First Time Buyer Programs in 2009

The timing is right, and financial opportunity is here, ... in the form of buyer programs, they are also called mortgage assistance programs.

A basic requirement is that the buyer be a "first-time buyer". If you haven't owned any property in a long time, that may also qualify you.

These programs are invariably sponsored by a local city, or Los Angeles or Orange Counties.

Another feature is there may be a "silent second", which means there is no monthly payment due until a certain date, or the property is sold, depending on the program. These are down payment assistance programs provided through qualified entities.

There may be income restrictions and household size maximums, geographic area buying restrictions in some programs, or current residence requirement restrictions, and U.S. citizenship or permanent resident status is required.

Principal residence (no income investments) of a single family home, condominium or townhome.

NOTE: No 100% financing--buyers must have "skin in the game", although on one program the buyer contribution is only 1%, most are up to 3% and 5% down payment levels, depending on FHA or conventional loan requirements, and must be from the borrower's own funds.

The exciting news is that if the buyer falls into a program's guidelines, there could be a difference of several hundred dollars a month difference in the monthly loan payment vs. a loan without an assistance program.

So who has these programs?

• The City of Fountain Valley offers up to $150,000 in the form of a "silent" second, with an annual gross income starting at a maximum of $70,600 for a single buyer, up to $133,200 for a household of eight.


• Orange County has a Mortgage Assistance Program offering up to $40,000 for a "silent" second; income starts at maximum of $52,100 for a single buyer. Good in 15 cities including Seal Beach, Stanton, Cypress, La Palma, Los Alamitos, plus unincorporated areas.


• The WISH Downpayment Assistance Grant provides up to $15,000 for each household (funds available on first come, first serve basis). Must purchase in Orange County.


• Orange County Housing Trust has up to 25% of the purchase price (no more than $115,000), for downpayment assistance. Purchase must be in Orange County.


• City of Bellflower Downpayment Assistance Program offers up to $40,000 in a "silent" second, with a single buyer income no higher than $42,450, going up to a maximum of $80,050 for a household of eight.


• City of Long Beach offers a program currently "on hold" but still taking applications.

For more assistance in finding a home in 2009, and getting financial program help, please contact me.

Saving Energy Saves Money in Your Home

Just recently I was in our local Belmont Shore shopping zone and kept walking by a large sidewalk bin of CFL (compact fluorescent light) light bulbs. Somehow, it gradually dawned on me that at $.99 each, these were a real bargain and far below the going price of $5.00+ in most retail stores.

According to flexyourpower.org, replacing standard incandescent light bulbs with compact fluorescent light bulbs savs 75% of lighting costs. If you live in household of several people where the lights may be on as much as half the day, or you live in a condominium building requiring public lighting, this can be a tremendous savings in a year. Not only is it a savings to you, it's a savings for everyone. "If all Californians replaced five bulbs with CFLs, it would be like taking 275,000 cars off the road. "

So I bought a lot more than 5 bulbs, well worth it at $1.00 each--not only are they energy saving, but a 23 watt CFL bulb equals a 100 watt incandescent bulb, and the CFL will burn up to 10,000 hours.

HINT: After trying out different brands, you'll find the right tone for you.

I used the "warm white" from MaxLite, but the end result also depends on the lamp shade or other globe the light will be shining through.

Go to FlexYourPower.org and check out the many other energy saving tips. You really can't lose.

And if you are in Belmont Shore soon, Billings Hardware has a great supply of CFLs.

Brief Explanation of New Buyer Tax Credit

Buyers have until November 30, 2009 to take advantage of this credit. As you may know, not everyone who buys a home in 2009 qualifies for the new $8,000 Federal Tax Credit for a home purchase. Here is the qualification criteria:

• Buyers must be a first time homebuyer (no home ownership in the last 3 years)
• Home must be purchased between January 1, 2009 and November 30, 2009
• The home must be kept for minimum three years
• The home must be owner-occupied
• The credit is $8,000 or 10% of the home's value, whichever is less
• A single person cannot make more than $75,000 for the full amount ($95,000 max. for partial credit)
• A couple cannot make more than $150,000 for the full amount ($170,000 max. for partial credit)
• AND, if someone meets the above criteria AND buys a newly built home, they will receive the $8,000 Federal Tax Credit and the $10,000 California state tax credit as well.

