When, Why, How and What Should I Do to Buy a Home?

I understand the dilemma of choosing which direction to take attempting to purchase a Home today. With an abundance of mixed information, derived from many and various sources, it’s often difficult to assess which are of real value or actually valid. It is essential to make allowance of time to research, to sift through and decipher that which is pure commercial advertising or a well informed and valid service. We need to proceed carefully!
At this time with quick access to mass data, etc. it is essential to determine what is really necessary information. Is it providing valid reliable well informed details to make major financial decisions?
Today in the Real Estate Market, Home Prices are discounted and much lower than they have been for several years, along with low interest rates.
In addition if you are a “First Time Buyer” you have available from the “Stimulus Plan” a First Time Buyer $8,000. Federal Income Tax Credit. (See IRS CODE) at http://www.irs.gov/
There are many articles and advertisements discussing Home Foreclosure /REO’S Bank Owned and Short-Sales.It is important to understand the basic workings relating to them.
REO’S are Bank Owned Real Estate. Properties foreclosed upon by the lender upon the delinquent non -payment of the loans.
The existing huge inventory of REO’S has greatly contributed to the discounting of home values , which can be a bonanza for some, if qualified to purchase at this time. What may appear on the surface as a “Bonanza” may not be for all, especially if the property has not been thoroughly inspected prior to your offer to purchase.
There are many possible pitfalls, if you’re not cautious since the lenders are exempt and not required to make disclosures with reference to the conditions of the foreclosed property. Often the property may require extreme repairs. It is essential to hire a qualified “Home Inspection” company for an extensive inspection.
The U.S. Department of Housing and Urban Development has a great web site which I feel is a wonderful source of information for the Buyer. www.hud.gov
Such as : With assistance on, what you can afford on your income, credit rating, current monthly expenses, down payment and the interest rate... check several lenders, compare costs and interest rates, and negotiate to get a better deal. Consider getting pre-approved for a loan. Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs
You owe to yourself to check it out. www.hud.gov

Short Sales: When the property owner attempts to sell the property, upon accepting with a contingency, an offer which is less that the amount owed to the bank, negotiating with the lender to accept less than the amount actually owed.
The short Sale can be difficult to complete and close in a timely manner, many times they will not close. Lenders are not always agreeable to the negotiation of a lesser amount and may be quite slow in discussing them or providing agreement.
In Short Sales the Sellers are responsible to and should disclose the condition of the property; however it is still essential to get a Home Inspection.
Locate and work with a Realtor, ask questions and always verify!
Please Note: Real Estate Brokers do not give Tax or Legal advice, always contact your Tax /Legal advisors

The Mortgage Forgiveness Debt Relief Act

Cancellation of Debt


In these economic unsettling times many are having difficulty in meeting their mortgage obligations and could be facing the loss of a property by foreclosure.

Many homeowners are staring a mortgage nightmare in the face. They are now upside down on their homes and cannot afford the mortgage payments.
Many have borrowed beyond the equity in their home. They may have taken on a debt that they can no longer afford to make the monthly payments. As the initial teaser rate periods have ended and interest rates have risen, they can no longer sustain and are facing foreclosure.
Take the time now to investigate the current remedies available pertaining to a pending tax consequence. When a Lender forgives (cancels) a debt and relieves the debtor it can trigger a tax liability called “Mortgage Relief “ Canceled debt under tax law is considered income and included as part of the debtor’s income...
Congress passed the Mortgage Forgiveness Debt Relief Act,enacted December 20, 2007The Act allows exclusion of income realized as a result of a modification of terms ,or foreclosure of a principle residence.

Debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home. This is known as qualified principal residence indebtedness.

Lenders have been criticized for creating loan programs that set borrowers up for trouble. The loans came in many forms, interest only, zero down and various hybrid loans were criticized. Unfortunately these loans have in many ways led to the current state of disaster when housing prices eventually fell and interest rates rose from their teaser rates and historic lows

If you are having problems meeting your mortgage obligations, it is important that you do not panic. Talk with your lender about your options. If a short sale looks like the solution, make sure you sit down with an accountant before selling and get legal advice While defaulting on a mortgage is unfortunate tax nightmare is definitely worse.More information can be found in IRS Publication 4681, Canceled Debts, Foreclosures, Also IRS news release IR-2008-17.

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REAL ESTATE BROKER/ EXCHANGOR