A week or so ago it was announced that FHA loans could have the $8,000 first time home buyer tax credit upfronted to the buyer to put towards their closing costs.   The big problem however was who was going to give the first time home buyer the $8,000?   It’s not like the mortgage companies were saying we will loan you the additional $8,000 so where was it going to come from?   One option was through an agency such as the Bucks County Housing Group which helps out with closing costs, but to be able to get these funds from the group the buyers  would have  to take a Home Buying Boot Camp Class  and meet with counselor’s so it’s a time consuming process.   Another viable option is the PHFA (Pennsylvania Housing Finance Agency) which allows buyers to borrow the lesser of 10% of the purchase price, or $6,000 for newly constructed homes, or $5,000 for existing homes.   The trouble before  yesterday was that PHFA’s interest rate was at 6.75% compared to FHA’s 5% so it just didn’t make sense to take advantage of this otherwise great program.     GOOD NEWS!   The tables have turned and today PHFA’s rate is at 5.3875% versus FHA’s which is at 5.75% which makes PHFA the obvious route to go and now opens this Tax Credit Advance Loan Program up quite a bit.   There are guidelines for purchase price and income limits  which for the Bucks County Area is a $224,000 purchase price and a 1 member household income limit of $46,600 and a 2 member household income limit of $62,200.       In Philadelphia the purchase and income limits are $224,000  and an income limit for  a 1 member household of $56,000 and for  a 2 member household the income level limit  is $74,600.

To break this down it means if you are a single first time home buyer in Bucks County who earns $46,600 or less per year and you want to purchase a home under $224,000 you are eligible for the $5,000 Tax Credit Advance Loan Program and it can be used towards your down payment.   To show how this could work:  A first time home buyer can now purchase a 3 bedroom 1.5 Bath 1469 sq. ft. townhome in Holland (that is currently on the market) for approx. $215,770 with a $10,800 seller assist.   This would make the total funds needed to purchase approx. $7,553.18 with a   monthly payment including taxes, insurance, and HOA fees of approx. $1,648.69.   Now if the buyer used PHFA’s Advance Loan Program they would receive $5,000 to put towards their down payment so this brings the total funds needed to purchase down to $2,553.18.   The best part is after receiving your $8,000 first time home buyer  tax credit and paying back the $5,000 loan you’ll still receive $3,000 back.   ANother option is to keep your entire $8,000 tax credit and let the $5,000 Advanced Loan become a second mortgage amortized over 10 years at the same rate as your first mortgage.   In this scenario the monthly cost over 10 years would be $53.98 per month.   Pretty great deal.   Don’t forget the tax credit is only available until the end of Nov. so on Dec. 1st it’s gone.   As an FYI the norm to get to closing after executing an agreement of sale is 6 – 8 weeks so you’ll want to start looking soon to take advantage of all these great incentives.   The Advanced Tax Credit Loan is on a first come first serve basis so look into sooner rather than later.

 For more info check out this link and of course feel free to contact me with any questions.

 http://www.phfa.org/consumers/homebuyers/where.aspx

Recently, Larry Flick, CEO of Prudential Fox & Roach forwarded a report on our local real estate market put together by Kevin Gillen who earlier this year prepared a report for the Mayor of Philadelphia about the city™s real estate market.  You can see the report here.   Report

The report found that Philadelphia™s home prices have only fallen half as much as the average for the 10 largest cities, and the foreclosure rate remains well below the average of most other US cities so foreclosures are not expected to have as big of an impact on sales prices here.   At this time, Philadelphia is considered œunder-valued by 1.2% which is the first time this has occurred since 2003.   œInterestingly, Philadelphia was considered more over-valued during its last housing boom in the late 1980™s than it is now, despite the fact that house price appreciation during the recent 2003-2006 boom was much greater.   This implies that the fundamentals of Philadelphia™s housing market are in relatively better condition now than they were during the last downturn in 1989-1995. (pg.10)

 œThe Philadelphia Housing Affordability Index which is the ratio of the average local house price to the average local family income has fallen to 2.08 from its peak of 2.52 two years ago.   This implies that the typical Philadelphia home is priced just over twice the income of the typical Philadelphia family.   This is a 17% improvement in the affordability of local homes.   U.S. Federal guidelines for affordability state that a home is affordable to area households if it is priced at 2 “ 3 times typical area incomes.   By these guidelines Philadelphia is now a very affordable city. (p.9)

This is really fantastic news for First Time Home Buyers, and many seem to know it.   œ[There was a] sharp decline in this months™ supply of unsold homes indicating that buyers have begun to re-enter the market.   And why wouldn™t they.   œWith these declines, the region™s housing values have re-set themselves back to where they were in late 2004. (pg.2)   With home prices moving back to where they were before the huge run up from 2005 “ 2007, and interest rates the lowest we™ve seen in decades it is a great time to buy your new home.  

