INVESTING IN REAL ESTATE IN NORTHERN ILLINOIS

Tax Credit Can Be Used for Down Payment

2009-05-13T10:27:00.000-07:00

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Source: IAR Weekly Connection

2009 FIRST-TIME HOME BUYER TAX CREDIT QUIZ

2009-05-06T14:37:00.000-07:00

2009 FIRST-TIME HOME BUYER TAX CREDIT QUIZ

Q. To qualify for the 2009 First-Time Home Buyer Tax Credit, a home must be purchased in what time period?

A: Jan. 1, 2009-Dec. 1, 2009
The home must be purchased on or after Jan. 1, 2009 and before Dec. 1, 2009 to qualify.

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Q. In order to qualify for the full $8,000 tax credit, the house must be at least what price?

A: $80,000
Any home that is purchased for $80,000 or more will qualify for the full $8,000 credit. The credit is equal to 10 percent of the home's purchase price, up to $8,000. So if the house costs less than $80,000—say, $75,000—the credit will be 10 percent of the cost (in this case, a $7,500 credit).

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Q. A first-time home buyer is defined as a buyer who hasn't owned a principal residence for how long?

A: 3 years prior to the purchase
A first-time home buyer is considered to be a purchaser who has not owned a home in the three years previous to the day of the 2009 purchase. So if the last time you owned a home was in 2005, you would be eligible for the tax credit, even though it's not technically your "first" home. Married joint filers must both meet this "first-time home buyer" requirement in order to claim the credit on a joint return.

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Q. What is the income limit for claiming the full tax credit for married taxpayers filing a joint return?

A: $150,000
Married couples filing jointly cannot have an income of more than $150,000 to qualify. If the couple makes more, they don't lose out entirely, though. The credit phases out for married couples (filing jointly) who earn $150,000 to $170,000 in annual income, with a smaller credit being awarded for the higher amounts. Learn more about the formula at REALTOR.org.

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Q. What is the income limit for claiming the full tax credit for a single taxpayer?

A: $75,000
Similar to married couples filing jointly, singles making more than $75,000 in annual income don't necessarily lose out entirely on the benefit of the credit. The credit phases out for single filers earning between $75,000 and $95,000. Learn more about the formula at REALTOR.org.

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Q. How is a home buyer’s income determined for tax credit eligibility?

A: Adjusted Gross Income (AGI)
For most individuals, “income” will be defined and calculated as Adjusted Gross Income (AGI) on their IRS 1040 income tax return forms. AGI includes wages, salaries, interest and dividends, pensions and retirement earnings, rental income, and several other elements. AGI is the number that appears on the bottom line of the front page of a 1040 form.

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Q. What is the most significant difference between this tax credit and the one Congress approved in July 2008?

A: The repayment feature is eliminated.
The 2008 home buyer tax credit that Congress approved was basically an interest-free loan but it had to be repaid over 15 years, whereas the 2009 tax credit does not have to be repaid. The 2008 tax credit also had a limit of $7,500.

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Q. What types of homes do not qualify for the tax credit?

Mobile homes
Townhouses
Houseboats

A: They all qualify
Basically any home that is used as a principal residence qualifies for the tax credit, including single-family houses, mobile homes, townhouses, condos, manufactured homes and even houseboats. Generally, you must spend 50 percent or more of your time in the home for it to be considered a principal residence.

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Q. To claim the tax credit, you will need to:

A: Claim it on your federal income tax return.
It's that easy: Just claim it on your federal income tax return; no pre-approval is necessary. Home buyers will need to complete IRS Form 5405 to determine their credit amount and then claim that amount on Line 69 of their 1040 income tax return.

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Q. Which of the following statements about the tax credit is TRUE?

- The credit can be used as part of a buyer's down payment.
- Vacation homes and rental properties are not eligible.
- Properties outside of the U.S. also are eligible.
- Homes purchased in 2008 can still take advantage of this as well.

A: Vacation homes and rental properties are not eligible.
The home must be a principal residence that is owned by the occupant, so vacation homes and rentals would not be eligible for the tax credit.

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Q. What if buyers are eligible for an $8,000 credit, but their entire income tax liability for the year is only $5,000?

