Voting is Worth the Wait

October 31, 2008

Once again a Letter to the Editor in the Washington Post struck me just right:

Friday, October 31, 2008

Looking at the Oct. 29 Metro headline “Never Seen Crowds Like This,” I felt a little disgusted — not because the lines for voting were so long; not because voters were being inconvenienced; and not because we all have busy lives. It was because it seems that our priorities are out of whack.

I wonder how long many of these “inconvenienced” voters have waited in line for tickets to big games, movies or concerts — three or four hours, maybe?

The last time I went out to eat on a busy weekend, I was told the wait would be between 45 and 70 minutes — and that was just for a seat. And what about the last time you or someone you know went to one of the more popular theme parks? I’ve heard of people waiting one, two or three hours per ride — yet theme park visitors go on three or four rides per day.

Truth is, voting isn’t an inconvenience. I don’t care how long it takes.

Five or 10 minutes is nice. That’s the norm. But take a book, perhaps one on American history, in case your wait is longer. What can you say about people who will wait several hours for a theme park ride or to see the celebrity du jour but can’t be bothered with a line on Election Day?

ROB KIRCHHOEFER

Mr. Kirchhoefer, however you may pronounce your name, you really hit the nail on the head. Very few countries in the world today – or at any time in history – see the regular peaceful transfer of power that is the election process we enjoy, that so many find “inconvenient” or ignore – only to bitch when those elected do something they don’t like (or do nothing at all).


What is “preapproval” and why do I need it?

October 31, 2008

Not many people have the cash to buy a home. If you do, you already know you don’t need a mortgage preapproval. But for the rest of us cash-poor mortals, mortgage preapproval (before you begin your house hunting) lets you know exactly how much you are qualified to borrow, and thus what you can spend on a home. What is the point of looking for a home until you know how much home you can afford?

Furthermore, when you decide on a home, the seller will want to know that you are able to pay what you are offering before he will consider your offer. Thus when you make an offer, you are expected to provide a letter from a reputable lender saying exactly that.



The lender wants to understand your personal financial picture, including savings, credit history and income. To help you get a quick idea of what you can afford – which they generally call a prequalification – they will usually run a credit check, and accept your word on your income and assets.

The next step involves having you provide bank statements and such to verify assets, and paystubs or other income verification documents. When they have seen these, they can provide you with a preapproval letter referencing your ability to borrow a specific amount. What is nice about all of this is that most good lenders don’t charge you anything for these services, nor do they require that you use them for your mortgage.

The keys to getting a solid preapproval are:

  • establish a consistent record of paying your bills on time, to keep your credit rating up;
  • aim for having enough savings to cover your down payment, closing costs if necessary (figure 2-3% of the sales price but often the seller will contribute this), and two month’s expenses in case of emergency. While you wouldn’t want to tap retirement savings for your down payment or other house purchase costs, they do represent reserves that help reassure the lender about your financial stability, so be sure to include these in your assets;

  • a stable employment history is important, but if you’ve recently completed college, or were in the military, you have good reason to have less work history. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years, so hang on to those tax returns.


It’s Only A Blip

October 25, 2008

I am sharing today a letter to the editor of the Washington Post from this morning’s edition. It rather neatly encompasses my views – namely, let’s get on with doing what we do:

Fearing Fear Itself

The Oct. 23 front-page article “Job Losses Accelerate, Signaling Deeper Distress” used words such as “hemorrhaging” and “long and painful recession.” While factual, I suppose, such reports can become self-fulfilling. Americans should take a breath and think about the “crisis” we are in.

There is no world war, no second Sept. 11, no spate of Hurricane Katrinas, no bird flu epidemic, no drought of biblical proportions, no locusts and certainly no massive slayings of firstborns. This economic crisis is man-made and is spread not through spores or other biological means. It persists because of fear itself, spread by our New Age circulatory system — the media and the Internet. Thus it can be stopped by man. People should be told that it will run its course and that things will then be better.

America is cheap now. It’s a good time to buy, not sell, stocks, homes and cars.

Someone asked me when this will be over. I said that it could be over by next Thursday if someone with credibility just said that it would be over and enough people believed it.

ROBERT J. BRUDNO

Thank you, Mr. Brudno. I don’t think I have the credibility needed, but I certainly agree with you.

Yesterday my younger son, he of the first job and fresh new 401-K, asked me, “This is good for people like me, right? Stock prices are low so that’s good?” I’m not certain of anything except that he has a lifetime ahead of him for his investments to mature, so I encouraged him to press on and keep at it. And, by the way, be sure to buy that first home before June 30 so you get the tax credit.


Facts About The $7500 Homebuyer Tax Credit

October 22, 2008

Yes, you can get $7,500 from the federal government to help you buy a house . . . for a limited time.

