to whittle that drastically, but take a hard look at what you have and ask yourself what you can live without.
There’s a common belief that rooms will feel larger and be easier to use if all the furniture is pushed against the walls, but that isn’t the case. Instead, furnish your space by floating furniture away from walls. Reposition sofas and chairs into cozy conversational groups, and place pieces so that the traffic flow in a room is obvious. Not only will this make the space more user-friendly, but it will open up the room and make it seem larger.
Give yourself permission to move furniture, artwork and accessories among rooms on a whim. Just because you bought that armchair for the living room doesn’t mean it won’t look great anchoring a sitting area in your bedroom. And try perching a little-used dining-room table in front of a pretty window, top it with buffet lamps and other accessories, and press it into service as a beautiful writing desk or library table.
If you have a room that serves only to gather junk, repurpose it into something that will add to the value of your home. The simple addition of a comfortable armchair, a small table and a lamp in a stairwell nook will transform it into a cozy reading spot. Or drape fabric on the walls of your basement, lay inexpensive rubber padding or a carpet remnant on the floor and toss in a few cushy pillows. Voila – a new meditation room or yoga studio.
One of the things that make staged homes look so warm and welcoming is great lighting. As it turns out, many of our homes are improperly lighted. To remedy the problem, increase the wattage in your lamps and fixtures. Aim for a total of 100 watts for each 50 square feet. Don’t depend on just one or two fixtures per room, either. Make sure you have three types of lighting: ambient (general or overhead), task (pendant, under-cabinet or reading) and accent (table and wall).
To make a room appear to be bigger than it is, paint it the same color as the adjacent room. If you have a small kitchen and dining room, a seamless look will make both rooms feel like one big space. And make a sunporch look bigger and more inviting by painting it green to reflect the color of nature. Another design trick: If you want to create the illusion of more space, paint the walls the same color as your drapery. It will give you a seamless and sophisticated look.
Painting a living room a fresh neutral color helps tone down any dated finishes in the space. Even if you were weaned on off-white walls, take a chance and test a quart of paint in a warm, neutral hue. These days, the definition of neutral extends way beyond beige, from warm tans and honeys to soft blue-greens. As for bold wall colors, they have a way of reducing offers, so go with neutrals in large spaces.
Don’t be afraid to use dark paint in a powder room, dining room or bedroom. A deep tone on the walls can make the space more intimate, dramatic and cozy. And you don’t have to go whole hog – you can paint just an accent wall to draw attention to a dramatic fireplace or a lovely set of windows. If you have built-in bookcases or niches, experiment with painting the insides a color that will make them pop — say, a soft sage green to set off the white pottery displayed within.
If your home is like most, the art is hung in a high line encircling each room. Big mistake. Placing your pictures, paintings and prints in such stereotypical spots can render them almost invisible. Art displayed creatively makes it stand out and shows off your space. So break up that line and vary the patterning and grouping.
Mixing the right accessories can make a room more inviting. When it comes to eye-pleasing accessorizing, odd numbers are preferable, especially three. Rather than lining up a trio of accessories in a row, imagine a triangle and place one object at each point. Scale is important, too, so in your group of three be sure to vary height and width, with the largest item at the back and the smallest in front. For maximum effect, group accessories by color, shape, texture or some other unifying element, stagers suggest.
Staged homes are almost always graced with fresh flowers and pricey orchid arrangements, but you can get a similar effect simply by raiding your yard. Budding magnolia clippings or unfurling fern fronds herald the arrival of spring, summer blooms add splashes of cheerful color, blazing fall foliage warms up your decor on chilly autumn days and holly branches heavy with berries look smashing in winter.
Create a relaxing bedroom setting with luxurious linens and soft colors that will make a potential home buyer want to hang out. Bedroom staging trick: If you don’t have the money to buy a new bed, just get the frame, buy an inexpensive air mattress and dress it up with neutral-patterned bedding. And remember to declutter. By cleaning out your closets, you’re showing off your storage space, which sells houses – it always ranks high on buyers’ priority list.
If you can’t afford new cabinets, just get new doors and drawer fronts. Then paint everything to match and add new hardware. And instead of replacing the entire dishwasher, you may be able to get a new front panel. Check with the manufacturer to see if replacements are available for your model. If not, laminate paper, which goes on like contact paper, can be used to re-cover the existing panel.
Unfinished projects can scare off potential buyers, so finish them. Missing floorboards and large cracks in the sidewalk on the way to your door tend to be a red flag, for example, and they cost you less to fix than buyers might deduct from the asking price.