A: They'll get a refund for $3,000.
Any credit amount unused will be refunded as a check to the buyer. So the purchaser would receive the difference between the $8,000 credit amount and the amount of tax liability (so in the above case, a $3,000 refund).

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Q. How long do owners have to stay in their homes without having to repay the tax credit?

A: 3 years
The home cannot be sold until three years after the purchase, or owners will be required to repay the tax credit. This is to prevent buyers from flipping properties in order to cash in on the credit.

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Source:REALTOR Interactive Magazine

Fed Announces Plan to Reduce Foreclosures

2009-01-31T21:49:00.000-08:00

The Federal Reserve will take aggressive action to renegotiate mortgages that are likely to enter foreclosure, Fed Chair Ben Bernanke said in a letter to Congress Tuesday.

Under the program, which only affects mortgages owned by the Fed, the central bank will be able to reduce what a home owner owes on a mortgage, lower the interest rate, lengthen the term on the loan, or take other steps that might persuade home owners to keep paying. Borrowers will deal directly with their mortgage servicer.

The Fed says that the mortgages most likely to be affected are those with loan balances that are more than 125 percent of estimated value of the property.

"It's a step beyond what FDIC is doing with its own portfolio," said mortgage expert Alan White, an assistant professor at Valparaiso University School of Law. "Principal write-downs are still the critical issue" in keeping borrowers in their homes.

Source: Washington Post, Neil Irwin and Renae Merle (01/28/2009)

Foreclosure bill among final action of General Assembly

2009-01-22T13:07:00.000-08:00

In the last days of the 95th General Assembly there were a few items of interest approved by both chambers including Senate Bill 2513 with provisions to address foreclosure actions, which requires that no foreclosure action can begin before the mortgagee mails a notice advising the homeowner about HUD-approved housing counseling. According to IAR Weekly Connection

What You Should Know About Buying REO's

2008-11-27T10:36:00.000-08:00

Buying Real Estate Owned (REO) property, rehabbing it and renting it out can be a great investment strategy. But it is a different transaction altogether than buying your principal residence. Here are some things that are important to know.

1. Most REO property won’t leave you feeling all warm and fuzzy.
First time home-buyers are often gleeful when they get their first look at the home they will eventually buy. "It’s just so CUTE!" they declare. They oooh and aaah over the carefully groomed, staged and scented home visualizing Thanksgiving Dinners and Christmas trees.
REO property often takes a little more imagination. You have to try to pretend that the yard is not dead, the house isn’t lime green, the walls don’t have holes in them, the kitchen appliances and fixtures are actually there, and the flooring isn’t all torn up. That is, if you can get past the unbelievable stench and filth of lives gone horribly wrong.
To be fair, there are nice, clean REO properties to be had. But oftentimes, an REO house is one that shows evidence of terrible neglect and outright abuse on the part of an angry or desperate previous owner.

2. Don’t expect the bank to pretty it all up for you!
The banks usually prefer to sell "as is." Minimally, they will do an initial "trash out" to remove the belongings left in or on the property. In addition, they will re-key, board up windows, and winterize. It is unlikely that measures will be taken to add appeal- if the sinks, lights, appliances and windows are missing, they are likely to stay that way. Exception: if the buyer’s lender requires a repair to fund the loan, the bank may negotiate the cost of the repairs. In a competitive REO market, however, they won’t need to do any repairs- a cash buyer will snatch it right up in it’s current condition.

3. The bank won’t tell you what’s wrong with the house, because they don’t know.
A traditional seller is required to provide you with a laundry list of everything they know to be wrong with the property. In the case of an REO property, the seller has never even seen the property, let alone lived in it. The bank has no idea if the handrail is loose, if there are barking dogs next door, or if meth was manufactured in the second bedroom. Make sure that you do any inspections necessary to ensure that you have a good grasp on the condition of the property- very little information will be provided to you by the seller.

4. Buying at a low enough discount will take patience.
When the banks first put their properties on the market they frequently price them too high. Many times a successful purchase involves a process of making a number of low ball offers and being rejected several times and waiting while the asking price comes down to the level where your price will be accepted.

