All the real estate talk in the DC metro region nowadays is about finding great deals. Most of the deals can be found through foreclosure homes in Northern Virginia and Washington DC. However, the process can be more complicated and risky than one may think. Here are some things you should know:

There are three different stages of foreclosure, each of which presents different opportunities for buyers. The first step is to figure out which one makes the most sense for you.

Pre-foreclosure

A home goes into pre-foreclosure when a borrower has fallen behind on his payments, but the house has yet to be auctioned off. Homeowners are looking for a way to get the financial burden off their back. So it’s not a bad idea to look over the delinquency notices that lenders file with county courthouses when a borrower misses a payment.

Owners are usually open to doing a short sale which is when the buyer pays less than what they actually owe on the mortgage. Banks are reluctant to do these such deals because they take a loss. It can take months before a deal goes through and even after that long period of time, there is a chance that the bank will not accept it.

In this market, we’re finding that the banks are more inclined to agree to the short sales. It makes sense for them to liquidate early rather than going through the foreclosure process costing lenders around $50,000.

Do not be turned off by dirty carpets or ugly paint jobs. That’s where the best deals are.

Sheriffs’ sales

In the next stage of foreclosure, homes in default are auctioned off on the county courthouse steps. These homes can be real bargains, but the process is a crap shoot.

There are downfalls that can arise with this type of process. Bidders cannot inspect the property prior to the auction so there is no telling what needs to be fixed. You also run the risk of buying the home with liens still against it because of unpaid taxes which can jack up the cost of the home. Finally, the kicker, buyers need to come with cash ready to put down 10%-20% and pay the rest in a matter of days. So if you want to buy on the courthouse steps, you’d better be a pro.

Even after a purchase, a deal can fall through if the current owner can come up with enough cash to repay the buyer the amount of the winning bid.

Post-foreclosure

After a lender takes back a house, the property goes back on the market as what’s called an REO (real estate owned) property. These are treated like ordinary sales, listed with a broker. Typically, bargains are not as sharp.

Young, hungry real estate agents are the ones that are usually screening REOs all the time. Go out and find one and put them to work for you. These are a lot less risky because the process is so clean; the title is clear and the property is delivered vacant.

Click *HERE* to actively search for foreclosures in Northern Virgina and Washington DC

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As I mentioned the other day,  the new housing stimulus package is allowing a $7,500 tax credit for first time homebuyers.  So what exactly is this you ask?  Anyone who has been reluctant to purchase a home in these so called “bad” real estate conditions should keep in mind these dates: April 9, 2008 through June 30, 2009.

These important dates mark the eligibility time span for the home-purchase tax credit created by the new housing bill. If you have not owned a house during the past three years and can go to closing before the end of next June, you may be eligible for up to a $7,500 credit against your federal taxes for 2008 or 2009 ($3,750 if you file taxes as a single person).

Here’s a quick overview of the credit in its final form:

· The basic idea: To jump-start housing sales and clear out unsold real estate inventories, Congress is offering tax credits to pull in new buyers. Within the designated time period, buy any house — new, old, any location or condition, any price range — and the IRS will cut up to $7,500 off your tax bill for either this year or next. For example, if you’re an eligible buyer this year and you owe the IRS $4,000 on your total 2008 income tax bill, your $7,500 tax credit could wipe out everything you owe plus get you a $3,500 refund. The new tax credit is what the government calls “refundable”: If your tax bill is less than the credit amount, you get the difference back from the Treasury.

· Eligibility rules: Do you own a home? If so, you’re not eligible for the credit. Did you sell your home more than three years ago and now rent? You are eligible. You’re also eligible if you have never owned a home. Close on a house before June 30, and you can claim a credit of up to 10 percent of the purchase price of the property, up to $7,500. If your adjusted gross income exceeds $150,000 ($75,000 if you’re single), the credit maximum begins to phase down. You cannot claim the credit if you are a nonresident alien, financed the property using a state or local housing agency’s tax-exempt bond mortgage, or do not plan to use the house as your principal residence. Buyers who use the District’s first-time-buyer credit program cannot double-dip and use the new federal credit, too.