I wanted to expand a bit on the blog I wrote yesterday.   I fully believe that green homes are the wave of the future and no matter what will become the standard for new homes being built.   The reason why is because green really means quality.   Green homes have a better building envelope and use top notch systems that reduce energy consumption reducing monthly costs.   These homes take a few extra steps along the way to ensure they perform the best that they can i.e. sealing ducts, and all gaps in the envelope, making sure the highest level of insulation is used, and maybe more importantly used correctly, windows that insulate better etc.   One might think that all new homes are already built this way, but that is not always the case.   It’s not the norm, but from time to time I hear horror stories about people finding out that their ducts are not even hooked up to each other, insulation wasn’t installed on an exterior wall, or something else  most of us would never expect to find in our homes.   There are some new inspections people can perform to find out if their home is performing the best that it can.   One way is to get an energy audit.   The inspector performs tests such as the blower door  test to ensure that the envelope is tight and not leaking, or the duct blower test to determine  if the ducts are leaking.   Another test they can perform is taking pictures of your home with an infared camera to determine  where the majority of heat loss is.   This test is the one where folks found out that a section of an exterior wall was missing insulation.  These tests are a great way to find out if there is anything you can do to help lower your monthly costs, and I believe builders will be expected to show the results of these tests to potential buyers as more and more of us demand quality.   For more info on these types of tests check out.   An Energy Audit will usually cost approximately $300 – $400 for an average single family home.

Energy Audits

HERS Ratings

Blower Door Tests

I just received an e-mail from the Green Resource Council “Congratulations! The Green REsource Council is pleased to inform you that you have successfully completed all requirements and were awarded NAR’s Green Designation. ”

I’m really excited to be able to add this to my Realtor and ABR designations.   I know some people think that Green is a fad, and some even think of it  in only political terms  and see it as an out right liberal lie.   I don’t want to discuss either here, but do want to point out the one level we all agree on and that is green at it’s core really means energy efficiency and I don’t think anyone would argue that they would prefer a more energy efficient house to help reduce your monthly bills.   If you have any questions about what you can do to make your home more energy efficient just let me know and I’ll be happy to guide you to the right places.

Explanation of Settlement Costs

To show the affordability of homes and how the tax credit can actually put money back in a first time home buyers pocket I took a few recent closings so we can look at actual true-life scenarios.   I have attached the estimated closing costs for each property both with a seller assist and without a seller assist all except for the case of 1105 Society Place as this property did close with a 6% seller assist so I found no reason to run a different scenario.

1105 Society Place is a 2 bedroom 1 bath condo in Newtown Grant that settled for $190,000 on 2/26/09.   The MLS sheet shows the buyers received $11,400 as a seller™s assist towards closing costs.   However, since a seller assist cannot exceed the buyer™s closing costs, and under FHA guidelines the buyer must pay for the 3.5% down payment I had to lower the seller assist by almost $2,000 to $9,490.15 for this example.   You will notice the settlement cost estimate includes the breakdown of all of the fees included in buying a new home, but for our purposes the two important sections to focus on are at the bottom of the page under Funds Required to Purchase and Monthly Mortgage Payment (PITI).   You™ll see with a seller assist of $9,490.15 the buyer only needs $6,650 to purchase the home and the monthly payment including principal, interest, taxes, mortgage insurance, condo fee, and homeowners insurance (estimated at $300 per year) your monthly bill comes to $1,454.67.   Not too bad considering it would cost approximately $1,300 or so to rent a similar unit.     So, at settlement the buyer must bring $6,650 to purchase their new home, but next year when they go to file their taxes they will apply for the First Time Home Buyer Tax Credit which in this scenario will equal the full $8,000 so in essence they have actually purchased a new home and put $1,350 back in their pockets.   Pretty amazing!

In this scenario I reduced the seller assist the buyer actually received since the buyer must pay the 3.5% down payment, but this does not mean the seller assist wasn™t $11,400.   In a situation like this when the seller assist exceeds the buyers closing costs the buyer has a couple of options.   They can use the additional funds to pay for points to reduce their interest rate, or they can ask the seller to reduce the sales price.   In this scenario I did not use the extra money at all as I am not privy to what actually transpired.

Now let us look at a townhome in case a condo just isn™t right for you.   156 Madison Ct. settled for $207,000 on 10/29/08.  There have actually been a few good deals in this neighborhood one selling for $200,000 that needed a bit of work and one at $213,000 that was completely move in ready.   The buyer did not receive a seller assist on this property, but a buyer could have easily received a seller assist and had the seller still net their bottom line of $207,000 without any concerns of an appraisal issue.   I have attached both scenarios with and without a seller assist to show you how they would both play out.   We will focus on the one with the seller assist for our purposes here.   You™ll see with a seller assist of $11,722.15 the buyer only needs $7,630 to purchase the home and the monthly payment including principal, interest, taxes, mortgage insurance, condo fee, and homeowners insurance (estimated at $800 per year) is $1,645.25.   Not too bad considering it would cost approximately $1,500 or so to rent a similar townhome.     So, at settlement the buyer must bring $7,630 to purchase their new home, but next year when they go to file their taxes they will apply for the First Time Home Buyer Tax Credit which in this scenario will equal the full $8,000 so in essence they have actually purchased a new home and put $370 back in their pockets.   If you compare the two scenarios one without the seller assist and one with the assist the monthly payment including all taxes, insurances, and homeowner fees the difference is only $62.85 rolling the $11,722.15 seller assist in.   Considering cash is king it™s interesting to see that it would take 15.5 years for the additional monthly payment of $62.85 to equal the $11,722.15 rolled into the mortgage.   Since most people won™t live in the same house for 15 years it™s not a bad idea to role the settlement costs into your mortgage even if you don™t have to.   Instead, you could use that money to upgrade a kitchen, or bathroom to increase the value of your new home.   Not too bad!

closing cost examples.pdf

When you open the link you may have to scroll down to see the info.

