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Monday, July 28, 2008

Housing Bill Has Something for Almost Everyone

Don't ignore the housing bailout bill because you think it benefits only troubled homeowners. You may be surprised to learn that you may miss out on a windfall. The bill does offer incentives to certain over-extended borrowers and their mortgage lenders.

But it also offer many hand-outs to millions of people who have the potential to benefit in other ways.

Here are some of the new benefits:

  • Renegotiating Mortgages: Some people may be allowed to cancel their old ARMs and replace them with new fixed-rate loans lasting at least 30 years. The program officially begins on Oct. 1, 2008, but some lenders may be willing to start their negotiations with borrowers sooner. It expires on September 30, 2011.
  • Break for First-time Buyers: If you're buying a primary residence and you're a first-time homebuyer, you're eligible for a federal tax credit of up to $7,500 or 10% of the purchase price (whichever is smaller). With this credit, you subtract the tax credit from the total amount you would pay to the IRS. So if you owe $1,500 to the IRS, and you qualify for the credit, you would end up getting a $6,000 credit. This changes and phases out completedly depending upon income.

  • A Break for Vets: Lenders will have to wait nine month -- not 90 days -- before beginning foreclosure procedures on someone returning from the military. They must wait a year before raising interest rates on a mortgage held by someone returning from military service.

  • Additional Deduction: Homeowners may now take an additional federal tax deduction of $500 or $1,000 if you're married and filing your tax returns jointly. The catch here is that you must report the property taxes on your tax form. If they are less than $500 or $1,000 (depending upon if you're single or married and filing jointly), your deduction will be limited to the amount of the property tax you paid.

  • Reverse Mortgage Changes: Origination fees are limited to 2% of any loan up to $200,000 and 1% over that, up to a maximum of $6,000. Borrowers cannot be forced to purchase an annuity or other financial/insurance product as a qualification condition. The bill raises the maximum amount available for borrowing from $400,000 to a cap of $625,000.

  • Redefinition of Jumbo Loans: Any loan over 115% of the local median home price and larger than $625,500.


credit: Ron Lieber 7/25/08




Sunday, July 27, 2008

Re-work, Renovate & Remove!

The article below published today in the New York Times beautifully outlines the theory of readying your home for selling, and stresses the importance of seeing your home objectively through the eyes of prospective buyers. It also explains how to effectively "pray to St. Joseph" should it come to that. And it brings up the question of "to accept the first offer or not?!" Read on and enjoy!

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Repointed Walls and Some Help From St. Joseph

By KEITH MULVIHILL

GENERALLY speaking, Jane Stivaletta is not one to knock on wood, and she has never carried a good-luck charm. But contrary to her nature, shortly after she put her apartment on the market last October, she found herself marching up the steps of St. Patrick’s Cathedral and into the gift shop to purchase a small statue of St. Joseph.

“I never heard of doing this before,” Ms. Stivaletta said, “but a few years ago, when my sister was selling her house, she asked me to get her a statue of St. Joseph to bury upside down in the yard. There’s a kit you can buy for exactly this purpose.”

For the uninitiated, St. Joseph is the patron saint to many categories of people, including home sellers. Since Ms. Stivaletta’s sister had sold her house a month after following the instructions in the kit, she figured she would try the same tactic, reasoning that she had nothing to lose.
Lacking the requisite yard, she upended the figurine in a potted Christmas cactus on a windowsill. “I really felt funny doing it and I was glad no one could see me putting St. Joseph in the dirt,” she recalled, laughing. “I remember the box said to pray to St. Joseph that the right person comes along and offers the right price. So that’s what I did.”

Rituals aside, Ms. Stivaletta was confident that her 550-square-foot one-bedroom apartment, in a walk-up at 152 East 83rd Street, between Lexington and Third Avenues, a few blocks from Central Park and a subway station, would sell.

She renovated the apartment after paying $250,000 for it in 2004. Dark brown paint slathered over brick walls was sandblasted away; the mustard-yellow bathroom was tiled in pristine white; and the kitchen was gutted. In all, she paid about $60,000 for the facelift. When the job was done, she was proudest of the exposed-brick walls, which she had repointed: “They’re like a work of art,” she said.