· Payback: Unlike some other tax credits, this one requires beneficiaries to repay the credit. Starting in the second tax year after purchase and continuing for up to 15 years, taxpayers are expected to make pro rata repayments to the government on their federal filings. Over a 15-year payback period for the full $7,500 credit, the cost would be $500 a year. If you sell the house before the end of the repayment period and you have no gain on the sale, you won’t be expected to pay the credit back from the proceeds. If you have a net gain, the “recapture” cannot exceed the amount of your gain. In other words, the federal government is taking on all or much of the risk that the value of your new house won’t increase over time.

At its core, the new tax credit functions very much like an interest-free loan for up to $7,500. You pay only the principal back over time.

How do you claim the credit? If you pass the eligibility tests, simply request the credit on your tax return for either 2008 or 2009. Even if you buy in 2009, you can take the credit against your 2008 taxes by filing an amended return. The association has launched an educational Web site, www.federalhousingtaxcredit.com, with additional information for consumers

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Congress has been working over the last several months to pass a housing stimulus package that will alleviate some pain for home buyers and sellers in the DC Metro area and the rest of the US. It now appears that they are getting close to a vote on the final bill which could happen in the next day or so with the President signing it into law shortly thereafter. ***Update: President Bush signed off on the 2008 Housing Stimulus Bill on July 30, 2008! I wanted to make you all aware of a few of the major provisions of the bill that may directly affect you.

• First Time Homebuyer Tax Credit: What Congress is currently calling a tax credit of $7,500 will be available to all first time home buyers (or buyers who have not owned a home in the last 3 years) who close(d) on their new home between April 9, 2008 and July 1, 2009. The proposed credit is in essence, an interest free loan that is payable back to the government over the subsequent 15 years at $500 per year. Obviously the main beneficiaries of this provision are the first time home buyers.

• Seller Funded Down Payment Assistance Programs (ie. Zero Down, AmeriDream, “100% Financing”. Nehemiah, etc): Any down payment assistance program involving sellers or interested third parties will be terminated on October 1, 2008. This means that buyer loan approvals need to be completed on or before September 30, 2008 to be eligible for any currently existing down payment assistance programs. If you assume a 30-45 day loan approval period that means this program will only be available for sales prior to August 15^th or shortly thereafter.

• FHA Cash Down Payment Requirement: The new minimum cash down payment proposed in the bill is 3.5% raised from 3.0%. This provision will take effect immediately upon enactment of the Bill. This means that any home sale subsequent to the signing of the bill will require a minimum down payment of 3.5%.

What does all this mean? It’s time to take advantage of these programs before they’re gone. If you’re in the market to purchase a home in Northern Virginia or Washington DC, there is no sign bigger than this: “THIS IS THE TIME TO BUY!”

Contact us at 1-888-998-9455 for top-notch buyer representation on your new home purchase!

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Are you familiar with route 66, exit 71? It’s the exit that will bring you to Fairfax Dr. and place you among the hustle and bustle known as Arlington. It seems to be the most popular place to live in Northern Virginia. Not necessarily Arlington as a whole but to be more specific, Clarendon, Courthouse, and Ballston. Convenience plays a big role when you ask any of the residents. You’re going to find mostly a younger generation roaming the streets with their dressy clothes and Starbucks in hand. The young professionals prefer to walk out of the office and convene with their peers at a local restaurant or bar for Happy Hour. Did I mention convenience? There are 4 metro stops in North Arlington which gives people an option to ditch their car and go Green. The metro can take you right into the Washington D.C. to enjoy the sites on the weekends or prevent you from having to drive so you can enjoy the nightlife.