Having tile professionally painted can make a bathroom look brand new. And accessorizing can make buyers feel like they’re in a spa. Put out items like rolled-up towels, decorative baskets and candles. It’s a great way to create a polished look, and it doesn’t cost much to do.
As always, as part of listing your home with us, you get a free 2-hour home staging consultation with Irina.
April 5, 2010 • 2:36 pm 1
Federal law offers up to $8,000 for first-time homebuyers and $6,500 for long-time residents. California law offers up to $10,000 for first-time homebuyers or buyers of properties that have never been occupied. Here’s a handy summary of the two tax credit laws:
|HOMEBUYER TAX CREDIT||FEDERAL||CALIFORNIA|
|Amount of Tax Credit||10% of purchase price not to exceed $8,000 for First-Time Homebuyers or $6,500 for Long-Term Residents.||5% of purchase price, not to exceed $10,000 for first-time homebuyers or buyers of properties that have never been occupied. (See also Maximum Credit for All Taxpayers.)|
|Date of Purchase||By June 30, 2010, but taxpayer must enter into a written binding contract by April 30, 2010.||From May 1, 2010 to July 31, 2011, but an enforceable contract must be executed by December 31, 2010.|
|Principal Residence||Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121).||Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218).|
|Type of Property||House, condominium, townhome, manufactured home, apartment cooperative, houseboat, housetrailer, or other type of property located in the U.S.||Single-family residence, whether detached or attached.|
|Eligibility||1. First-Time Homebuyer: Up to $8,000 if buyer (and buyer’s spouse if any) has not owned a principal residence during the three-year period before date of purchase; OR
2. Long-Time Resident: Up to $6,500 if buyer (and buyer’s spouse if any) has owned and used existing home as a principal residence for 5 of the last 8 years.
|1. First-Time Homebuyer: Up to $10,000 if the buyer (and buyer’s spouse if any, according to FTB) has not owned a principal residence during the three-year period before date of purchase; OR
2. Never-Occupied Property: Up to $10,000 for a principal residence if the property has never been previously occupied as certified by the seller.
|Income Restriction||Yes. Tax credit begins to phase out for modified adjusted gross income (MAGI) over $125,000 (or $225,000 for joint filers). No tax credit at all for MAGI over $145,000 (or $245,000 for joint filers).||No|
|Maximum Purchase Price||$800,000.||N/A|
|Refundable||Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check.||No|
|Repayment||No repayment required if the buyer owns and occupies the property for at least 36 months after purchase.||No repayment required if the buyer owns and occupies the property for at least two years immediately following the purchase.|
(not married to each other)
|Tax credit may be allocated between eligible taxpayers in any reasonable manner.||Tax credit must be allocated between eligible taxpayers based on their percentage of ownership.|
|Maximum Credit for All Taxpayers||N/A||$100 million for first-time homebuyers and $100 million for never-occupied properties, both on a first-come-first-served basis.|
|Reservations of Credit||N/A||Yes. Buyer may reserve credit before close of escrow for a property that has never been occupied by submitting a certification signed by buyer and seller stating they have entered into an enforceable contract between May 1, 2010 and December 31, 2010, inclusive.|
|When to Claim||Full tax credit may be claimed on 2009 or 2010 tax returns.||1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2010, $3,333 for 2011, and $3,333 for 2012).|
|Tax Agency||Internal Revenue Service (IRS).||Franchise Tax Board (FTB).|
|How to File||First-Time Homebuyer Credit and Repayment of the Credit (IRS Form 5405) to be filed with tax returns||Submit application to the FTB to obtain Certificate of Allocation. The FTB may prescribe additional rules and procedures to carry out this law.|
|Other Restrictions||Cannot be an acquisition from related persons as defined; cannot be an acquisition by gift or inheritance; and buyer cannot be a non resident alien.||Cannot be an acquisition from related persons as defined; buyer or spouse must be 18 years old; buyer cannot be another taxpayer’s dependent; credit is allowed for only one qualified principal residence; and credit allowed cannot be a business credit under Cal. Tax & Rev. Code § 17039.2.|
|Legal Authority||26 U.S.C. section 36.||Cal. Rev. & Tax Code section 17059.1 (as added by Assembly Bill 183).|
|Date of Enactment||November 6, 2009 (as revised).||March 25, 2010.|
|More Information||IRS Web site at http://www.irs.gov/newsroom/article/0,,id=
|FTB Web site at http://www.ftb.ca.gov/
Readers who require specific advice should consult an attorney.
Copyright© 2010, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)