On April 26, 2009 at 13:00 PM, you are invited to an Open House at 609 Hill Avenue in Langhorne. If you are looking for a Resale – single family property in this area, don™t miss this rare opportunity to visit this magnificent property. For a preview of this Resale – single family property, check out my site at kimcosack.topproducerwebsite.com. Please do not hesitate to Contact Me if you have any questions or wish to schedule a private showing.

There are many tax write offs available to home owners and here are a few not to forget:

Points:   Points used to buy down your mortgage rate are  tax deductible.   However, origination fees that are a service fee are not.

Pre-Payment Penalties:   Although pre-payment penalties always sting the fact that they are tax deductible helps ease the borrower’s pain.

Pro-Rated Real Estate Taxes:   At settlement buyers pay a pro-rated portion of the taxes for the year and their portion is tax deductible.

Pro-Rated Mortgage Interest:   At settlement buyers pay a pro-rated mortgage interest for the month which is tax deductible.

Home Construction Loan Interest:   As long as the buyers move into the property and use it as their primary residence  within 2 years they can write off the interest.

Mortgage Interest:   Homeowners can claim an itemized deduction up to $1 million worth of mortgage-debt.

Home Equity Interest:   Homeowners can claim up to $100,000 of home equity debt for their principal residence.

You want to make sure that itemized deductions are higher than the Standard-Deduction ($11,400 for Joint filers, $5,700 for singles, and $8,350 for heads of household in 2009).   If your itemized deductions are less than the standard you’ll make out better just using the standard deduction.   In this case you won’t see any changes from your taxes before you bought a home.   You just want to make sure you remember to compare the standard deduction to the itemized to get a true sense of what additional write-offs are available to you.

Another thing to take into consideration is the High-Income Phaseout Factor.   In 2009 if your adjusted gross income (AGI) is over $166,800 for both joint and single filers your itemized deductions are reduced by 1% of the difference between what your AGI is and the $166,800 phaseout line.   So if you earned $200,000 your deductions will be reduced by $332.   $200,000 – $166,800 = $33,200 x .01 = $332.   Although not all itemized deductions are reduced by this factor, the benefits of being a homeowner i.e. mortgage interest and property taxes are.

Of course these are simple guidelines to remember, but be sure to contact a tax proffessional to see how this all affects you.   The biggest tax advantage still available is the tax free profit from selling your home which is up to$250,000 for singles and $500,000 for married couples.   The other for first time home buyers is the $8,000 tax credit.

We just received the year to date results for Bucks County and Philadelphia for December 2008, and there is Plenty of Good News!   Everywhere I go I am astounded and amazed at what people think is going on in our local real estate market.   I hear people say things like, œI™ve lost $100,000 on my house! and time and again I ask where are they getting their information.   Now, here are the facts and only the facts.  

Year to date for December 2006 (the height in the market) to year to date for December 2008 Single Family Homes in Bucks County have seen the average sales price drop 6.2% from $376,230 in 2006 to $352,890 in 2008.   Now average sales prices can be affected by one extreme whether that is a one off low price, or high price so it is usually better to focus on the median price, or both together to get a true sense of what the numbers are telling us.   The median price has gone from $319,030 in 2006 to $298,900 in 2008 which is a decrease of 6.33% which is almost identical to the drop in the average sales price so we can confidently say that since the peak in the local housing market sales prices are only off by approximately 6%.   In other words for someone™s home to be off $100,000 their home would have to have been worth $1,666,666 in 2006.   I™m guessing that™s not you, and I know it™s not me, or the majority of us here in Bucks County.   After the wild ride of soaring home prices that saw the average sales price for a single family home grow 70.56% from 2000 to 2008 ($199,879 to $340,913) there has to be some sort of slowdown.   It™s just the natural progress of any market.   However, let me backtrack to the fact that the average sales price for a single family home is up 70.56% since 2000.   That is a staggering fact that should make every homeowner happy because buying a home continues to be the greatest investment one can make even in this market.   View The Market Statistics for all years between 2000 and 2008 here   http://www2.topproducerwebsite.com/users/30400/downloads/Statistics%202006%20to%202008.pdf?id=0.5453867  

Now, don™t get me wrong the market isn™t all roses and I wouldn™t want to make anyone believe that, but what I do want is to talk about the facts using the stats to paint a realistic picture so my clients can make educated decisions.   The area where the market has taken a big hit is in the number of single family homes settling which is off 25% since 2006.   That™s a huge percentage, but at the same time it does not mean homes are not selling.   In fact, 5,390 homes sold in Bucks County last year and every month between 300 and just over 600 homes sold so homes are definitely selling and as seen from the stats above they are still selling for 94% of what they sold for at the height of the market.   Now let™s look at Philadelphia the local Metro hub and see what has gone on there.

