Safe High Return Investments Orange County

As many potential homebuyers know, the American Recovery and Reinvestment Act of 2009 was revised and expanded beyond what was offered in 2008. The housing tax credit established in 2008 was a credit that functioned much like a no-interest loan which had to be repaid in 15 equal, annual installments beginning in the 2010 income tax year.

The housing tax credit for 2009, which is claimed by using form 5405, allows for an increase up to $8000 for purchases made before December 1, 2009. The bonus is that the credit doesn’t have to be paid back as long as the home remains the taxpayer’s main residence for three years following the date of the purchase. So, the housing tax credit is a true credit.

 

According to the IRS, “First time homebuyers represent a significant portion of existing single-family home sales. The expansion of the first time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.”

 

There are a couple of guidelines that buyers need to be aware of for the tax credit program, such as that the credit begins to phase out for taxpayers whose adjusted gross income is $75,000 or $150,000 for joint filers. Taxpayers are allowed to claim 10 percent of the purchase price up to $8000, or up to $4000 for those married but filing separately.  So for the market in Southern Orange County, any home valued over $80,000 could qualify for the full housing tax credit amount….which is just about any home in our market!

 

This housing tax credit works nicely with the FHA financing guidelines to provide homeowners a perfect opportunity to step into the current market. For an FHA loan, you do not have to be a “true” first time home buyer to take advantage of the tax credit program. To qualify, you cannot have owned real estate in the past three years and the property that is being purchased must be owner occupied. The down payment requirements for FHA financing are currently lower than the requirements for the national conforming loans, as low as 3.5%. Additionally, in the Orange County, California and Laguna Beach Real Estate Market FHA financing can go as high as $729,750.

 

Credit requirements for FHA financing may be more favorable than you think. Back in the day, the processing of FHA loans was inefficient, which was part of the reason that the Alt-A and subprime lending market was born. A combination of non-prime credit standards and competition in the market brought more efficiency to borrowers that required these loans. Currently, an FHA loan amount up to $417,000 requires a credit score of 580; an FHA loan amount over $417,000 requires a credit score of 620. Terms and qualifications are different from lender to lender, so be sure to shop around for the best loan scenario for your current financial situation.

 

But FHA is not the only way to go. There are conforming, and high balance conforming loans available to homebuyers as well. These loans will typically require a larger down payment such as 10% down on a single family residence in the conforming loan range, or as much as 20% down with a high balance conforming loan. As a side note, the high balance conforming loans, with available amounts up to $729,750 is currently supported by the government and set to expire December 31, 2009.

 

So what does all this mean for you?  There is evidence of excitement and movement for listings and sales that fall into the FHA and conforming loan range. The area’s real estate market is at long last exhibiting signs of a gradual but sustained recovery while continuing to favor buyers in search of the best-priced buying opportunities.  In true “supply-and-demand” fashion, the region remains in a solid buyers’ market, allowing first time homebuyers to take advantage of the housing tax credit as well as favorable prices and interest rates.

 

So how do you know when to get into the market? For starters, you can request a Market Snapshot Analysis Report.

Taking advantage of opportunities, such as the housing tax credit, when others are shying away from a market is how the rich get richer. Right now, buyers see an opportunity to make a real estate purchase that will give them a return on their money better than what other forms of investments may offer. Buyers understand that a purchase today, with the favorable home values and financing options, could allow for a return on their money of well over 8% per year which is better than the ROI on many other types of “safe” investments today. By putting pen to paper and making sense of the opportunities available, it can be easier to put fears aside.

Safe High Return Investments Irvine

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