Saturday, March 27, 2010

Interest rates are going up - Federal Reserve policy is changing on March 31st

The Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac since early last year. The purchase program has helped maintain low interest rates for borrowers. As planned, the Fed this week announced it will stop purchasing these securities at the end of this month. Many analysts anticipate this will result in a slight rise in rates by year’s end.

Interest rates have hovered at or near historic lows for much of the past 18 months, resulting in lower payments for many borrowers. With the Fed discontinuing its purchase program, some analysts believe a rise in interest rates could range from 0.25 percent to as much as 1 percent by the end of 2010.

The federal tax credit for home buyers also is scheduled to end April 30. The tax credit combined with the expectation interest rates will increase has created a sense of urgency for many home buyers. In fact, 23 percent of California home buyers purchased a home in 2009 due to the perception that interest rates will rise and they would be priced out of the market, according to C.A.R.’s 2009 Survey of California Home Buyers.

Rising interest rates will have an effect on home buyers. For example, a qualified couple with a combined pretax income of $100,000 per year and debt obligations (excluding mortgage) of $500 who receive a mortgage rate of 5 percent could qualify for a loan of up to $590,000, assuming a 20 percent down payment. If the interest rate were to rise to 6 percent, as analysts at Barclays Capital predict, the same couple could only qualify for a mortgage of $540,000.

Saturday, March 20, 2010

First-time homebuyer TAX CREDIT has been extended!

When does the tax credit expire?
First-time homebuyers have until April 30, 2010 to be in contract on a home purchase. The purchase must close by June 30, 2010.

How much can a home cost?
Homes purchase for up to $800,000 are eligible.

How much is the credit?
10 percent of sales price or $8,000, whichever is less.

What is the income limit for first-time homebuyers?
The income limit for claiming the full tax credit is $125,000 for single taxpayersand and $225,000 for married taxpayers filing a joint return.

Does the tax credit have to be repaid?

How is the credit claimed?
Use IRS Form 5405 to claim. The IRS will require a copy of your HUD-1 Settlement Statement to verify the purchase.

How is a first-time buyer defined?
A first-time buyer is defined as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, this includes the home ownership history of both spouses.

Saturday, March 13, 2010

CALHFA Announces $700 Million to Assist Homeowners

The U.S. Treasury has allocated $699.6 million to CalHFA to help low and moderate income borrowers who have been hit hardest by unemployment and falling home values. These funds will be used for innovative programs to help stabilize the housing market.

The HFA Hardest-Hit Fund was designed to allow the maximum possible flexibility to Housing Finance Agencies in designing locally-focused programs that address the needs of a specific state or region within a state. All programs must have foreclosure prevention and housing market stability as their primary objectives.

CalHFA's proposal, along with proposals from the four other states selected (Arizona, Nevada, Florida and Michigan) is due by April 16, 2010. The Treasury will then review each proposal for compliance with program objectives and other requirements. The Treasury expects that CalHFA may be in the position to begin drawing down funds within four to six weeks following submission of proposals, or mid-year.

More info:

Saturday, March 6, 2010

Understanding Wood Burning Regulations

To reduce fine particulate pollution and protect public health, the Bay Area Quality Management District adopted Regulation 6, Rule 3: Wood Burning Devices.

The wood-burning regulation includes a mandatory prohibition on wood-burning on days when air quality is forecast to be unhealthy, as well as restrictions on excessive chimney smoke and a prohibition on the burning of garbage, plastics and other unsuitable materials.

The Air District will issue Winter Spare the Air Alerts through the end of February, at which times it will be illegal to use any wood-burning devices such as fireplaces, wood stoves or pellet stoves within the Bay Area. Residents failing to comply with the restrictions will be subject to a $400 fine, which will increase with subsequent violations (unless the resident's ONLY source of heat is from a wood-burning device).

How you can comply with the wood burning regulation:
  • Check before burning from November - February.
  • Do not burn wood, fire logs or pellets if Winter Spare the Air Alerts are issued. Call 1-877-4NOBURN.
  • Listen for announcements on radio and television.
  • Sign up for email notification at
  • Sign up for automatic phone alerts at or call 800-430-1515.
  • These regulations apply to households and businesses with fireplaces or other wood-burning devices, even hotels and restaurants.
  • It is okay to use gas-fueled fireplaces and logs, gas inserts or electric fireplaces.
  • NEVER burn any garbage, plastics, wrapping paper or other inappropriate materials.
  • Burn cleanly when burning is allowed.
  • Burn only clean, dry wood in short, hot fires with plenty of air in order to prevent excessive smoke from chimneys or flues.