Home Buyer Incentives: Mpls.
Click here for the latest eligibility information on Minneapolis' Advantage program.
Limitations are by property type (foreclosed or vacant); income; and neighborhood (mostly north and central). According to the Web site, the program "offers 200 loans at $10,000 each that can be used to pay for closing costs, down payment, or even small repairs to the home."
Showing posts with label Home Buyer Incentive. Show all posts
Showing posts with label Home Buyer Incentive. Show all posts
Tuesday, April 7, 2009
Saturday, March 21, 2009
$10,000 Loans to 200 Buyers
Mpls. Offers Biggest Home Buyer Carrot Yet
Minneapolis Advantage Program
As a Realtor, I'm for anything that sustainably strengthens demand for housing, and specifically, foreclosures. Foreclosures are to the housing market what cancer is to an organism: a contagious disease that quickly spreads to nearby healthy "cells" and claims them, too.
However, under the category of "side effects" or "unintended consequences," two thoughts:
One. There are a lot more than 200 foreclosed properties in Minneapolis at the moment. How is Minneapolis Advantage going to decide which properties -- and which Buyers -- qualify?
I can easily imagine the online equivalent of the latest Star Wars movie release or hot concert tour, where diehards show up in sleeping bags days before tickets go on sale.
Is that really the best way to parcel out such goodies?
Two. I have clients who just closed on a foreclosed Minneapolis duplex. I'm not sure that they would have qualified -- the program has income limits that they may have exceeded -- but it's annoying to think that they just missed out on this program (and I'm just their Realtor!).
On a larger scale, you might call this phenomenon "waiting for an even BIGGER carrot."
Whether it applies to interest rates, home prices, or buyer incentives, the effect is to teach Buyers that it pays to wait.
That's probably not what policymakers are try to achieve at the moment . . .
Starting April 2, the Minneapolis Advantage program will provide $2 million to fund 200 $10,000 deferred loans to buyers of foreclosed homes in certain Minneapolis neighborhoods. The loan is forgiven if the homeowner lives in the house at least five years. Information about the program will be available on April 2 by calling the agency or visiting its website. The Greater Metropolitan Housing Corp. administers the loans, which can be used toward a down payment or closing costs on a foreclosedhome or one that can be sold as a short sale (a lender agrees to a sale for less than what is owed on the mortgage). The program is available for houses in 26 neighborhoods throughout Minneapolis.The Strib article doesn't provide the web site. Here it is:
--"Agency Offers $2 Million in Deferred Loans" (Star Tribune, 3/20/09)
Minneapolis Advantage Program
As a Realtor, I'm for anything that sustainably strengthens demand for housing, and specifically, foreclosures. Foreclosures are to the housing market what cancer is to an organism: a contagious disease that quickly spreads to nearby healthy "cells" and claims them, too.
However, under the category of "side effects" or "unintended consequences," two thoughts:
One. There are a lot more than 200 foreclosed properties in Minneapolis at the moment. How is Minneapolis Advantage going to decide which properties -- and which Buyers -- qualify?
I can easily imagine the online equivalent of the latest Star Wars movie release or hot concert tour, where diehards show up in sleeping bags days before tickets go on sale.
Is that really the best way to parcel out such goodies?
Two. I have clients who just closed on a foreclosed Minneapolis duplex. I'm not sure that they would have qualified -- the program has income limits that they may have exceeded -- but it's annoying to think that they just missed out on this program (and I'm just their Realtor!).
On a larger scale, you might call this phenomenon "waiting for an even BIGGER carrot."
Whether it applies to interest rates, home prices, or buyer incentives, the effect is to teach Buyers that it pays to wait.
That's probably not what policymakers are try to achieve at the moment . . .
Friday, February 27, 2009
Today's Buyer: A Composite
What Do Today's Home Buyers Look Like?
Contrary to popular opinion, home buyers are not an endangered (or extinct) species. Two of my clients just purchased homes, and three more are actively looking.
So what generalizations can you make about them?
They have many (if not all) of the following four attributes:
One. First-time Buyers.
Yes, it's a lot easier to buy if you don't need to sell first.
If you currently own a home and want to buy another, you must either: 1) qualify to own two homes at once, which means an interval of "doubled-up" mortgage payments, utility bills (even if one set is lower because you're not living there), etc.; or 2) make a contingent offer.
That means your offer is contingent on getting a signed Purchase Agreement on your current home, typically within 90 days.
While more Sellers are ok with that in today's market, others want the certainty of a done deal, even if it means accepting a lower price.
Of course, another reason buying is easier for first-timer's is all the incentives being thrown at them.
I'll leave a comprehensive list of programs and incentives for another post, but suffice to say, if you're a first-time buyer and can't find a carrot (or several) for buying right now . . . you're not looking very hard.
Two. Long-term orientation.
I think it's safe to say that the people not buying now are focused on the (downward) direction of home prices.
