Last week while at the grocery store, I overheard a couple discuss waiting for a repeat of the First-Time Homebuyer’s Tax Credit before making their home purchase. All I could think was…NO! Now is one of the most opportune times to buy a home. Yes, I said home… not house. A house is an investment…a home is where you and your family live…memories are built, the good and bad things in life “happen”…grandma comes to visit…get the picture? Any way, here are some reasons why you don’t want to put off purchasing a home:

1. Interest rates are at their lowest EVER!. The difference between a 30 year fixed rate loan of $150,000 at 6%* and 4.5%* is $142.00 per month. Meaning that you can have a more affordable monthly payment, qualify for a bit larger or nicer home or buy that beautiful new home or condo with $142 Mello Roos or homeowners association dues.

2. FHA, Fannie Mae, Freddie Mac and Investors are continually changing and restricting a buyer’s qualifying ability. Just this week it was announced that co-signed payments will no longer be omitted from qualifying ratio’s. This flies in the face of a twenty-year practice of omitting the payment if it is proven (documented) that the second party is, and has been, making the payments within the last 12 months or since inception. This means, if you co-signed for your adult child’s auto loan, you now have to qualify with that payment as well. If you co-signed for your parents or grand parents, or your brother or sister, you are now held as responsible and have to qualify for your home loan even though they make the payments.

3. Just this week, a measure passed in congress allowing FHA to increase its annual mortgage insurance premium from .55 to 1.50%. President Obama is expected to sign this Bill into law. The administration argues that the premium hike will allow FHA to build it’s capital more quickly than it otherwise would. (Duh!) Also included, is the option to reduce the financed upfront MIP. However, financed MIP has a less severe impact on qualifying ratios, since it is spread out over the term of the loan. The higher Annual Monthly Mortgage Insurance Premium has the potential to further reduce a borrower’s qualifying potential.

4. Private Mortgage insurance is back for CA** home buyers with 5 -10% down and credit scores over 720.

So the government isn’t giving away $8,000, but the rates are lower than ever, and who knows what the next round of restrictions or laws will do to limit your ability to buy. Added together, these are all good reasons to buy a home now!

I encourage you to contact me today to discuss your purchasing options, before rates begin to climb and your ability to purchase becomes further restricted.

*not to be considered a rate quote and used for comparison purposes only APR 6.456% and APR 5.172%
** Not in all areas of CA

Ingrid Pierson (530) 885-1545 ipierson@teamvitek.com

The four-county area of El Dorado, Placer, Sacramento and Yolo witnessed a 29% decrease in closings in July. The end of the federal down payment program was partly to blame; however it was not the only factor.  The area also experienced a 15% increase in the number of homes for sale since May as well as a decline in the average listing price.  “Buyers took a step back to take advantage of the larger inventory at lower prices,” stated Michael Lyon, CEO, Lyon Real Estate. “When we see larger inventory, coupled with static, record-low interest rates, it affords buyers choices that they have not seen since the late 90’s.” Ironically, the price-per-foot of homes sold has seen gains in the low-end and continued loss in the high-end.

The drop in average list price has accounted for the biggest change over time rather than the number of homes sold. Over the past year the average list price went from a peak of $455,000 in August of ‘09 down to $338,000 for July of 2010.  The difference between average list price and average sold price has dropped from $216,000 in August ‘09 to a staggering $84,000 in July 2010. Michael Lyon continued, “This drop is indicative that the average seller better understands today’s buyer mentality and realizes that if you are not priced within 10% of the sold comparables, you probably will not generate any interest or an offer. The increase in pended sales last month shows that Sellers are getting realistic and buyers have tremendous choices. Closings are likely to rebound in the next 60 days.”

TRENDGRAPHIX’s latest report shows that sales decreased 29 percent during the month of July for the Tri-County region of Sacramento, Placer and El Dorado Counties. July 2010 sales were 28 percent lower than July 2009 sales. Pending sales increased by 22 percent from June to July 2010.
July 2010 inventory of 8,013 homes for sale is 28 percent higher than July 2009 inventory. This is a 48 percent decrease for the regional inventory record high of 15,302 set in August 2007.

