Big, Bad, Buying Mistakes

April 28th, 2009 3:14 PM

Big Bad Buying Mistakes

Via Kathleen Frawley Your South County Connection (Keller Williams):

# 1 biggest mistake:  Waiting until the market hits the bottom. 

Are you kidding? First of all we won't know the bottom was hit until about 60 days after it happened.  Second of all, Sellers will get the news flash the same day you do.  So guess what...prices will increase.  (probably dramatically and immediately)  So sitting on the couch biting your nails and waiting for "the bottom" won't help any one.  If you need a house, and will have comfortable payments, by all means get it.  You don't want to tell your friends in a couple of years you missed the boat.  (would've could've should've)

Mistake #2:  Not being pre-approved.

Pre-qualified is NOT the same as pre-approved.  If you submit an offer on a house you love with only a pre-qualification, in this market, you probably won't get it.  In fact, banks look at a pre-qualification as only a maybe-long shot-risk-gamble-slight possibility of qualifying.  in fact if they have multiple offers (which is very common) they may use your contract for a dartboard or to line the bird cage.

Pre-approval is golden.  Harps will play in the background when your offer is submitted with a pre-approval.  It will let you know exactly what you qualify for, and helps the process flow much smoother.  No brainer...get pre-approved.

Mistake #3 Betting on resale.

As a rule real estate increases in value.  As a rule over any 12 year period, real estate increases in value.  READ that:  12 year period.  The numbers, statistics, history, gurus, and geniuses say 12 years.  Not two weeks, not 6 months, not a year.  12 years.  Bottom line here: don't over extend yourself.  If the payments are comfy cozy buy it.  If it will rent for more than your payments, buy it.  (easy to do in this market) if cash-flow is positive right now, or you are prepared to wait 12 years for capital gains buy it.

If you think you need it right now because it will double in value immediately, and you will over extend yourself or bet the farm to get it, Call me- I'll talk you down.  That is not a smart way to live your life, or invest your money.

Those are the three mistakes I see most often, and the ones I can think of right now, but likely, i will post more later.

 

"Mistakes are part of being human.

Appreciate your mistakes for what they are:

precious life lessons that can only be learned the hard way.

Unless it's a fatal mistake, which at least others can learn from."

Al Franken

Myrtle Beach Fires - My Video Account

April 24th, 2009 4:30 PM

Homebuyer Tax Credit Modifications Explained:

April 1st, 2009 1:19 PM

Homebuyer Tax Credit Modifications - Explained.. .

Via Pederson Properties, Inc. (Coldwell Banker Residential Brokerage):

Homebuyer Tax Credit - As modified in the American Recovery and Reinvestment Act of 2009

(Major Modifications in Italic)

The following information highlights the differences between the 2008 and the 2009 Housing Tax Credit...

Feature	Credit as Created July '08 - Applies to all Qualified Purchases on or After April 9th, 2008	Revised Credit - Effective for Purchases on or After January 1st, 2009 & on or Before November 30th, 2009
Amount of Credit	Lesser of 10% of cost of home or $7,500	Maximum credit amount increased to $8,000
Eligible Property	Any single family residence (including condos, co-ops) townhouses that will be used as a principal residence.	No change All principal residences eligible.
Refundable	Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.	No change Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit	Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000).	No change Same income limits continue to apply.
Qualifications	Purchasers (and purchaser's spouse) may not have owned a principal residence in three (3) years previous to purchase.	No change Still available to First Time Homebuyers or those who have not owned a principal residence in the three (3) years prior to purchase.
Revenue Bond Financing	No credit allowed is home is financed with state/local bond funding.	Purchasers who utilize revenue bond financing can use credit.
Repayment	Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing.	No repayment for purchases on or after January 1st, 2009 and on or before November 30th, 2009.
Recapture	If home sold before 15-year repayment period ends, then outstanding balance or repayment amount recaptured on sale.	If home is sold within three (3) years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.
Termination	July 1st, 2009 (But note program changes for 2009)	On November 30th, 2009.
Effective Date	Purchases on or after April 9th, 2008 and before January 1st, 2009. Repayment to begin for 2010 tax year.	All revisions are retroactive to January 1st, 2009.

Source: National Association of REALTORS®

 

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