Year to date in December 2006 the average sales price for a single family home in Philadelphia was $160,170 and year to date in December 2008 the Average Sales Price was UP to $168,520, or 5.2%.   Once, again we have to remember that the average sales price can be influenced by a random high, or low priced sale so it is wise to look at the median sales price as well to see what the numbers are really telling us.   Using the same year to dates for December 2006 and December 2008 the Median Sales Price was UP from $125,000 to $129,900, or 3.9%.   Not too many news stories about this out there, and it should be shouted from the rooftops that our local area is not only holding its™ own, but some areas have continued to see sales prices grow.  

Again, it™s not all roses.   The number of single family homes that settled is down 30.95% in Philadelphia since 2006, but again as seen above this does not mean homes are not selling.   Year to date for December 2008 over 11,000 homes had sold.  I believe most of us are more concerned with the value of our home rather than if everyone else™s home is selling.   So, as I™ve proved using only the facts, the values are still there.   The important thing is to be one of those homes that sell.   So how is this accomplished?

The important thing to consider here is what does it take to be one of the thousands of homes that sell every year and what that comes down to is finding the right Realtor who will help you get the house in shape, staged, and listed at the right price, and who will market the hell out of it.   Which is were The Cosack Team comes in.   With over 30 years combined experience we have been through markets like this before, and we know how to get your home sold for the highest price, in the least amount of time and with the least amount of angst possible.   Just checkout our Testimonials on our home page to see what our clients have to say about us.   Then give us a call.

* Remember when viewing the attached stats that the total settled volume needs to take into consideration the change in percentage of settled units as they go hand in hand *

Neighborhood Sales Update Brookstone, Heritage Hills, Makefield Glen & Tapestry click here: http://thecosackteam.com/neighborhood-sales-.asp

Check out the link below from NAR for a great backdown of the tax credit

government_affairs_homeb_tax_credit.pdf

We’ve been updating our site and have added testimonials from our clients.   Check out the link below to see what our wonderful clients have said about us.

http://thecosackteam.com/testimonials.asp

Check out this new Single Family property that I just posted on my Web site. It is at 2613 2613 Galloway Rd. in Bensalem. This Single Family property has 4 bedrooms and 2 baths. Gorgeous 4 bedroom, 2.5 bath Contemporary home only 3 years old. Fabulous gourmet kitchen and hardwood floors throughout first floor. Private setting backing to wooded area only minutes from stores, major highways etc. .

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

Revised February 18, 2009Just signed and sealed¦a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today…

Tax Credit for Homebuyers First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.  Remember a tax credit is very different than a tax deduction “ a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Buyers will have to repay the credit if they sell their homes within three years.

Additional Housing-Related Provisions Tax Incentives to Spur Energy Savings and Green Jobs ” This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings ” This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization.  According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing”This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.    Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and section  to increase energy efficiency, including new insulation, windows, and frames.Expanding Housing Assistance”This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.  More Help for Homeowners in the Future Another thing to keep an eye on in the coming weeks is President Obama™s plan to help struggling borrowers before they are faced with a default on their mortgage.According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That™s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I™ve highlighted some of the major provisions that may impact you now and in the future.As always, if you have any questions or would like to discuss how this may specifically impact you, I™d be happy to sit down with you. Just call or email me to set up an appointment.

Thanks,

Tom Fullen

Sr. Mortgage Consultant

Trident Mortgage Company

Fax (610) 650-5607

Office (215) 860-3237

http://tomfullen.tridentmortgage.com

The most recent update on the Tax Credit is as follows.

Amount of Credit: Increased to $8,000.   Lesser of 10% of cost of home, or $8,000.

Eligible Property: Any single family residence including condos, co-ops, and townhomes that will be used as a principal residence.

Refundable: Yes. Reduces, or can even eliminate income tax liability for the year of purchase.   Any unused amount of tax credit refunded to purchaser.

Income Limit: Yes.   Full amount of credit available for individuals with adjusted gross income of no more than $75,000 and $150,000 on a joint return.   Phases out above those caps at $95,000 and $170,000.

First-time Homebuyer Only: Yes. Purchaser and purchaser’s spouse may not have owned a principal residence in 3 years previous to purchase.

Revenue Bond Financing: Purchasers who utilize revenue bond financing can use credit.

Repayment: No repayment for purchases on, or after January 1, 2009 and before December 1, 2009

Recapture: If home is sold within 3 years of purchase, entire amount of credit is recaptured on sale.   Otherwise the tax credit never has to be repaid.

Termination: December 1, 2009

Effective Date: January 1, 2009

This tax credit replaces the credit created in July 2008.

If you have any questions don’t hesitate to ask.   NAR will be sending out   a breakdown when everything is said and done so I’ll notify everyone of any changes.

The 38 home community had it’s first sales at the end of ’08 and the beginning of ’09.   749 Maple Ln. #3 dropped it’s asking price from $259,900 to $209,900 and went under agreement for that price settling on 11/17/2008.   745 Maple Lane #1 dropped it’s price from $264,900 to $209,900 and that settled for $210,000 on 1/10/2009.   Currently in our MLS there is only one active property, 747 Maple Lane #2 that has also dropped it’s price to $209,900.    The other listings have all been withdrawn at this time.