COUNTY HIGHS AND LOWS

Sacramento County sales decreased 30 percent from June to July 2010. Inventory increased 7 percent during the month of July. Pending sales increased by 21 percent in the month of July. 56 percent of the homes sold for under $200,000; 37 percent of the homes sold for between $200,000 and $400,000; and 7 percent of the homes sold for over $400,000. The average price per square foot decreased 1 percent during the month of July to $124.

Placer County sales decreased by 24 percent and inventory increased by 6 percent during the month of July 2010. Pending sales increased by 31 percent from June to July. 4 percent of the homes sold for under $200,000; 50 percent of the homes sold for between $200,000 and $400,000; and 46 percent of the homes sold for over $400,000. The average price per square foot decreased by 1 percent during the month of July to $146.

El Dorado County sales decreased by 25 percent from June to July, and the inventory increased by 3 percent from June to July. Pending sales have increased 18 percent during the month of July. 20 percent of the homes sold for under $200,000; 46 percent of the homes sold for between $200,000 and $400,000; and 34 percent of the homes sold for over $400,000. The average price per square foot increased 1 percent during the month of July to $155.

Yolo County sales decreased by 14 percent for July 2010 and the inventory increased by 9 percent. Pending sales decreased 1 percent during the month of July. 31 percent of the homes sold for under $200,000; 51 percent of the homes sold for between $200,000 and $400,000; and 18 percent of the homes sold for over $400,000. The average price per square foot decreased 4 percent during the month of July to $164.

Nevada County sales have decreased by 37 percent during the month of July, and inventory increased 1 percent. Pending sales increased by 22 percent. 0 percent of homes sold for under $200,000; 41 percent of the homes sold for between $200,000 and $400,000; and 59 percent of the homes sold for over $400,000. The average price per square foot increased by 244 percent during the month of July to $244.

San Joaquin County sales have decreased by 22 percent during the month of July, and inventory increased by 9 percent in July. Pending sales increased 16 percent. 39 percent of the homes sold for under $200,000; 48 percent of the homes sold for between $200,000 and $400,000; and 13 percent of the homes sold for over $400,000. The average price per square foot decreased 2 percent during the month of July to $100.

Knowing the tax laws can allow homebuyers and the Realtors® that assist them to make a move confidently and to save lots of money. California Propositions 13, 60, and 90 can positively affect people over 55 years of age.

Proposition 13:

Under Proposition 13, the value of a home, for property tax purposes, is reassessed to the new market level (the new purchase price) whenever a change in ownership occurs. This usually results in higher property taxes.

Prop 60:

Proposition 60 allows a transfer of base-year value of the principal residence sold of a senior citizen (55 and older) to a replacement dwelling of equal or lesser value within the same county.

Prop 90:

Proposition 90, enacted in the November of 1988 in California, and otherwise known as the “local option law”, provides an avenue for property tax relief to owners 55 and older who sell their principal residence and purchase a replacement home of equal or lesser value in another county.



The County Assessors will require a copy of the tax bill from the other county and a copy of the applicant’s birth certificate to be included with the application. Also, include a copy of the grant deed for the new purchase and a copy of the closing statements of both sale and purchase.

SUMMARY OF ELIGIBILITY REQUIREMENTS:

The seller of the original residence, or a spouse residing with the seller, 55 years of age or older, as of the date that the original property is transferred.
The replacement property must be of equal or lesser “current market value” than the original.
The tax base year of the original property cannot be transferred to the replacement dwelling until the original property is sold, BUT (and this is the cool part) the replacement property must be purchased or newly constructed within two years (BEFORE OR AFTER) of the sale of the original property. This allows the property owner to take advantage of a low market, like the one we’re in, and sell when things are selling more briskly or vice versa. This just means that the homeowner will be taxed on the new property at the assessed rate until the sale is made on the original property and the proper paperwork is filed with the county. The owner must file an application within three years following the purchase date or new construction completion date of the replacement property.
This is a one-time-only filing. Proposition 60/90 relief cannot be granted if the claimant, or spouse, was granted relief in the past.
Proposition 60/90 relief includes (but is not limited to): single family residences, condominiums, units in planned unit developments, cooperative housing, corporation units or lots, community apartment units, mobile homes subject to local real property tax, and owner’s living premises which are a portion of a larger structure.
The taxpayer is not eligible for the tax relief until they actually own AND occupy the replacement dwelling as their principle residence.
If the buyer is moving to another county, it is essential that you call the co-operating County in question, to verify that they are currently accepting the value transfer under Proposition 90, and what their requirements are. If you have any questions, the property tax office in Sacramento for all counties in California may be reached at (916) 445-4982.