People are willing to spend up to $2,000 a month just to rent a one bedroom place. What does this tell you? It’s the place to be and it’s going to be like this for a very long time. You have to wonder if any of these renters ever considered purchasing a home in Arlington. That $24,000 a year is just getting shoved into an abyss. Who would want to invest your money in a home so you can reap the benefits in the future? Certainly not Johnny who is notorious for racking up hundred dollar bar tabs and telling everyone to never buy a home, I mean he’s only 35 years old and has never owned a home. Since North Arlington is the most desirable place to live, it’s going to be on the expensive side. You’re looking at a 1 bedroom place for around $360,000. Yes, that is expensive but you’re placing yourself amidst the glorious surroundings and action of the city. Sure you could move 4-5 miles outside and find a 1 bedroom for $300,000 but you also can’t walk outside your home and be where you want to be.

If you’re thinking about purchasing in the N. Arlington area and will have no problems with the payments, you’re making a great investment. The real estate in this area is only going to get more popular. Home prices in this area have not seen a dramatic effect that the surrounding cities like Fairfax, Falls Church, Centreville, Chantilly, and Herndon have.

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Knowing when to get out is one of the hardest decisions one has to make in a lifetime. What’s even harder, is knowing when to get in. I would have been rich if I had invested in Google, or if I had sold my home when the market was hot, or had got out when I was up $1000 in Blackjack. These are all situations that we regret and would love to go back in time to correct them. Whether it was greed, listening to one of our friends/family, or just scared to take the risk, we wish we had made the right decision. This leads me to my discussion of the housing market.

Have we hit the bottom of the housing market? I can’t tell you for sure but there are many hints that have me believing that we have. In some areas of Arlington, VA and Washington D.C., housing prices have gone up. This is shocking news to buyers out there. However, this is the truth. Most of the buyer mentalities right now are very relaxed. They believe they can take their time. In reality, they’re going to miss out of the market and catch it on the way up. Interest rates are below 6% and that is phenomenal. One of the biggest things that I see right now is that buyers are holding out for the interest rates to drop. I understand that we all want the lowest rate possible but a rate below 6% is a great rate regardless. It’s like saying I wish I had bought stock when it was $20/share instead you bought it for $25/share. Now the stock is up to $500/share. In the long run you made a great buy and it doesn’t really make that big of a difference.

If you are searching for a home right now, you’re witnessing the bottom of the market. In a few years from now we’ll all look back and see that 2008 was the bottom of the market and those who purchased then will be the wise buyers.

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Owning a home in Northern Virginia or Washington DC has been part of the American Dream. However, nowadays it’s becoming harder to live that dream. With the mortgage crisis, higher minimum credit scores, larger down payments, and mortgage insurance premiums (PMI) are becoming more common. Fewer home buyers are qualifying for mortgages and the up front costs of home ownership has steadily increased.

There are still programs out there for first-time home buyers that offer discounted interest rates and are more lenient on underwriting standards. The Federal Housing Administration (FHA) has a good program and it’s backed on income-verification and debt thresholds. There are also first-time home buyer credits out there. For instance, one program in Washington DC states: Taxpayers who have not recently owned a home in the District may be eligible for a one-time tax credit of up to $5,000 of the amount of the purchase price against federal income tax. In Virginia, the Home Stride program helps out first-time home buyers. Home Stride is a loan program available to first-time home buyers using a Virginia Housing Development Authority (VHDA) loan product for their first trust mortgage. Home Stride allows eligible buyers to borrow up to the lesser of 10% of the sales price or $25,000 to pay down payment and closing costs. Payments and interest are deferred for the first 3 years of the loan. After this deferment period, the interest rate of the loan is 5% for the remaining 27 years of the loan. The loan has no pre-payment penalties and can be paid in full at any time.

If you are a first time home buyer, it is recommended that you consult with a real estate agent. Buyers are generally not aware of FHA and VHDA loan programs. Who knows, these programs may help you get into the home of your dreams.

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