This community started offering the properties in May ’07 so after   nearly two years on the market they have sold for approximately 20% less than their original asking price.   This does not reflect our local market as we have not seen the same sharp decline other areas of the country have.   We have seen more of a 5% drop since the peak of the market in ’05/’06.   I would attribute the drop in sales price to the fact that there are not many comparables in the local area for new construction, and this being Philly’s first solar community there is nothing to compare it too in that facet.   The good sign is that people are interested in Going Green, and the builder has finally found the price that people are willing to jump on board with.   Hopefully we see more of these places sell this year.

Unfortunately, the $15,000 tax credit to any home buyer was scaled back before being agreed upon by the House.   Originally, the tax credit would have been available to any one without any  income level guidelines at all.   Now, what we have is a better version of the tax credit that was available last year for first time home buyers.     The tax credit as it stands now is for $7,500 for all first time home buyers who make less than $75,000/ year  for singles and $150,000/ year  for couples.   Last year the credit was really an interest free loan, but now the $7,500 tax credit does not have to be repaid as long as the home is not sold again within 2 years.   This credit will be offered until September of this year so if you’ve been thinking  about buying your first home now’s a great time to start looking.     Expectations are that rates will come down a bit after President Obama signs the Package into law.

All Home Sales for 2008 in Yardley Corners and Society Place now uploaded under home sales.

http://thecosackteam.com/neighborhood-sales-.asp

Checkout the Investors tab on our website.   There’s a great article discussing write-offs to consider and a program to help you keep track of income and expenses which also helps you sort out your tax write-offs.   Let us know what you think.

 http://thecosackteam.com/investors.asp

On Wednesday, the Senate unanimously approved an amendment to the Economic Stimulus Package to stimulate the housing market.   This amendment offers a $15,000 (or 10% of the sales price) tax credit to anyone who purchases a home in the next year.   Although, the House has not passed the Economic Stimulus Package many believe this amendment will stay intact in the final version as it was not vetoed by any member of the Senate from either party. (US News Online: http://www.usnews.com/blogs/the-home-front/2009/2/6/the-15000-home-buying-tax-credit-6-things-to-know.html)  The amendment will allow taxpayers to claim the credit on their 2008 taxes, and unlike the First Time Homebuyers Tax Credit of $7,500 from last year this tax credit will NOT have to be repaid.   The $7,500 tax credit was really an interest free loan that had to be repaid over 15 years, or when the home was sold, but this new $15,000 tax credit will supplant the $7,500 First Time Home Buyer credit doubling the credit and making it available to anyone who purchases a primary residence.   There is not an income restriction attached to this either so it really is available to everyone. (US News Online: http://www.usnews.com/blogs/the-home-front/2009/02/06/the-15000-home-buying-tax-credit-6-things-to-know.html)  

The tax credit is given over a 2 year period so anyone owing $7,500 or less could go 2 years without paying taxes.   One stipulation and this is to make sure the tax credit is not used by investors is that you must live in the home for 2 years, and if the home is sold before 2 years time the tax credit must be paid back.   (The Swamp: http://www.swamppolitics.com/news/politics/blog/2009/02/housing_tax_credit_little_bene.html)

This tax credit should have a great impact on our housing market, and will hopefully spur the economy.   To think that in a sense buying a home just became $15,000 cheaper, and with the prices falling back into realistic, or even bargain deals coupled with the low interest rates makes it a great time to buy a home.

On a side note:   There have been quite a few really good deals popping up.   I™ve seen a few 3 bedroom townhomes in Tapestry  for sale/sold  in the low $200™s which is the same price we™ve seen 2 bedroom condos sell for, but there are also quite a few single family deals coming on the market.   Last year I saw a 4 bedroom single-family in Northampton sell for $260,000 which was pretty amazing considering townhomes in Council Rock sell for that much.   The latest deal (which is Active/ No Showings right now) is a 2,089 sq. ft. 3 bedroom 2.5 bath single family home in Council Rock on .6 of an acre with a one car garage.  

All Home Sales in 2008 for Newtown Grant, Palmer Farm, Tanglewood, and Tareyton are now posted on our site

http://thecosackteam.com/neighborhood-sales-.asp

All of the sales during 2008 in Cornerstone, Crown Pointe, Heacock Meadows, Liberty Square, Rose Hollow, and Yardley Commons are now posted under our Neighborhood Sales section    http://thecosackteam.com/neighborhood-sales-.asp More to follow.   If you live in a neighborhood that we don’t post regularly shoot us an e-mail and let us know which neighborhood you’d like us to add.

All of the home sales in 2008 for Makefield Glen, Heritage Hills, Brookstone, and Tapestry have been posted on our website.   Click the link below to go there now.   Other local communities will be updated shortly.

http://thecosackteam.com/neighborhood-sales-.asp

Or look under http://www.thecosackteam.com and go to Neighborhood Sales on the tool bar.

One of the first things I discuss with homebuyers when we sit down together is their comfort zone and  how to choose  a price range.   I warn my clients that many mortgage companies can approve  them up to the moon, but often times this will be well above their comfort zone.   So, although, they must meet with a Lender to receive a pre-approval we need to discuss what range they would like their monthly payments to fall within.   From there I can work backwards and formulate a price range they can comfortably afford.   There’s nothing worse than being house poor.   This means you end up spending every last cent you have paying your mortgage and you never have cash left over for the fun things in life.   Soon your home will seem like a prison and you’ll start to hate your nest.   It is important to remember that we all need to get out and play every once in a while so figuring out a price range where you’ll have some money left over is an absolute must.

