Stimulus Package Explained by Local Mortgage Broker

By Jacob Barr, owner Ridgecrest Mortgage in Mt. Shasta

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction

It’s important to remember that the $8,000 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 homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they 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 homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples

According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.


Higher Loan Amounts

More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.

Additional Housing-Related Provisions

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.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

CC&R Corner for March 2009

By Will Bullington, Lake Shastina CC&R Compliance Officer


STATUS ON AMENDMENTS TO THE CC&R’S

There seems to be some confusion about the ballot that was mailed to members by the Board. Between town hall meetings, complaints from homeowners and variance requests three sections of the CC&Rs were identified as needing some type of change. To make these changes it requires 51% of the association members to vote through a secret ballot. This is approximately 1,600 members. We have received around 1,000 with over 3,300 being mailed out. That’s not a bad return but more people need to exercise their right as members of the LSPOA and vote. The Board authorized a re-mailing of ballot to those that did not respond at all. Those ballots will be mailed out in mid March. What is the vote about?

Let’s say you go to a home improvement store and buy a pre-fabricated shed or dog kennel. If the eaves on the shed are not at least 18” or the height of the dog kennel is 5 foot or below, it violates the CC&Rs. If you want to put in a small garden area with fencing to keep out the deer, it can’t exceed 5 feet in height. Do you think that with over 1,000 homes we have had a few “controversies” with these sections? You bet we have.

If you have a ballot and haven’t taken the time to vote please do so. If you are content with the way the CC&Rs are currently written then vote “against” the amendments. If you want to see some type of change then the ballot will let you vote “for” or “against” each section. There are three sections being considered for amendments: eaves or overhangs (the section is currently vague as to where one measures to or how), outbuildings, and fences.

What type of architectural rules would there be? You will be given written notice 30 days prior to the Board having a hearing on each rule (or any rule for that matter). You have a right to give input to the Board as to what the rules should be. Current input includes making some type of allowance for dog runs and garden enclosures to exceed the 5 foot rule but still be “open.” Other input included allowing smaller outbuildings and sheds to have 12” eaves and not meet the primary structure requirement of a 4 ½ to 12 pitch, etc.

If you never received or lost your secret ballot please call our office at 938-3281 extension #107 and ask for a new one to be mailed to you. Please VOTE!

Doggie Parks in Lake Shastina

by Bruce Batchelder

Most readers know about the various undeveloped parks provided for residents of Lake Shastina. On our map they are labled with capital letters and colored green. They are owned by our association and have their own nine-digit Assessor's Parcel Numbers or APN's.

These future park sites are scattered all over Lake Shastina, thirty six by my informal count, and were intended for recreational uses such as picnics, playgrounds, barbequing and so on. Some, such as those in Unit 7 are connected by graveled walkways and one, the largest, has been developed and is now the Bill Hoy Family Park in Unit 8.

One use that has been suggested for these open spaces is doggie parks, where dogs can run loose and mingle with other friendly dogs. These are very popular in other communities and serve as a very inexpensive way to allow dogs who are otherwise confined to runs or kennels to socialize with others, making them in the process friendlier and less aggressive.

Cost of developing a future park site would mostly be the fencing. The parks I have personally visited had 36" tall cyclone fabric with an "air lock" type of double entry so dogs could not get loose coming in or going out. The amount of fencing would of course depend on how much area is to be enclosed but it's possible we could organize some volunteer labor to put it up. Funding for the material might come from a variety of sources: the LSPOA, grant money, fundraisers, etc.

The starting point of any project like this is to ask if there is interest and that is the purpose of this article. If you would like to help out just call me at 938-0385 or drop an email to batchelder@gotsky.com.

A Local Milestone, of sorts

For the first time since we began real estate here I saw a home listed for under $100,000 (above, on Cottontail Dr.). As you might suspect it needs work and is dated. It is also I think, an REO or real estate owned. That is, the bank owns it because the owner gave it back to them under duress.

There are a rising number of these it seems. As many Siskiyou County natives say, it takes months for some things to reach us up here. Like the foreclosure waves rippling through the bay area for example. This week we met with a Redding broker looking for help with the REO's and foreclosures here. He has so many, and spread so far out, that he doesn't have time to drive up and show or take pictures.

Prices per square foot are below $100 more commonly, too. It used to be that $100 per foot was the builder's cost and in olden times homes were selling at $125 or even $145, where the builder could make a decent profit. Of course older homes should be less per foot than brand new ones; they have wear and tear, often need updating, and lack modern amenities.

The home above is $63 per square foot and owned by Countrywide, one of the first casualties of the ARM loan collapse. The bank is trying to get back what they loaned the owner and it's possible they may have to take a loss on that loan if they can't move the home for the actual balance.

I'm not trying to alarm anyone however. We have all seen home values falling and in extreme cases, owners walking away from their places. Buyers do seem scarce and wary; what if I buy and prices go even lower? Some who have been in the business through previous cycles feel that we are not yet at the turning point where demand has risen close enough to supply for prices to stabilize. Maybe that will happen this year and the certainty about it all is that it WILL happen. Cycles by definition repeat themselves and the supply-demand balance will return sooner than later we feel. Our phones are ringing more lately it seems and we are hopeful.

Emergency Vet Care 24/7

Many if not most of us own dogs, cats, or other pets and when emergency care is needed nothing is available in the whole county after 5PM. Stories of animals suffering over the weekend are legend. Yet efforts to obtain some sort of after-hours emergency care have fallen flat.
The standard line seems to be that it's a stressfull business to begin with and nobody wants to work evenings or weekends. While it's true that ranchers are used to delivering calves and colts what do the rest of us do with household pets with convulsions and bleeding?
From a business point of view they should charge for the extra effort of answering a midnight call. And most of us would pay the surcharge with no hesitation.
But it's not offered. In fact, most offices have no after hours phone numbers and the result is that animals suffer.
We know of one case where a terminal dog convulsed over an entire weekend only to die in the owner's arms just minutes before the office opened as they waited in the car outside the door.
Can't we work out some rotation or on-call service? We have approached the Siskiyou Humane Society which is most interested in this . .. I mean, what is more 'humane' than preventing this kind of needless suffering?
If you support this idea please email me. We need to do something.

Tough Choice

Here's the thing about the stimulus package. It's about creating jobs and putting money in people's pockets, right? Build bridges, fix freeways, do the infrastructure thing. So jobs go out to bid and some private company wins the bid. Materials are on them and let's say it's a bridge and steel is part of the job.

Where does that steel come from? Best price is China but there go some jobs in Pittsburg. Okay, let's make it mandatory that the steel is made here in the USA. But it costs more so fewer bridges get built.

It's a lose-lose tradeoff. We require bidders to guarantee American made ingredients at the cost of losing American jobs in other sectors because fewer projects can get funded.

What's right here?