How's that for an incentive to buy a home! Go to my website http://www.juliahuntsman.com/ to find properties under $300,000; for example, right now in Long Beach along there are about 480 condos listed in the MLS, many in the lower price ranges.

More on Tax Credits and Tax Savings for the Energy Efficient

Follow the link to this article for more about tax credits in the Stimulus Bill for being energy efficient, i.e., tankless and solar water heaters!

Your Next Home: Belmont Heights & Alamitos Heights Stats

Yes, there are a few single family properties that have been on the market for a long time, in this area there are 55 single family listings in "active" mode, and 3 properties have been on the market exactly one year or longer. Taking those out of the calculations, the average days on market (DOM) for this area is 104 days for the actives.

There are 12 in escrow--DOM of 67 excluding one of the sales that has been on the market for close to a year--and two sold in less than 14 days. Inventory as of January 6, 2009 showed 5.2 months of inventory supply (all property types) for Long Beach--compare that to 8.1 months of inventory supply for January, 2008.

For 90803 zip code (Belmont Heights, Naples, Belmont Shore, Bluff Park) in January 2009, the inventory supply is at 6.8 months.

Did you know that 6 months is considered the national turning point for a change to or from a buyer's or seller's market? Meaning less than 6 months inventory on the market (the amount of time it would take to sell all properties on the market at the current selling rate) is when the market flips over to favoring the seller.

If you'd like the market picture for your neighborhood or area of interest, I have that information also available by e-mail.

So if you're interested in this area, there are some great opportunities especially considering the interest rates which lowers your monthly payment, saving you thousands of dollars over the life of your loan. Take a look again at my December post on the cost of waiting to buy.

Your New Home in the Long Beach Ranchos

A favorite area of Long Beach is "the Ranchos", a neighborhood of houses developed and built by Cliff May.

Built when the California ranch style home was really coming into style, these economical houses were the "tract home" version of the newly popular ranch style. They commonly feature interior courtyards and open floor plans, which are two of the reasons they are still so popular. Updated homes have improved cooling and insulation, but the overall characteristics of well lit rooms, open kitchens and living rooms, and large sliding glass doors to the outdoors, are what popularized the "Southern California lifestyle' of the post-World War II era.

Current listings are in the range of $515,000 to $649,000 (this is down more than $100,000 at the peak of the market). Original floor plans ranged from about 1100 sq. ft to about 1400 sq. ft., with attached 2-car garages, board and batten siding on single story homes on slab foundations, open kitchens with built-in ovens and formica counters, hardwood floors and low-pitched rooflines. While not officially an historic district, this area has many loyal followers of this style who more and more create additions and remodels that adhere to the Cliff May style. Interestingly, Cliff May, who was not an architect but was proficient at building homes, was descended from one of the early California families and loved the old Spanish/Mexican influence architecture designs in the early villas that were also characterized by courtyards and the feeling of outdoor acess with privacy. The "Ranchos" are not homes with the traditional "front yard"--over time the courtyards have accommodated landscaped patios, tree-covered decks, or great areas for fenced-in pools.
Contact me for more on selling prices in this neighborhood! Click on the link to see current listings in the Ranchos.  If there is something listed but you don't see it here, please let me know!

Loan Pre-Approval and Credit Scores

So often I hear from prospective buyers that they are afraid the loan pre-approval process will lead to a drastic lowering of their FICO (credit) score because, of course, their credit record must be viewed in the process.
So here it is from the horse's mouth: "Shopping around for an auto loan or mortgage shouldn’t hurt, if you keep your search to six weeks or less", per Craig Watts of Fair Isaac Corporation, the company which developed the FICO credit scoring system used throughout the world of credit.

Other factors that make up your score are length of credit history, how many accounts you've recently opened, balance due on your credit lines and the total amount available to you (keep your balance under 50%), and your payment history counts for 35% of your score. Many times people do not realize that having a 30-day late pay recorded on your credit history can be almost disastrous for some loans, or that the big car purchase or the last minute furniture purchase before you closed escrow may send your credit score over the cliff at the last minute before you close escrow. Yes, the lenders check your credit report once again just before the schedule closing to make sure you're still in good shape.

There are more impacts to your credit score, for instance in a short sale or foreclosure, but this article gives a good basic outline so you know what to expect.