Some of this material from Chico Ca Real Estate Blog

NEW HELP COMING FOR MORTGAGES BACKED BY FANNIE, FREDDIE

2008-11-27T10:35:00.000-08:00

The Bush administration announced another plan to modify hundreds of thousands of distressed mortgages held or backed by mortgage finance giants Fannie Mae and Freddie Mac. To qualify for the new program, homeowners whose loans are owned or packaged by Fannie and Freddie must be 90 days or more past due on their payments for single-family dwellings in which they live. (Kevin G. Hall, November 12, 2008, RISMedia)

NAR HOME BUYER AND SELLER SURVEY SHOWS RISE IN FIRST-TIME BUYERS, LONG-TERM PLANS

2008-11-27T10:34:00.000-08:00

The latest consumer survey of home buyers and sellers shows first-time buyers have risen in market share and plan to own their homes longer than buyers in the past. Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it’s a trend he expects to grow. (Walter Molony, November 8, 2008, NAR)

Bargain or Bait?

2008-08-31T21:00:00.000-07:00

Q. With all the troubles in the real-estate market, I've been tossing around the idea of buying a home that's in foreclosure. How can I know I'm not buying a dump?

A. More properties than ever are in foreclosure, and the number may climb-to 2.5 million by the end of 2009, according to Lehman Brothers. But auctions on the courthouse steps, where speculators pay cash on the spot for homes they probably haven't inspected, aren't the place to buy.

Better to try the aftermarket, says Lawrence Yun, chief economist for the National Association of Realtors. Some of the best deals are found in what goes by the awkward term real-estate-owned, or REO, homes. These are properties that did not sell at auction and are then put back on the market by the lender. So you can inspect them as you would any home, discover, any problems or liens, and know what you're getting into.

With the glut of properties for sale, "lenders have become very motivated sellers," says Glen Daniels, director of REO sales at Foreclosure.com, a listing service. "I'm routinely seeing 20 percent discounts on these properties."

Such online services (including ForeclosureS.com and RealtyTrac) collect data on foreclosed and lender-owned homes, then sell access to those listings for a fee, usually about $40 to $50 a month. And there are state- and region-specific sites such as foreclosuresNH.com. A real-estate agent who specializes in lender-owned properties can also help you find REO homes. Quiz any brokers you approach on how, and how quickly, they learn of bank-owned property coming to market. - Walecia Konrad

Source: AARP The Magazine, September/October 2008 (Bold print mine)

Home sales decline, but there are some signs of recovery

2008-08-21T18:28:00.000-07:00

(WASHINGTON) - NAR reports existing-home sales in the second quarter were down less than 1 percent compared to first quarter sales, and the average sales price declined by 7.6 percent from quarter to quarter.

NAR said the annual sales pace in the second quarter was 4.91 million units, compared to a sales rate of 4.95 million in first quarter. A year ago the sales pace at this time was about 5.87 million.
The median single-family home in the second quarter sold for $206,500, compared to $223,500 in the first quarter.

The trade association said sales actually rose in 13 states over the quarter and about a quarter of metropolitan areas are showing price increases from last year.

NAR said the largest home-sales gains over the quarter were in markets that had been hardest hit as consumers respond to deeply discounted home prices. Home sales increased 25.8 percent in California, 25.0 percent in Nevada, 20.5 percent in Arizona and 10.1 percent in Florida.

Source -It's News To You- published by the Realtor Association of Northwest Chicagoland

Housing Stimulus Package

2008-07-29T22:30:00.000-07:00

Illinois REALTORS applaud passage of housing stimulus package. Yet this week President Bush is expected to sign REALTOR-supported H.R. 3221, the "Housing and Economic Recovery Act of 2008,” which includes:

$7,500 first-time homebuyer tax credit. The credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009, repayable over 15 years. This provision will be effective immediately and is intended to convert those "just looking" into buyers.
GSE reform. Independent regulator for Fannie Mae and Freddie Mac and permanent conforming loan limits up to the greater of $417,000 or 115 percent of the local area median home price, capped at $625,500.
FHA reform. Permanent FHA loan limits at the greater of $271,050 or 115 percent of local area median home price, capped at $625,500.
FHA foreclosure rescue. A refinance program for homebuyers with problematic subprime loans.