There’s a guide on our website that explains how lenders determine what amount they’ll pre-approve you for, and that also discusses different mortgage options.   Go to http://thecosackteam.com/buying.asp  Scroll down to the bottom and click on R.E. for Dummies near the bottom left hand corner.   Then click on Real Estate  Guide and then on What Can I Afford?   Let me know if you have any questions.

The first time I sit down with clients to discuss their homebuying optons I find that the major misconception the majority of them have is, “It’s impossible to get a loan in today’s economy,” or “I have good credit, but I can’t come up with the 10% down payment.”   Every time I am astounded as to where this information is coming from.   Many times my clients  will say  ”well I spoke to a mortgage counselor and this is what I was told.”   THIS IS ABSOLUTELY NOT TRUE!!!!!!!!!!!

Mortgages are no harder to get today than they were a year, or so ago, and today’s rates and mortgage options are fantastic.   As long as you have a credit score above 600 and have not claimed bankruptcy in the past 4 years you would be eligible for an FHA Loan that only requires a 3.5% down payment.   So, on a $200,000 home you would only be required to put down $7,000.   Now, there are other closing costs such as Transfer Tax, Homeowners Insurance, Lender Fees, Escrows, etc.  but a buyer can negotiate a 6% Seller Assist to help cover these fees.   The only amount a buyer must bring to the table is the downpayment of 3.5%.   So, what this means is that a buyer could negotiate a deal on a $200,000 home and would only need to bring $7,000 to the table.   Pretty Good deal.

In 2008, there was a program available to homebuyers through the Genesis Program where the seller could “gift” the down payment to the buyer which made homeownership much more accesible to the majority of Americans.   While this program was available I had clients purchase a home in the $180,000 range and they only needed $3,500 to close.  I say “gift” because it was really rolled into the buyers mortgage.  Unfortunately, this program is currently not available, but legislatures are trying to bring it back.   Either way, the misconceptions are stunning, and I think if more people understood what was available tto them they would not continue lining their landlords pockets by paying off their mortgages and would begin paying off their own.

Look Who™s Buying Now & Why

Posted by  Dale Cosack under For Buyers, For Realty Professionals, Marketing Reports, Newtown

The 2008 Profile of Home Buyers and Sellers Pennsylvania Report just came out and our age group between 25 – 34 years old has made their presence known.   Although, the median age of home buyers was 38 the median age of First Time Home Buyers was 29.   First Time Home Buyers accounted for 46 percent of recent home purchases.   57 percent of First Time Home Buyers were between 25 and 34 years old.   So, this means just over a quarter of recent sales (26.22%) came from our age group.   This does not account for those in our age group (25 – 34)  who moved up.   This is only concerning First Time Home Buyers so the number is undoubtably higher, but still a quarter of recent home sales is a huge section of the market.

According to NAR™s 2008 report: the reasons given by the majority of First Time Home Buyers (68%) for purchasing now was simply the desire to own their own home.   Who wants to keep paying off someone else™s mortgage by renting?  50 Percent of Home Buyers said now was just the right time for them to buy.   20 percent stated it was due to improved affordability of homes, or the availability of homes for sale.   18 percent said their circumstances were such that they had to buy when they did, and only a minor 2% said they wished they would have waited.

With rates hovering around 5% and sales prices being more affordable there™s a big difference between what one could get for their money a few short years ago compared to what they can afford now.  

A brief example is:

If someone purchased a 2 bedroom condo in the Newtown area in 2006 for $210,000 when the average interest rate was around 6.5% their monthly Principal, Interest, and Mortgage Insurance would have totalled $1,396.18.   This does not account for Real Estate Taxes, Condo Fees, or Insurance as those numbers will vary from neighborhood to neighborhood.

Assuming a modest 5% decrease in sales price  we see that a condo selling today  for $199,500 at an interest rate of 5% would cost $1,139.79 taking into consideration Principal, Interest, and Mortgage Insurance, but again not Real Estate Taxes, Condo Fees, or Insurance.

The difference in monthly payments comes to $256.39 per month, $3,076.68 per year, and a whopping $92,300.40 over the life of the loan.   Imagine what could be done with that extra money.   Simply using that difference to buy down your loan faster would have a huge impact. If you were to put the $256.39 towards your mortgage you would shorten your 30 year mortgage to just under 20 years.   Pretty incredible!

September 10, 2008

Fannie and Freddie Taken Over by Government

Posted by  Dale Cosack under For Buyers, For Sellers, For Realty Professionals, General Information

   Fannie Mae and Freddie Mac are the nations two largest mortgage finance companies.  Fannie Mae was a established in 1938 under FDR™s New Deal and only became a private enterprise, or a government sponsored enterprise in 1968 so, although it is a stockholder-owned corporation it has always had strong ties to the government.   Freddie Mac was created in 1970 as is also a government sponsored enterprise.    This week in a joint conference Henry Paulson, U.S. Secretary of the Treasury, and James B. Lockhard III, director of Federal Housing Finance Agency announced the government would takeover the mortgage giants who traditionally guarantee half of the US mortgages in an effort to stabalize the national economy, and to pull the nation out of the housing slump.

