Good morning – I was speaking with a Realtor this morning and she was very frustrated with buyers saying they want to wait for prices to drop more. That got me thinking about the forecasts I am reading that say when interest rates start to rise, they will move fast. So…, I did some comparisons that took into account prices dropping but also show what higher interest rates will do as well. Bottom line is, the higher the loan amount, the better off they are to buy today and take advantage of the current low rates. I hope this will help you and your clients.

$200,000 loan at 4.00% interest:
Principal and Interest pymt = $955

What happens when prices drop but interest rates rise?

$150,000 loan:
RatePrincipal and Interest Pymt
5.50%$852
6.00%$899
6.50%$948
7.00%$998

$300,000 loan at 4.00%$ interest:
Principal and Interest pymt = $1432

What happens when prices drop but interest rates rise?

$250,000 loan:
RatePrincipal and Interest Pymt
5.50%$1,419
6.00%$1,498
6.50%$1,580
7.00%$1,663

Bob Veldkamp

“Your Premier Lender”

689 Tank Farm Rd Ste #230-B
San Luis Obispo, CA 93401
Cell: 805-801-8444
Office: 805-544-6133
Fax: 805-544-6149
bobveldkamp@gmail.com
CA DRE License # 01410661

 I will be conducting a Water Conservation Clinic at Farm Supply, SLO, on Saturday, June 5, from 10:00 AM to 11:30 AM.  The reason I am writing you about it is that the information provided should be very useful to Realtors and other professionals (not just home owners).   Given the cost of utilities, this short clinic should provide the attendee with the tools to help keep costs down. Recently, the first three businesses I visited during the day had significant water leaks – Totaling about $3,000 per month in water and sewer charges. That can be a huge hit, and two of the businesses were restaurants who were not aware of the ongoing leaks.  I have about 5,000 residential and commercial customer contacts per year regarding leaks and conservation issues, and will be explaining some of the things I have learned over the last 20 years.  There will be free gifts for all who attend, and a flyer is attached.  Hope to see you there!  Mary, I would appreciate it if you would pass the word around to friends and colleagues, and your customers. 
 
Bob Nicholson
City of San Luis Obispo
Utilities Department
440-6977

The Internal Revenue Service (IRS) recently issued new guidelines and clarified documentation that taxpayers must submit to successfully obtain the federal tax credit for home buyers.

The federal tax credit for home buyers was extended and expanded late last year.  Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010.  Repeat buyers may be eligible for a tax credit of up to $6,500.  

To receive the tax credit, home buyers must comply with the IRS’s documentation requirements, including a fully executed IRS Form 5405.  On the form, which is available on the IRS’s Web site, taxpayers provide information supporting their claim of eligibility, such as income and home purchase date. 

The IRS also requires home buyers to submit a copy of the closing or settlement statement that proves the transaction took place.  The IRS previously said that the statement should show “all parties’ names and signatures, property address, sales price, and date of purchase.”  However, since closing or settlement statements vary by state, and in some cases the form does not include both the seller’s and buyer’s signatures, the IRS has revised this requirement.  As long as the closing or settlement statement conforms to prevailing local practices, the IRS will accept it. 

One stipulation for repeat buyers is they must provide documentation they lived in their former property for a consecutive five years out of the previous eight years.  Accepted documentation may include property tax records, hazard insurance records, or copies of annual mortgage interest statements filed with their federal taxes.

KEEP THIS IN  MIND

 NAR’s Pending Home Sales Index (PHSI) is a barometer of future sales. Typically, there is a one- to two-month lag between the signing of a sales contract and the close of escrow. Although government incentives, low interest rates, and affordable home prices have lured many buyers, especially first timers, to the market, historically sales decline during the winter months and begin to rise in the spring.  Because of the government’s efforts to stimulate the housing market, some economists believe that housing prices will decline once the incentives come to an end. However, the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) closely watched “2010 California Housing Market Forecast,” projected that the median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 in 2009.

 According to C.A.R.’s Vice President and Chief Economist Leslie Appleton-Young, unlike the rest of the nation, home sales in California already bottomed out more than two years ago, and the median home price reached its trough in February 2009.

 Although home buyers should not focus solely on future home price appreciation, according to data collected by C.A.R. over the last 40 years, homeowners who purchase a median-priced house, live in their home for at least five years, and sell it at the current median price, have averaged an annual rate  of return of more than 11 percent.

Get a locally grown Christmas Tree!

In 2006 the Land Conservancy of San Luis Obispo County was honored to accept a conservation donation that permanently protects Fred and Pat Frank’s 60 acres of farmland, oak woodland habitat and nearly a mile of Graves Creek in Atascadero. 

The protected property includes a tree farm. If you are looking for a locally grown Christmas Tree, consider supporting the Frank family by purchasing your tree from Hidden Springs Tree Farm in Atascadero. Not only will your purchase support a sustainable multi generation family business on protected land, but 100% of your money stays in our community. That’s a whole new way of saying Happy Holidays in San Luis Obispo County-by supporting local people and local land.

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It????s important to remember that the tax credit is just that??? a tax credit. The benefit of a tax credit is that it????s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to? $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.

In addition, you may be able to benefit from additional housing related provisions, including the following:

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Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

As