Remember, getting pre-approved for a loan should not be impacting your score negatively, and should not be a reason as to why you can't go forward with the process. Also, if your score does fall for some reason, it will come back up within 60-90 days at a certain rate once you start eliminating the problem. It's important to talk with the loan officer first to find out what is needed or must be changed for qualification for a loan--another mistake people make is going ahead and taking certain actions, such as cancelling a credit card after they paid it off, which actually may hurt rather than help them. So don't be afraid to ask a professional first about what the best course of action might be in terms of qualifying for the loan.

Will the Real Home Value Please Speak Up?

December, 2008 median home price: Is it $387,021 for Los Angeles County, or is it $278,000? Well, for one thing, you have to dig a little deeper. Dataquick's $278,000 median price figure is for "Southern California" which includes at least 5 counties (single family and condos), and if you've been following the reports, you know that Riverside County has taken a very large "hit" thus lowering the overall median for Southern California. The other important thing to know is that condos prices have softened considerably, and are lower overall than detached single family home prices. Zillow's median price of $387,021 is based on Los Angeles County alone, and is considerably higher based on its own calculations of "size and characteristics of homes in the area -- whether they were sold or not -- and other factors". California Association of Realtors for Los Angeles County is $336,980 (not including condos).

The thing to remember is that "all real estate is local". So if you would like to know the prices for your area, contact me for reported sales in your zip code or neighborhood.

Prices are Down and Sales are Up in Southern California

"While sales from September 2007 through last summer were at the lowest in
at least two-decades, they've been up off the bottom ever since."

That's this month's news from Dataquick: in December '08, sales were up over 32% from one year before. An indicator of who is buying is shown by the current typical mortgage payment: $1239 in December, down from $2060 one year previous (remember these Dataquick figures combine condo and single family sales). Many more first-time buyers are now able to buy, and the opportunity is there through the bank-owned properties, short sales and overall price decline. But when the reports show that the residential market in Southern California, even with much market distress, has been "up off the bottom" since last summer, isn't it time for buyers to sit up and take notice? Most recent info from California Association of Realtors (as of end of 3rd quarter, 2008) shows the buyer affordability index is now up to 53% (it was 24% one year before), and their stats on California's existing home sales, up over 84% in December from one year ago. Statewide, the median home price is $281,100 (contact me for local median home prices in your neighborhood).

For a more specific and free market snapshot report for your zip code or city (including Long Beach, Cerritos, Cypress, Anaheim, Seal Beach, Huntington Beach, Yorba Linda, Bellflower, Whittier, Lakewood, Costa Mesa and 21 other cities in Southern California, contact me or visit my web site at http://www.juliahuntsman.com/.

Converting Your Property From Rental To Residence

We haven't been thinking of 1031 exchanges so much in the recent past, but even now, properties ARE selling, so if you've got a move underway, here are 2009 1031 exchange laws you should know about if you're considering moving into your income property and later taking the capital gains exemption as a principal residence.

The Housing Assistance Tax Act of 2008 changed what is known as Section 121 of the Tax Code:
As of January 1, 2009, exclusion must be allocated between the period the principal residence was used as an investment property or second home, and the period of time the residence was used as your principal residence. Any portion of the exclusion amount allocated to the period the property is not used as your principal residence is eliminated.

Suppose you exchange into a rental property which is rented for four (4) years, and then move into this former property and live in it for two (2) years as a principal residence. Then you sell the principal residence and realize $300,000 of gain. Under prior tax law, the you would be eligible for the full $250,000 exclusion and would pay tax on the $50,000 remainder.

Under the new law, the exclusion is prorated as follows (Note: This example does not take into account depreciation taken after May 1997, taxable at 25%):

Two-thirds (4 out of 6 years) of the gain, or $200,000, is ineligible for the $250,000 exclusion.
One-third (2 out of 6 years) of the gain, or $100,000, is eligible for exclusion. [This example was changed to show that the allocation formula takes into account years before the 5 year lookback period in §121(a).]

But, suppose you exchanged into the property in 2007, and rented for 3 years until 2010 prior to the conversion to a principal residence. If you sell the residence in 2013, after three years as a principal residence, only the 2009 rental period would be considered in the allocation for the non-qualified use. Thus, only one-sixth (1 out of 6 years) of the gain would be ineligible for §121 tax exclusion.

So, if you're thinking of property conversion, be sure to check with your accountant or tax preparer about your actual exclusions allowed on your return!