    At this time there is no immediate cost to taxpayers, but this could very easily become the biggest bail out in history.   We™ll have to wait and see how it plays out.   However,  the immediate effects in the housing market are a drop in mortgage rates that have hovered just above and below 6.5% for the last month, or so.   They immediately dropped to 6% making a big difference in what homebuyers can afford.   We™ll keep you posted as things play out.

August 6, 2008

Green Homes Still Not Selling!

Posted by  Dale Cosack under For Buyers, For Sellers, For Realty Professionals, Regional News, Philadelphia

When this blog first began we spoke about this new community in Juniata called Maple Point that are eco-friendly.   I find myself very drawn to the eco-boom and our nations growing concern for sustainability and think every little thing we can do is an important step to helping this world stay a healthy place for future generations.   However, as a Realtor, and also a real estate investor I understand the concern for getting the most bang for your buck and this is even more true today as everyone listens to the doom and gloom forecasts for our economy and the housing market.   So, the question is will these great new homes sell?   Unfortunately, the answer so far is No.   These properties have now been on the market for 254 days and they have dropped their price $30,000 to $229,900, but still have not gone under agreement.   I understand that Don Bradley has a history of making affordable Green Homes and that his a part of his goal, but I can™t help to wonder if this specific neighborhood isn™t right for this eco-builder.   In a time when the market is going down and the economy is struggling it is difficult to get people to think outside of the box and take to a new idea.   I wonder if these types of properties would fair better in Center City where many people are attracted to the latest fashions and new ideas.   Hopefully, Mr. Bradley will sell these homes and the families that live there will enjoy their beautiful home (they really look gorgeous from the photos) and feel great about doing their part to protect our planet.   I also hope we will see more of these homes being built in the Philadelphia Metro Region.  

August 6, 2008

Need Help with Your Down Payment? The Genesis Program Has the Solution!

Posted by Dale Cosack under For Buyers, For Sellers, For Realty Professionals, General Information

There™s a great program out there that allows seller™s to gift all, or a portion of the buyers down payment called The Genesis Program, or The Preferred Program  that is compliant with FHA regulation.   What this means is many more people can have a chance at the American Dream.   There are so many things to think about when looking for your new home and one of the biggest concerns  is coming up with all of  funds needed to purchase.     Under new FHA rules buyers can not only request a 6% seller assist, but they can also request the seller join The Genesis Program for a small cost of $300 which allows the seller to gift the buyers all, or a portion of the 3% down payment required for an FHA loan.  

 In  today™s market many homes are sitting on the market for a longer period of time as buyers are taking their time to look at all the competition.   This Genesis Program could be a great tool for sellers to stand out from the competition and will  expand their number of potential buyers who may be able to afford the mortgage, but who cannot come up with the down payment.   This really is the new 100% loan that went the way of the dinosaur last year.   What I mean by this is that the buyer is mortgaging 97% of the FHA Loan, and through The Genesis Program they are not forced to muster the additional 3% for the down payment.   With the FHA loan limit being raised to $420,000 this could amount to $12,600.   Not a bad differential for a seller getting 97% of their asking price in today™s market and what an incentive to buyers who are looking for a deal.   It could be a win-win for everybody.

For more info. on the program check out the link below:

http://www.thegenesisprogram.org/whatisgenesis.cfm

August 6, 2008

First Time Home Owners Tax Break!!!!

Posted by  Dale Cosack under For Buyers, For Realty Professionals, General Information

   Just wanted everyone to know that the Housing and Economic Recovery Act of 2008 has been passed, and it offers a credit of $7,500 to first time homeowners who purchase a home between 4/9/08 and 7/1/09 as long as the buyers make less than $75,000 singularly, or $150,000 jointly.  The way it will work is that you will gain a tax credit when you file your taxes in the amount of $7,500 and if you owe less than this amount you will receive a tax refund for the rest of the credit.  This tax credit is really an interest free loan as you will need to repay it over 15 years, or when the home is sold, but it is still fantastic as it puts a good bit of money back in your pockets after having to spend a large sum of money to purchase a home.    

 With the new FHA rules it would be possible for someone to purchase a home with $0 out of pocket, and to receive this $7,500 tax credit at the same time.   This is not the easiest agreement to negotiate, but it can definitely work in the right scenario.    FHA allows for a 6% seller assist and under the new rules laid out this year buyers can also request a 3% seller gift if  both buyer and seller sign up for  The Genesis Program.    This can bring the total funds needed to purchase down to zero dollars even including the first years hazard insurance and the home inspection fees.   This is obviously best case scenario, but by no means impossible.   Recently, I helped clients get into a $177,000 home for just under $3,600 total out of pocket cost using  The Genesis Program.   If they decide to take the  interest free loan from the government they will be getting into  their home  and putting $3,900 back  into their pockets.   Not a bad deal at all!    I have attached in pdf format a breakdown of how the Tax Credit will work.  Good News!!!!!!!!!!!!!          first time h.o. tax break.pdf

April 29, 2008

Time to Lock In or Refi as the Feds. Meet Again

Posted by  Dale Cosack under For Buyers, For Realty Professionals, General Information

          The feds. are meeting again this week to discuss cutting rates again from 2.25% to 2% which should have an affect on the current mortgage rates that are currently 6.25%   The last time the feds. met and the rates dropped it only lasted a few hours at most.   Those of you out there who are currently shopping for mortgages, or who may benefit from refinancing should be on the phones to your mortgage lenders to make sure all your paperwork is in so you can jump if the rates fall again like they did last time.   A 1% drop in rates could mean a substantial savings to you.