Which is perfectly understandable.
No one wants to catch a falling knife, and right now the velocity of that knife is record-setting, particularly in places like Las Vegas, Phoenix, and parts of California.
By contrast, many of today's Buyers don't really care what prices will be next year or even three years from now because they're not contemplating selling then.
Rather, they see themselves as locking in their long-term housing costs at today's historically low rates. No matter what housing prices or interest rates do from here, they know that their monthly living costs will be a fixed $1,200, or $2,000 (or whatever).
Three. Financially conservative (or related to someone who is).
It's certainly possible to buy today with as little as 3% or 4% down, particularly for Buyers going through FHA. However, putting more down gives you more options: you can "go conventional" (get a regular bank-issued mortgage); it may qualify you for a lower interest rate (surprise, surprise); and it will help you avoid the various add-on fees becoming popular with lenders.
Also unsurprisingly, Buyers coming in with a heftier downpayment are more popular with Sellers, who don't have to "sweat" the Buyer's financing contingency (the vast majority of Purchase Agreements give the Buyer a prescribed amount of time to secure their mortgage).
When credit was readily flowing, Sellers really didn't care where the Buyer's money was coming from; they knew it would be there at closing. So financially strong Buyers couldn't really get much of a discount.
Today, Sellers can't take anything for granted.
As a result, financially strong Buyers -- making low-risk offers with big downpayments -- can often command a discount from nervous Sellers.
Of course, putting more down means re-paying less.
That same financial conservatism carries over into Buyers' borrowing decisions.
Forget about exotic, adjustable rate loans; they just want plain vanilla, fixed, at the lowest rate they can get.
Four. Custom wants and needs.
I just sold a 4,000 square foot duplex with prehistoric wiring (amongst many other problems) to couple moving to the Twin Cities from Chicago.
Big obstacles, right? Perhaps for many Buyers.
However, one of the clients is a potter who wants to put in a kiln. As a result, they wanted a property where they could install a high-end, 200 amp-plus electric service. Buying a "blank slate" property -- with a discount to match -- suited their needs much better than retrofitting something closer to "move-in ready" condition.
Obviously, not every client needs an in-home kiln (for some odd reason, though, I've now had three clients who have!)
However, plenty of Buyers are looking for homes that they can put their own "stamp" on, whether it means creating a new Kitchen, opening up walls to create a more open floor plan, or simply updating to their taste.
For the first time in a long while, such homes are in plentiful supply, at prices that are likely to prove good, long-term values.
Contrary to popular opinion, home buyers are not an endangered (or extinct) species. Two of my clients just purchased homes, and three more are actively looking.
So what generalizations can you make about them?
They have many (if not all) of the following four attributes:
One. First-time Buyers.
Yes, it's a lot easier to buy if you don't need to sell first.
If you currently own a home and want to buy another, you must either: 1) qualify to own two homes at once, which means an interval of "doubled-up" mortgage payments, utility bills (even if one set is lower because you're not living there), etc.; or 2) make a contingent offer.
That means your offer is contingent on getting a signed Purchase Agreement on your current home, typically within 90 days.
While more Sellers are ok with that in today's market, others want the certainty of a done deal, even if it means accepting a lower price.
Of course, another reason buying is easier for first-timer's is all the incentives being thrown at them.
I'll leave a comprehensive list of programs and incentives for another post, but suffice to say, if you're a first-time buyer and can't find a carrot (or several) for buying right now . . . you're not looking very hard.
Two. Long-term orientation.
I think it's safe to say that the people not buying now are focused on the (downward) direction of home prices.
Which is perfectly understandable.
No one wants to catch a falling knife, and right now the velocity of that knife is record-setting, particularly in places like Las Vegas, Phoenix, and parts of California.
By contrast, many of today's Buyers don't really care what prices will be next year or even three years from now because they're not contemplating selling then.
Rather, they see themselves as locking in their long-term housing costs at today's historically low rates. No matter what housing prices or interest rates do from here, they know that their monthly living costs will be a fixed $1,200, or $2,000 (or whatever).
Three. Financially conservative (or related to someone who is).
It's certainly possible to buy today with as little as 3% or 4% down, particularly for Buyers going through FHA. However, putting more down gives you more options: you can "go conventional" (get a regular bank-issued mortgage); it may qualify you for a lower interest rate (surprise, surprise); and it will help you avoid the various add-on fees becoming popular with lenders.
Also unsurprisingly, Buyers coming in with a heftier downpayment are more popular with Sellers, who don't have to "sweat" the Buyer's financing contingency (the vast majority of Purchase Agreements give the Buyer a prescribed amount of time to secure their mortgage).
When credit was readily flowing, Sellers really didn't care where the Buyer's money was coming from; they knew it would be there at closing. So financially strong Buyers couldn't really get much of a discount.
Today, Sellers can't take anything for granted.
