October 6, 2009 Newsletter

The market is starting to come back, based mostly on very low interest rates and the $8000.00 tax incentive for first time home buyers. The tax break is currently scheduled to disappear December 1, 2009, meaning if you have not settled by that date, you are not entitled to the tax credit. There is a movement in Congress to extend the credit with arguments on both sides. One side says it will continue to stimulate buyers. The flip side states that it creates a false economy and prevents the market from returning to normalcy.

Rates are extremely low, with 30 year fixed under 5 without points. Fifteen year loans are in the mid to low 4s and ARMS are close in price to the fifteen year loans. This is as low as we have seen rates in the last year and it is unlikely they can fall much lower. Lenders are experiencing an uptick in business due to the lower rates, so if you plan to buy or refi, start your financing process now.

Foreclosures continue to be the best bargains in the marketplace, and I was asked to reiterate cautions I provided in a previous newsletter. In order to bid at an auction, you must be present with a cashier or certified check in the amount required in the foreclosure ad. Without the required funds, you will not be an approved bidder and barred from the bidding. Once the auctioneer cries “sold” the highest bidder gets the property under the terms stated in the ad. From the date of sale the buyer assumes all responsibility for taxes, ground rent, condo dues, water, and the like. Buyer also has to pay all the transfer tax and documentary stamps. Before you can settle, the sale must be ratified by the court, which usually takes forty five days. Once ratified, the buyer has ten days from ratification to close. Buyer has no contingencies, so you must have your financing in place and ready to go. Buyer also assumes the responsibility for evicting the parties in possession, if any. Rather than “throwing them out” many buyers have resorted to paying the occupants an incentive if they move out quickly without further damaging the property. Even with these issues, many buyers have gotten extraordinary deals, but it is advisable to be prepared for these situations.

We want to be your title company and law firm. If you have any questions, feel free to contact me at tee.tillman@colonytitle.com or at 410 884 1160 x3007.