Source: IAR Weekly Connection

U.S. Senate Passes Bill to Expand FHA Programs

2008-07-15T19:27:00.000-07:00

U.S. Senate passes bill to expand FHA programs. On July 11, the proposed $8,000 homebuyer tax credit and the FHA and GSE reform and mortgage rescue legislation (H.R. 3221) passed the Senate and, according to NAR reports, heads back to the House for what legislators hope will be a binding revision that can pass the House and Senate before the end of July.

Source: Illinois Association of Realtors

NAR Pending Homes Sales Index down 14 percent from last year

2008-07-08T20:31:00.000-07:00

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in May, fell 4.7 percent to 84.7 from an upwardly revised reading of 88.9 in April, and remains 14.0 percent below May 2007 when it stood at 98.5. Lawrence Yun, NAR chief economist, said: “The overall decline in contract signings suggests we are not out of the woods by any means. The housing stimulus bill that is still being considered in the Senate is critical to assure a healthy recovery in the housing market, jobs and the economy." From the National Association of Realtors

May Home Sales

2008-07-01T19:31:00.000-07:00

Illinois housing market improves in May; sales up 17.3 percent from April. Illinois REALTORS statewide reported an upswing in home sales in May from April 2008, according to IAR's May housing report. Total home sales (single-family and condominiums) were up 17.3 percent in May 2008 to 11,173 sales compared to April 2008 sales of 9,523; year-over-year sales were down 22.9 percent from May 2007 totals of 14,493. The Illinois median price in May reached $190,000, down 7.3 percent from $204,900 in May 2007. Information from Illinois Association of Realtors.

Existing-home sales increased in May with buyers responding to lower home prices, according to the National Association of REALTORS. Existing-home sales—including single-family, townhomes, condominiums and co-ops—increased 2.0 percent to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April, but are 15.9 percent below the 5.93 million-unit pace in May 2007.

Worth A Look, Revisited

2008-06-20T14:48:00.000-07:00

Waukegan, 2 BR, 1 Bath, Central Air, 2 Car Garage $82,400

This property needs very little work!

Waukegan, 3 Bedroom, 2.5 Bath, Central Air, 2 Car Attached Garage $91,900

Beach Park, 2 BR, 1 Bath, Central Air, 2 Car Garage $99,900

Waukegan, 3 BR, 1.5 Bath, Central Air, 2 Car Garage $129,900

Drobonick Estates

2008-06-20T14:32:00.000-07:00

Sitting right in the middle of beautiful Drobonick Estates was this slightly run down, brick, gem of a home. My client spotted this among the properties I have been sending him on a weekly basis and said he had to have it. Originally listed for $130,000, he purchased it for $111,000. He hopes to add a bedroom, fix up the property, rent it out and watch his investment grow!

2636 N Pine Street, Waukegan 60087

2008-06-20T14:14:00.000-07:00

This picture does not do this property justice. It is a 3 bedroom, 1 1/2 bath home located in the "gardens". It has central air and a 2.5 car garage. Property was listed at $106,900 which was well below current market value. My client was able to snatch this property for a mere $71,000. He figures he will need to do about $7,000 in rehab and will rent it for $1,000 or more per month.

Beach Park Passes Zoning Inspection Ordinance

2008-06-05T14:59:00.000-07:00

The Village of Beach Park has recently adopted an ordinance requiring all one or two-unit residential zoned properties to file for a Zoning Certificate upon the transfer of ownership; the cost is $25. A property inspection must be conducted in order to determine the legal zoning of the property. Upon inspection and determination of the zoning, a Zoning Certificate will be issued which must be provided to the Buyer at the time of closing. In order to ensure the Zoning Certificate is ready in time for the closing, please make sure to make application for the Zoning Certificate not less than two weeks from the closing. However, nothing precludes the Seller from making application for the Zoning Certificate more than two weeks from the closing, including at the time of listing. Applications are available at Village Hall. From -It's News to You-, REALTOR® Association of NorthWest Chicagoland

Waukegan - Worth A Look

2008-06-04T11:25:00.000-07:00

Three bedroom, 1 bath with extra show in basement Sturdy brick constuction in northern part of Waukegan. $158,900.

Five bedroom, 2 bath brick home in very nice area. Detached 1.5 car garage. $150,000.

