Fall Is In The Air...almost

I love the fall- it's my favorite season. I love the way the trees and plants display their fall foliage like so many peacocks' plummage and the cold crisp mornings that give way to mild sunny days. I like the smell of fireplaces burning in the evenings when I walk my dog. I like the idea that's it fleeting- soon all of the leaves will be gone, the mild afternoons replaced with cold snowflakes, my flip flops replaced by Keenes and I will once again don my hoodies. I will change from beer to red wine and an occasional coffee with Baileys or the like....so as I see it fall heralds huge change.

And with fall comes a change in the the federal government's first time home buyer incentives, actually the end of the program. The program that provides the tax credit is set to expire on December 1st 2009. This means that we are effectively nearing the end of the time during which a buyer can place a property under contract and reasonably expect to close on the property prior to November 3oth. Given new lending rules, most transactions will take 45 days to close and as the deadline gets closer, quicker closings will become less likley. With all of that said, I know there has been some confusion about how the credit works so here is what I know:

• First time home buyers can receive a credit of up to $8000 on their federal income tax. The credit is equal to 10% of the purchase price of the home, (which can be a condo- it is not restricted to single family homes). The maximum amount is $8000. So you have to spend at least $80,000 to get the full credit.


• Once the purchaser has closed on the property they will receive a certificate which they can use to amend their 2008 income taxes and the refund will typically be sent to them in around 2 weeks.


• Once the check is received it can be used in any way the purchaser wishes.


• For those people who are struggling with downpayment money, FHA only requires 3.5% of the purchase price as down payment and it is often possible to get a seller concession for additional closing costs that the buyer will incur.

There is talk of both extending the program into next year and expanding it to include all homebuyers not just first timers, but to my knowledge it has not yet been ratified. If you can, take advantage of this once in a lifetime deal, because the way I see it, even if you buy an $80000 property you can come out ahead , with a little planning. You put $2800 downpayment, you ask the seller to pay all of your closing costs, another $2800 or so, and you net $5200 with which to fix up your new pad or buy some cool new furniture or take a vacation. And all of that is not to mention the yearly income tax credits related to the interest on your loan, or the potential for equity gain. I see it this way: You can go on paying rent, paying down someone else's mortgage or you can buy a home, get the IRS to give you money for doing so, know that every time you make a payment you are paying down the principal amount of your mortgage, and you can take income tax credits every year so that your net income is higher. And with a little bit of luck perhaps you will start gaining equity after the markets begin to thaw. If you are thinking about buying or you have questions about the first time home buyers credit- don't hesitate to contact me or one of the other professinal realtors at Cygnus Real Estate.

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Condos- To Buy or Not to Buy?

As I was on my way to the townhomes at Upper Larimer to work my open house the other day I noticed an entire development project for sale- not just individual units for sale but the whole project-all of the units to be sold to one buyer. The construction seemed to be over and the units were just sitting like so many forgotten toy soldiers- still at attention... waiting...just waiting for their new owners- for the families, the people, who would move in and bring the project to life, much as children bring their toys to life.

So you wonder: why is it that some developer who had the knowledge (or know-how) and the moxy to purchase land and go through the entitlement process- the process of getting the city to agree to let you build whatever you intend to build on your land, as well as actually bringing a development out of the ground and getting to the point where he or she could "turn the lights on" would essentially give up. Why didn't this apparently savvy developer who built what appears to be a reasonably viable project turn his back on it instead of renegotiating his pricing and his loans? Unfortunately, mis amigos, I suspicion ze answer lies with the current mortgage market.

The mortgage industry has essentially turned its back on condominiums, both acquisition financing and refinance monies. As my grandfather would say, "it's scarcer than hens' teeth." Much if not most, of what happens in the mortgage world is predicated by the infamous Fannie Mae. And Fannie Mae currently says that she doesn't care if it's a townhome or a traditional condominium there will not be any conforming conventional financing until at least 70% of the units are sold. That means that the consumer, the buyer, can not get a fixed rate conventional loan to buy a condo until the majority have already sold...the buyer has to rely on so called portfolio loans which can have a higher interest rate and a shorter term. In a strange quirk most of the existing condos can qualify...if and only if they were built as condos adn not converted from apartments to condos. Sound confusing? It is but none of it is insurmountable. However, it makes it all the more important to have a qualified mortgage lender- be it banker or broker and an experienced Realtor to help you navigate the waters.

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