TAMPA, Fla. – March 9, 2010 – Kim and Al Langevin were ecstatic Friday to close on a new home in St. Petersburg. And they’re pretty excited, too, about thousands in government money they plan to use to spruce up the house.

The Langevins are among a growing number of buyers rushing to find a home in time to cash in on the federal government’s tax-credit program. The couple, who moved from Lakeland, is eligible for up to $6,500.

They plan to put the money toward a swimming pool.

“We were worried we wouldn’t be able to close on time,” said Kim Langevin. “Getting that tax credit was a huge motivation.”

Real estate agents say their phones are ringing a lot more in recent weeks as folks scurry to sell and or buy homes before next month’s tax credit deadline.

“It’s been absolutely nuts,” said Paul De La Torre, a real estate agent with Keller Williams Tampa Properties. “I have showings galore and contracts are coming in left and right. I had 15 requests for showings yesterday.”

To qualify for the credit, buyers must have fully executed sales contracts in place by April 30 and the deal must close by June 30.

First-time homebuyers are eligible for up to $8,000. Buyers who have owned a home for five consecutive years within the past eight years can get a credit of up to $6,500.

Greg Armstrong, a broker with Coldwell Banker in Pasco County, said his agents’ phones are ringing, too. He credits most of the increase in traffic to improvements in the economy, but says the tax credit is also helping business.

“We’re seeing more people retiring to Pasco County,” Armstrong said. “I’ve had four or five retirees close in one week. In the past three years, I hadn’t seen that many. We had some retirement communities that went a full year without a sale.

“People are no longer afraid to do something. They were afraid for so long.”

Prices are indeed enticing buyers to pull the trigger, and more homeowners are putting their houses on the market in hopes of selling in time to buy another home. Some are trading up to bigger homes while others are downsizing.

Vernon Taylor, president of the Greater Tampa Association of Realtors, said he’s noticed more “serious” inquiries from potential sellers. In addition, he said, homeowners are more realistic about their house’s value.

Tampa Bay area sales prices have plummeted more than 40 percent since the peak of the housing boom. Home sales in Tampa-St. Petersburg-Clearwater rose 28 percent in the fourth quarter of 2009, and the median sales price hit $138,800. That’s down 42 percent since prices peaked at $239,600 in June 2006.

For those seeking to cash in on the tax credit, one challenge is closing in time. This is especially true for those trying to buy a home listed as a short sale.

Short sales often offer a buyer more bang for the buck because lenders allow the home to sell for less than the homeowner owes on the mortgage. Lenders sometimes cut the price deeply to sell the home so they can avoid foreclosing on the property.

Real estate agents estimate that as many as 60 percent of homes for sale are listed as short sales. However, lenders are often slow to approve deals, and real estate agents report buyers walking away in frustration.

That’s actually helping sellers who are not distressed, real estate agents say. That’s because they are able to close quickly and before the tax credits expire.

Some buyers, agents say, are even willing to pay a little higher purchase price to ensure they’ll get the tax credit.

Copyright © 2010 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

It is a common misperception by the general public that fixed rate mortgage interest is tied directly to Federal Reserve interest rate movement. On the contrary, the determinant is the performance of mortgage backed securities (MBS), most of which are issued by Ginnie Mae, Fannie Mae and Freddie Mac.

What does that mean in layman’s terms? MBS are securities traded on the open stock market and are backed by assets, like real estate. When you obtain a home loan, it is typically sold, pooled into a group of home loans as a securities package called MBS to be sold as securities to investors on the open stock market.

MBS are treated like bonds and are typically long-term, fixed-rate yield investments. Many compare the movement of MBS to that of 10-year Treasury Bonds. The higher the investor demand for MBS, the lower the yield for investors. If the demand for MBS increases, the price for MBS rises, MBS investors earn less yield and mortgage interest rates go down. Conversely, if the demand for MBS decreases, the cost for MBS notes goes down, investors earn more for their investment and mortgage interest rates go up.

On a more granular level, consider the inflation factor. Inflation directly impacts interest rates and the movement of MBS. Generally, as inflation rises, interest rates rise and the demand for MBS declines. On the other hand, as inflation goes down, interest rates decline and the demand for MBS increases. Looking at historical mortgage rates, the Carter Administration is a good example of this. Mortgage interest rates were in the double digits and climbed as high as 15 percent for real estate loans and 20 percent for commercial financing.

All factors aside, keep in mind that as investor demand increases for MBS, mortgage interest rates decrease. When MBS are on the decline, mortgage interest rates will be on the rise.

The external impacts to mortgage interest rates don’t necessarily determine what your rate will be if or when you apply for a mortgage. The other determinant is your credit rating. Before applying for a mortgage, obtain a copy of your credit report. Check it for inaccuracies and inquiries. If you find anything inaccurate, or inquiries that were not approved by you, write a letter to the credit reporting user with factual information.

By law, you may obtain one free copy of your credit report annually from each of the major credit reporting agencies in the U.S. - Equifax, TransUnion and Experian. Your credit rating and payment history are critical factors determining what interest rate you will be issued for your mortgage. If both are stellar and MBS are in high demand, then you should be issued the lowest interest rate available on the market.

In summary, obtain copies of your credit report, and make sure it is accurate. Watch the movement of MBS on the stock market, and monitor current mortgage interest rates. When interest rates are at a comfortable low, apply for a mortgage. You should be able to obtain the best interest rates available on the market.

Article courtesy of Kimbrough Gray, Escapeso Austin Real Estate, Austin, TX http://www.escapesomewhere.com

The term “Short-Sale” is used when the proceeds from the sale of a property are less than the combined outstanding loan balances on the property. Today, in Key West & the Lower Keys, the market is down 30%-70% (depending on the neighborhood) from the market high in early 2005. Let’s look at the following example:

An owner purchased his/her property four years ago for $500k and put 20% down. Therefore, the person who bought the home made a down payment of $100k and has a mortgage of $400k. However, in today’s market, the home may be currently worth only $300k. If the person were to sell the property today, after selling expenses (assume selling expenses are 6%), the net proceeds would be approximately $282k, or about $118k “short” of what is needed to pay off the mortgage. Hence, the term… “Short-Sale”).

When making an offer on a property that is listed as a “Short-Sale”, the decision maker is the Lender (or investor) who holds the mortgage on the property, not the property owner. Therefore, potential Buyers need to understand that when dealing with large institutional lenders, they need to be very patient. “Short-Sale” contracts typically take 3-6 months (or longer) to be approved by the Lender.

Also, not all offers on “Short-Sale Listings” are accepted or approved by the lender (nationwide, the average for successfully closing on a “Short-Sale” listed property is well under 50%). If the Lender doesn’t receive an offer close to the “Appraised Value” of the property, they will often just foreclose on the property rather than give it away to someone making an unrealistic “low-ball” offer.

Courtesy of Ruben Concepcion - Keys Financial Corp.  (www.keysfinancial.com)

(11/13/09)  Last week, a new Homebuyers Tax Credit bill was signed into law. The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren’t looking to purchase - pass on this article to anyone you think might be in the market to do so. This is information that might benefit them greatly, and I’ll be happy to be of service to them.

Here is a brief overview of the Homebuyers Tax Credit - and its benefits - based on the new bill.

Tax Credit for First-Time Homebuyers

FTHBs (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.

Tax Credit for Current Homeowners

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. Those in the military do have some special extensions on the timelines available.

What’s So Great About a “Tax Credit”?

The benefit of a tax credit is that it’s a dollar-for-dollar benefit, rather than a “tax deduction”, or 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 who qualified for the entire benefit 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 or no 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 sales price of $800,000.