Contact me for more information.

John Easterbrook (916) 486-6969 jeasterbrook@teamvitek.com

New money is now available for the SHRA MCC program. This program blows away the $8,000 First-time Homebuyer Tax Credit, if the borrower keeps the loan in place for more than five years as an owner occupant.

The Sacramento Mortgage Credit Certificate (MCC) Program is designed to provide homeownership assistance on home purchases within the cities of Sacramento, Elk Grove, Folsom, Isleton, Galt, Citrus Heights, Rancho Cordova and the County of Sacramento. The MCC reduces the amount of Federal income tax a homebuyer pays, thus giving more available income to qualify for a mortgage loan and to make monthly mortgage payments. This new allocation won’t last very long, so take advantage of it while you can. Below are a few keep points on the MCC loan program.

Program Features:

• 20% Mortgage Credit Certificate – a tax credit of 20% of the annual mortgage interest paid (amount of the credit cannot be more than the annual federal income tax liability after all other credits and deductions have been taken into account)
• MCC will be in effect for the life of the original mortgage loan provided property remains owner occupied
• MCC may be reissued one time, upon the first refinance of the original mortgage loan
• MCCs may be used with conventional loans, fixed-rate or adjustable loans, FHA and VA loans (MCCs are not available with bond-backed loans such as CHFA or Cal-Vet)
• 40 percent of an MCC allocation is reserved for households whose income does not exceed 80 percent of the area median adjusted for family size

Eligible Applicants Include Homebuyers:

• Who are first-time homebuyers (have not owned and occupied a home as a principal residence within the preceding three years) (in federally designated target areas, you do not have to be a first-time homebuyer)
• Able to qualify for a loan to purchase the home
• Who will live in the home being purchased
Who do not exceed the following income limitation:
• 1 or 2 person household $73,100 (non-target areas) $87,720 (target areas)
• 3 or more person household $84,065 (non-target areas) $102,340 (target areas)

Eligible Properties Include:

• Single family homes that are located within the cities of Sacramento, Elk Grove, Folsom, Isleton, Galt, Citrus Heights, Rancho Cordova and the unincorporated areas of the County of Sacramento.
Maximum purchase price limits:
• New and Existing Homes $506,795 (non-target areas) $619,417 (target areas)

Contact me for more information or a list of federally designated target areas.

John Easterbrook (916) 486-6969 jeasterbrook@teamvitek.com

Whether you are a homebuyer, Realtor®, or Escrow Officer, chances are you have endured a frustrating transaction by not knowing what is happening with your loan. Now with VITEK’s ‘Real-time Loan Status Updates’ (LSU), you will always know where your loan is in the process! We believe communication is vital to ensuring a smooth and successful transaction for our clients. Along with our new Loan Origination Software (LOS) we recently launched, we have programmed ‘Loan Status Updates’ into the loan process to keep you informed of important milestones in the transaction, as they happen.

When VITEK is your lender, in addition to phone calls from your mortgage loan originator, you can expect to receive email notification of important events in the loan process, triggered by the actions of our different loan departments.

A few important LSU’s that you can expect to receive include:

• Preliminary Title Report Received
• Loan Assigned an Underwriter
• Loan Approved with (or without) Conditions
• Loan Documents Ordered
• Loan Funded!

To help ensure your loan closes quickly, in addition to communicating with you on the status of your loan, we also keep you informed on important information you will need to take note of throughout the transaction.

If you want to stay fully informed throughout your loan transaction, allow VITEK to walk you through the home loan process. You won’t be disappointed!

Philip Duncan Executive Vice President