To sell her place, Ms. Stivaletta, who was planning to move to Connecticut, sought a broker. After poring over profiles of agents online, she settled on Paul Kolbusz, with the Corcoran Group.
“The first thing I thought when I walked into Jane’s place was that it would show well,” Mr. Kolbusz said. “She had done a great job renovating the apartment, and it had great light.”
But there was a small potential predicament. Upon spotting a cat-scratching post, Mr. Kolbusz immediately inquired about the litter box. “Jane had her cats trained to open a cabinet door to get to the litter box, which I had never seen before,” he said. “Her place was fine, but I reminded her to keep the cat litter fresh.”

To determine the asking price, Mr. Kolbusz checked the prices of comparable apartments in Ms. Stivaletta’s building and nearby apartments on the market. He gave Ms. Stivaletta a price range of $450,000 to $465,000. “I was leaning more toward the lower amount,” Mr. Kolbusz said, “but Jane wanted to list the apartment at the higher number, so I agreed to give it a shot.”
The first open house was in late October, and interest was strong. Mr. Kolbusz said 17 people signed the guest sheet at that showing, and the number of visitors was consistently over a dozen at open houses for the four or five following Sundays.

Mr. Kolbusz relies on a ceremonial custom of his own to help win over would-be home buyers. “I always put out a fresh bouquet of flowers and bring a scented candle,” he said. Nothing too perfumed. “Cinnamon is good.” Music rounds out the ritual. “If the homeowner has cable, I like to play the jazz-music station — it adds a cool vibe.”

Early on, a low offer of $420,000 was turned down, and despite open houses through November and December, excluding holidays, only one other offer came in, also around $420,000.
Still, neither the broker nor the seller was particularly worried. “I expected the holidays to be slow,” Mr. Kolbusz said. “I also thought that we would get a boost of interest if we lowered the price.” In January, after more than two months on the market, Ms. Stivaletta agreed to drop the price to $450,000, and interest again surged.

“I knew I had a really cute apartment and someone would want it,” Ms. Stivaletta said.
Blessing Tawengwa from Boston stopped by in late January. “I liked the place,” Ms Tawengwa said. “I thought it was well done.” Still, she admitted to being put off by the small size. “Coming from Boston, where apartments are bigger, I was still trying to get used to the fact that apartments in New York are tiny.” She kept looking and in May she made an offer on a two-bedroom apartment in Morningside Heights.

Another home seeker, Sylvie Goursaud, who is French, came by on a cold Sunday in late January. Ms. Goursaud said she had seen well over 50 apartments during her six-month search, including one she had liked, but luck there wasn’t on her side: “I had an offer in on a place, but the seller turned around and sold it to someone else,” she said. She kept up her search. “I just knew one day it would happen.”

Upon entering Ms. Stivaletta’s apartment she immediately felt that it was a good match for her. “It was exactly what I was looking for,” she said. “The brick wall was very European and made me feel at home.” She also admired the fire escape off one of the living room windows: “It was really pretty, and it’s so New York.”

Did the three flights up give her pause? “I have lived in walk-ups in Paris, Berlin and Tokyo,” she said, “Why not New York?”

Besides, she added, “Walk-ups remain one of the best values in New York.”
Ms. Goursaud came back twice more. The fact that the co-op’s rules allowed 90 percent financing sealed the deal. Ms. Goursaud made an offer of $425,000, and they agreed on $435,000. The contract was signed in February, and the sale closed in May.

Though she received $30,000 less than her original asking price, Ms. Stivaletta was satisfied with the deal. “Everyone who sells property wonders: ‘Is this the right price? Could I get more? Am I doing the right thing?’ ” she said. “In the end you just go with your gut. I was happy with my decision.”

After moving in, Ms. Goursaud is happy to own her first apartment in New York. “This is probably the only city in the world where you can be a foreigner and feel at home,” she said.
For Ms. Stivaletta, after many years in the city, it was time for a little slice of heaven. She packed up her cats and statue of St. Joseph and decamped to an apartment in Stamford, Conn., while she looks for a new house. “I bought a car and I love driving around and going to the beach,” she said. “It feels great to hear the birds again.”