Three bedroom, two bath brick home in the north part of Waukegan. Very nice area. Beautiful wood paneling in the basement. $143,900.

Two bedroom, two bath brick home in a very nice area. Attached garage. $140,000.

Brick and stone structure and busy street. Two bedroom, one bath with detached 2.5 car garage. $109,000.

Unusual Waukegan Listing

2008-06-04T08:57:00.001-07:00

This property appears to have been a business in the past and is now listed as a single family home. It has two half baths but does not have a full bath. The property does not contain a kitchen either. However, it does appear to be very well build and could be rehabbed rather easily. The basement is dry, building is supported by a steal beam and it has older style electrical circuit breaker boxes. Should be easy to rent as it is located on a busy street. Priced at $84,900.

Fannie Mae Nixes Extra 5% Down in Declining Markets

2008-05-29T22:03:00.000-07:00

Fannie Mae nixes extra five percent down in "declining markets." On May 16, the country's largest secondary mortgage market company, Fannie Mae, announced that it will no longer require borrowers to put up an extra five percent down payment when purchasing homes in areas deemed "declining markets." According to an NAR: "Fannie Mae had been hearing concerns from REALTORS and others for months that its declining-markets policy was bad for the housing market because it discouraged consumers from buying homes in markets hardest-hit by foreclosures."

Worth A Look?

2008-05-29T21:43:00.001-07:00

Beach Park

2 Bedroom, 1 Bath

$119,900

Waukegan

3 Bedroom, 1 Bath

$110,032

Waukegan

Brick 2 Bedroom, 1bath

$88,450

2121 N. Western Ave., Waukegan

2008-04-22T09:52:00.000-07:00

This 3 bedroom, one bath ranch has central air and 1.5 car garage. My client purchased it for $74,121. He plans to put about $5,000 into it and flip it. The property is in great shape and it is located in a very nice neighborhood.

We almost passed it one up because we thought other buyers would be going after it for full price or higher. It had been on the market for as high as $140,000, in the past.

This one, like many foreclosures, was a lesson in patience. It took nine weeks from the time the offer was submitted until I delivered the earnest money check. But if you are willing to wait for awhile and move quickly when the right time comes, you can reap the benefits of purchasing properties at 30%, 40% and even 50% off of their market value.

Foreclosures jump 57% as loans adjust - Tribune

2008-04-22T09:46:00.000-07:00

April 16, 2008

From Tribune news services

U.S. foreclosure filings jumped 57 percent in March from a year earlier as adjustable-rate mortgages increased and more owners lost their homes to lenders.More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households, Irvine, Calif.-based RealtyTrac Inc., a seller of data on defaults, said Tuesday. Nevada, California and Florida had the highest foreclosure rates. Illinois ranked 12th, with 1 in every 603 households in some stage of foreclosure. And the worst isn't over: The wave of adjustable-rate loans resetting to higher rates will crest in May and June, experts said. And that's expected to push more homeowners into default and foreclosure in the third and fourth quarters of this year, according to RealtyTrac.

"Once we're through that batch of loans, the worst will have been worked through the system," said Rick Sharga, RealtyTrac's vice president of marketing.Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are "simply walking away and deeding their properties back to the foreclosing lender" rather than letting the home be auctioned, RealtyTrac Chief Executive James Saccacio said.

Waukegan Six Unit - $295,000

2008-04-22T09:00:00.000-07:00

Sale is subject to approval of second lienholder.

All units completely remodeled. All windows replaced. New ceramic tile floors in all kitchens, halls, and baths. New kitchen cabinets, sinks, countertops. New bathroom vanities, toilets, tubs have new coating. New interior and exterior doors and closers. New carpeting throughout. All new appliances. Furnace 2 years old. Laundry income. Tenants pay electric and cooking gas. Like buying a brand new building!

Please allow 24 hours to show. Listing agent must accompany.

Listed by Graff Realty, Inc. Call Neal Metts 847-219-2577.

Northern Waukegan

2008-04-08T20:19:00.000-07:00

This listing caught my eye. Two bedroom, two bath, brick home with a one car garage in the northern part of Waukegan, listed for $88,450. There must be something wrong with it but for that price it's worth taking a look, isn't it?