As a result, financially strong Buyers -- making low-risk offers with big downpayments -- can often command a discount from nervous Sellers.
Of course, putting more down means re-paying less.
That same financial conservatism carries over into Buyers' borrowing decisions.
Forget about exotic, adjustable rate loans; they just want plain vanilla, fixed, at the lowest rate they can get.
Four. Custom wants and needs.
I just sold a 4,000 square foot duplex with prehistoric wiring (amongst many other problems) to couple moving to the Twin Cities from Chicago.
Big obstacles, right? Perhaps for many Buyers.
However, one of the clients is a potter who wants to put in a kiln. As a result, they wanted a property where they could install a high-end, 200 amp-plus electric service. Buying a "blank slate" property -- with a discount to match -- suited their needs much better than retrofitting something closer to "move-in ready" condition.
Obviously, not every client needs an in-home kiln (for some odd reason, though, I've now had three clients who have!)
However, plenty of Buyers are looking for homes that they can put their own "stamp" on, whether it means creating a new Kitchen, opening up walls to create a more open floor plan, or simply updating to their taste.
For the first time in a long while, such homes are in plentiful supply, at prices that are likely to prove good, long-term values.
Sunday, February 15, 2009
$8,000 Tax Credit Q & A
Parsing the Home Buyer Tax Credit
Realtors are already fielding questions from clients (see below) about the newly-passed $8,000 tax credit for home buyers.
Details are still sketchy -- the stimulus bill's provisions repeatedly shifted -- but the gist of it appears to be: 1) a scaling tax credit of up to $8,000 (not the $15,000 floated at one point) -- the formula is actually 10% of the home's price, so you max out buying anything over $80,000 (pretty low threshold); 2) a phase-out based on income levels; and 3) no repayment (it's a true credit).
As the details emerge, I think a lot of America is going to discover (remember?) how bad they are at math, and why they hated it in school!
Realtors are already fielding questions from clients (see below) about the newly-passed $8,000 tax credit for home buyers.
Details are still sketchy -- the stimulus bill's provisions repeatedly shifted -- but the gist of it appears to be: 1) a scaling tax credit of up to $8,000 (not the $15,000 floated at one point) -- the formula is actually 10% of the home's price, so you max out buying anything over $80,000 (pretty low threshold); 2) a phase-out based on income levels; and 3) no repayment (it's a true credit).
As the details emerge, I think a lot of America is going to discover (remember?) how bad they are at math, and why they hated it in school!
Still confused? Just ask your Congressman -- they'll know!Q: I read a news account saying that the $8,000 tax credit for home buyers is refundable-- does this mean that those paying less than 8K in taxes will be refunded the difference?
A: No. The "refundable" part is that you pay your taxes, then get a refund for whatever part of the $8,000 credit you qualify for. So, if you paid $5k in federal taxes and bought a $100,000 house, you'd qualify for the whole $8,000 -- and therefore get the whole $5k refunded. (You'd actually qualify for 10% x $100k, but it's capped at $8k).
If you pay less in taxes than the credit you qualify for, you leave that money on the table -- you can't get a refund for taxes you never paid. So in the case above, you're "out" $3,000.
Tuesday, January 27, 2009
Home Buyer Incentives Multiply
"$5,000 here, $10,000 there"
To paraphrase a *famous quote, "$5,000 here, $10,000 there, and pretty soon you're talking about real money."
In this case, the money consists of incentives offered to first-time home Buyers.
New home builders have been offering Buyer incentives for quite some time (upgraded finishes, discounted loans, plasma TVs, etc.). However, now government is joining the party in a serious way.
At the federal level, there is increasing speculation that the $7,500 repayable tax credit now offered Buyers will simply become a straight credit -- no repayment required.
Locally, a number of municipalities are dangling increasingly fat incentives to first-time Buyers to tackle foreclosed and abandoned homes.
The leader so far appears to be Brooklyn Center, offering a $10,000 package to qualifying Buyers.
Do I hear $15,000??
*The original quote was from Senator Everett Dirksen, whose decimal place was actually billions.
To paraphrase a *famous quote, "$5,000 here, $10,000 there, and pretty soon you're talking about real money."
In this case, the money consists of incentives offered to first-time home Buyers.
New home builders have been offering Buyer incentives for quite some time (upgraded finishes, discounted loans, plasma TVs, etc.). However, now government is joining the party in a serious way.
At the federal level, there is increasing speculation that the $7,500 repayable tax credit now offered Buyers will simply become a straight credit -- no repayment required.
Locally, a number of municipalities are dangling increasingly fat incentives to first-time Buyers to tackle foreclosed and abandoned homes.
The leader so far appears to be Brooklyn Center, offering a $10,000 package to qualifying Buyers.
Do I hear $15,000??
*The original quote was from Senator Everett Dirksen, whose decimal place was actually billions.
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