          This is a great time to buy!!!!!!!!!!!!!!!!!!!!

April 28, 2008

Recycling Your Old Home Into Your New Home

Posted by  Dale Cosack under For Buyers, For Sellers, For Realty Professionals, General Information

The link below is for an article posted on the Wall Street Journal Online by Nancy Keats on 4/28/08 that discusses her experience re-using pieces of her families old home instead of simply demolishing and then rebuilding.   I hope you find it as interesting as I did.

http://online.wsj.com/article/SB120913845018445209.html?mod=residential_real_estate

April 28, 2008

Bucks County Plans Greener Future

Posted by  Dale Cosack under For Buyers, For Sellers, For Realty Professionals, Regional News, Newtown

Bucks County leads the commonwealth as the first county in Pennsylvania to pledge to reduce global warming emmissions by 80 percent by 2050.   The county will achieve this goal in part through recommendations of the Bucks Employees Greener Initiative Committe (BEGIN) which will likely include initiatives to promote turning off lights and computers, green building practices, and alternative fuel consumption and car pooling.   Similar programs at the local level have been adopted by Lower Makefield and Doylestown.

Source: the Intelligencer; 4/17/08

 I thought this was worth sharing as it continues the Green Theme started on the first blog, and I also thought it is something us Bucks Countians can be proud of.   Every day more and more people are making the choice to go Green.   It is popular enough now-a-days that  there is even a fantastic show on TLC called œGreenovate that deals not only with creating a green home, but also flipping green homes.   Unfortunately, the few shows I caught only told the list price of the home, and did not tell us what the investor actually received.   Once the verdict is in on the Maple Point Solar Homes in Philly I™ll let you know.

Happy Earth Day!

April 16,2008

Building Green A Fantastic Idea, but What About the Value?

Posted by  Dale Cosack under For Buyers, For Realty Professionals, Regional News, Philadelphia

        Recently, we sent out a flyer to our clients titled œGoing Green Saving Green that discusses great ways to make your home more energy efficient that would not only help the environment, but also your wallet.  Going Green 1st Pg.    Going Green pg. 2     The Green Movement is constantly in the news as it has become a major focus in many Americans lives.   This is especially noted in the Democratic Primary as Barack Obama has made  fuel economy one of his top 3 missions, and focal points of his campaign.   I think most of us have some level of concern, and want to do our part to keep the world a healthy place for our children and future generations, but the real trouble comes down to cost, especially when it comes to building green.

        Recently,  I  received an e-mail regarding  a new building site in the N.E. section of Philadelphia called Maple Point located in Juniata.   The community is comprised of 38  3-4 bedroom, 2 1/2 plus bath, 1700  Sq. Ft.  town-homes located near Fairmount Park that offer various sustainable design features such as:

Energy Efficient Features

• Passive Solar Design
• R-38 ceiling and R-26 side wall insulation
• Foam and caulk air sealing measures
• 4kW rated photovoltaic solar system with battery backup
• High-efficiency Bio-Fuel boiler with hot water loop for radiant heat (86.5 AFUE)
• 275-gallon oil tank (double-walled)
• Domestic solar hot water system with 80-gallon insulated tank
• Mini-split air conditioners (15+ SEER-rated)
• Zoned heating and air conditioning
• Anderson Series 200 low-E, double hung insulated vinyl-clad windows
• Energy Star rated appliances included
• Compact fluorescent lamps throughout

You can check out the homes by visiting http://www.phillysolarhomes.com/

        It is an absolutely wonderful idea, and hopefully something we will see more often in the future, but what about the cost vs. neighborhood value.   The MLS Market Statistics state that the average sales price between March ˜07 and March of this year for the 19124 zip-code that includes Juniata and Frankford is $94,343, and the lowest asking price currently for a Maple Point Solar Home is $259,900.   If we look more closely at the immediate surrounding area near Maple Point we see a high sales price of $162,000 for a 3 bedroom, 1 1/2 bath, 1216 Sq. Ft.,  50 year old town-home.   Now this is definitely not a comparable property  for the Maple Point Solar Town Homes, but it is definitely more the norm for the neighborhood and it does  give us a better  idea of neighborhood value.  

        If we tried to compare the  Maple Point Home and the 50 year old  townhome  in Juniata  we would have to  adjust for size, amenities, and age.    We could add at least  $10,000 for an extra full bath, and an extra $80,000 for the extra Sq. Ft.  which would bring the sales price to $252,000.   This does not take into account the cost for new construction, or any of the green amenities.   However, the verdict is still out as the ribbon cutting ceremony was only on April 5th and currently none of the homes have sold, or at least they have not been recorded as sold in our MLS, or public records.  

        The solar home listed for $259,900 has been on the market for 141 days so far which is much higher than the average days on market for the 19124 zipcode which  was 54 days  according to the MLS™s Market Statistics between March of last year to March of this year.   We™ll have to wait and see if buyers are willing to pay the cost for a new green home.    We will keep you posted once the verdict comes in.  

Welcome to The Cosack Team’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Newtown.