Christopher Pagli's Blog

When the time for a final walkthrough inspection of the home you're purchasing arrives, most will welcome assistance!  This inspection should not be confused with an engineer home inspection which is conducted right after offer acceptance.  Below is a checklist of items to be checked by you and your Westchester County Buyers Agent.

General

1) Have all agreed upon repairs been completed?
2) Have the sellers removed any items that are supposed to stay in the home?
3) Is the home clean and/or broom swept?
4) Are there any signs of new damage to walls, floors, etc?
5) Do all light fixtures work?
6) If an agreed upon fixture was removed is there at least a "contractor grade" replacement?
7) Does every outlet have power?
8) Are there any leaking pipes, faucets, or toilets?
9) Do all The toilets flush?
10) Does the garage door opener work?
11) Do the locks work?
12) Do all the appliances work?
13) If new construction, are all the agreed upon finishing touches in?

HVAC

1) Test the furnace and air conditioning system...please note that a central air compressor cannot be tested in the freezing cold weather. Please consult an HVAC expert for more info.
2) Check to make sure vents aren't blocked?

The final walkthrough process is a fairly casual one and should be conducted the night before or hours before the closing.  If there are any issues that need to be addressed your Buyers Agent can approach the Listing Agent and arrange to have the items either credited or negotiated.  In my experience everything can be worked out as long as both parties are open minded.  Now enjoy the Real Estate you have purchased and will now call home!

Tax Credit for Homebuyers

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 8) to increase energy efficiency, including new insulation, windows, and frames.

Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.

The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November.

Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, said a congressional aide, who spoke on condition of anonymity because he was not authorized to publicly discuss the deal.

Senators were still negotiating the expansion of a separate tax credit that lets money-losing businesses get refunds for taxes paid in previous years, providing them with an immediate source of cash.

Senators in both political parties were hoping to add both tax provisions to a bill that would give people running out of unemployment insurance benefits up to 20 more weeks of federal aid. The Senate could vote on the overall bill as early as Thursday, but lawmakers were still haggling over several unrelated amendments Wednesday evening.

I wanted to take a minute and clarify some definitions of some commonly used Real Estate Terms.  I believe that as a Realtor it is my duty to educate you to use the correct terminology and understand the meaning.

1) Mortgage – This is one of the most commonly misunderstood words I come across.  Most people think that a Mortgage is a loan.  A Mortgage is a legal document that pledges a property to the lender as security for payment of the loan/debt.

2) Realtor – A Realtor, not Real-a-tor, is a member of the National Association of Realtors.  If the agent is not a member then they are just a Real Estate agent.

3) Pre-Qualification – Many think this is a Pre-Approval, it’s not.  A Pre-Qualification is a Pre-Approval to a Pre-Approval.  It’s the process of determining how much money a prospective homebuyer will be eligible to borrow before a loan is applied for.  This is usually a verbal process between Buyer and Lender.

4) Pre-Approval – With this process the prospective borrower has submitted all necessary documentation, credit checked, and passed to an underwriter for approval.  This is what you will need when making an offer on a home.

5) Closing Costs - Expenses (over and above the price of the property) incurred by Buyers and Sellers in transferring ownership of a property, also known as settlement costs.  In Westchester You can count on Closing Costs averaging 3%-4% of the purchase price, and a bit higher on properties over $500,000.  Keep in mind properties 1 million dollars and above have an additional “Mansion Tax” equal to 1% of the purchase price.

6) Assessed Value – I can’t tell You how many times I’ve been asked to clarify this.  The Assessed Value is the value placed on the property by a public assessor for purposes of taxation.

7) Annual Percentage Rate – The total yearly cost of a mortgage stated as a percentage of the loan amount.  It includes the base interest rate, primary mortgage insurance, and loan origination fees.

8) Cooperative – A form of common property ownership in which the residents of an apt building do not own their units, but rather share in the corporation that owns the property.  You receive a proprietary lease and stock certificate.

9) Condominium – A form of property ownership in which the homeowner holds title to an individual dwelling unit, plus a share of common areas of a multi-unit property.

My next blog post will feature more terms.  I hope this has been helpful so far!

Step 1 - Figure Your Total Monthly Pretax Income
a) Annual Salary/Wages Of Buyers..........................$_________________________
b) Other Annual Income...........................................$_________________________
c) Total Annual Income............................................$_________________________
d) Divide Total Annual Income By 12 Months.............._________________________
Total Monthly Pretax Income................................=$________________________

Step 2 - Figure Your Total Monthly Debt
a) Car Payment.......................................$_______________________
b) Student Loan Payment.........................$_______________________
c) Child Support/Alimony..........................$_______________________
d) Credit Cards (Minimum Monthly Payment)..........$_____________________
e) Other Long Term Debts..........................$___________________________
Total Monthly Debt....................................$____________________________

Step 3 - Maximum Monthly Mortgage Payment
(Includes Principal, Interest, Tax, Mortgage Insurance@28% Of PreTax Income, 29% FHA)
a) Total Monthly Pretax Income From Step 1...............................$______________________
b) Multiply By .28 (FHA Mortgages .29).......................................x.28 or x.29

 Maximum Monthly Mortgage Payment.....................................$________________________

Step 4 – Maximum Monthly Debt Including Mortgage Payment

 (36%, 41%, FHA & VA)

a) Total Monthly Pretax Income From Step 1……………………$_______________________

b) Multiply By .36 (FHA & VA Mortgages .41)……………………$_______________________

Maximum Monthly Allowable Debt Including Mortgage …………$_______________________

The total monthly mortgage payment should equal no more then 28% pretax income, 29% for FHA mortgages.

Total allowable monthly debt should equal no more then 36% pretax income, 41% for FHA and VA mortgages.