A tax credit of 10% of the purchase price up to $7,500 is available for any principal residence home purchase between April 9, 2008 and June 30, 2009. You must actually settle (close escrow) within that period. The credit is repayable over 15 years (making it, in effect, an interest free loan).

Eligibility:  Though it is called the “first-time homebuyer” credit, you are eligible if you (or your spouse) have not owned a home as a principal residence the past three years. Owning rental properties or vacation homes do not disqualify you. (Lucky you!)

Income Limits:  Single or Head-of-Household – $75,000 modified adjusted gross income for the maximum credit; up to $95,000 for a partial credit. Married filing jointly – $150,000 for the maximum credit; up to $170,000 for a partial credit.

Tax Years:  If you settle on your purchase in 2008, you must take the credit on your 2008 tax return. If you settle in 2009, you may use the credit on your 2008 or 2009 tax return. Obviously, if your income is expected to be over the limits in one year or the other, this provision helps.

Refundability:  The tax credit is refundable. That means even if you don’t owe any taxes (you lucky dog), you can take the amount of the credit as a tax refund. Woohoo!

Payback:  Normally, the credit will be repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you claim a $7,500 credit on your 2008 return, you will begin paying it back on your 2010 tax return. In this case, $500 will be due each year from 2010 to 2024.

If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale. If there is no gain, or if there is a loss on the sale, the remaining annual installments are forgiven.

If you die (ouch), any remaining annual installments are not due. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the remaining repayment amount on the same terms. If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.

For more details on the tax credit, see http://www.federalhousingtaxcredit.com/. As always, if your situation is unusual, consult your tax adviser.


Being Owned By A Cat

October 21, 2008

When you see me in a short-sleeved shirt and there are scratches on my arm, now you will know why . . .

Belly Rub Guide


A Good Time To Buy?

October 20, 2008

It depends. (How’s that for a no-nonsense opinion?) Are you looking to make a quick profit? Or do you want a nice home at a good price and low interest rate, to live in, get tax breaks, and maybe long-term appreciation? 

Heather Elias writes in Agent Genius:

So our clients are asking, “Is it a good time to buy?” How many times have you counseled your clients when they ask you that question? [Kim note: Always.] Of course, you then determine: do they have a house to sell, do they have good credit and adequate down payment. Somewhere in there comes the question: “How long do you plan on staying in this home?”

You’d better be thinking, “at least 5 years.” I used to say 3 years, but the times of quick profits are over. You will pay a little off each month building equity, and you should get some appreciation for sure – they still aren’t making any more land. A home is a long term investment; plan to stick around awhile when you buy. And don’t wait for the market to hit bottom, because by the time you find out it’s hit the bottom (if it hasn’t already), it’ll be six months later.

Geek Alert – Engadget has a post about Nintendo-based cufflinks for those of you who can’t get enough (and wearing these on your next foray into the singles bar, you probably won’t get any).


Stayin’ Alive

October 17, 2008

I knew there was a really good reason this song has been rolling around in my brain for 30+ years:

Disco tune “Stayin’ Alive” could save your life
Thu Oct 16, 3:27 pm ET

WASHINGTON (Reuters) – U.S. doctors have found the Bee Gees 1977 disco anthem “Stayin’ Alive” provides an ideal beat to follow while performing chest compressions as part of CPR on a heart attack victim.

The American Heart Association calls for chest compressions to be given at a rate of 100 per minute in cardiopulmonary resuscitation (CPR). “Stayin’ Alive” almost perfectly matches that, with 103 beats per minute.

CPR is a lifesaving technique involving chest compressions alone or with mouth-to-mouth rescue breathing. It is used in emergencies such as cardiac arrest in which a person’s breathing or heartbeat has stopped.

CPR can triple survival rates, but some people are reluctant to do it in part because they are unsure about the proper rhythm for chest compressions. But research has shown many people do chest compressions too slowly during CPR.

In a small study headed by Dr. David Matlock of the University of Illinois College of Medicine at Peoria, listening to “Stayin’ Alive” helped 15 doctors and medical students to perform chest compressions on dummies at the proper speed.

Five weeks after practicing with the music playing, they were asked to perform CPR again on dummies by keeping the song in their minds, and again they kept up a good pace.

“The theme ‘Stayin’ Alive’ is very appropriate for the situation,” Matlock said in a telephone interview on Thursday. “Everybody’s heard it at some point in their life. People know the song and can keep it in their head.”


Northern Va Real Estate – September 2008

October 16, 2008

The good news for sellers in Northern Virginia:

  • Home sales up 54% compared to the month of September 2007;
  • Pending home sales (contracts) up 58%;
  • Both Pending and Actual sales also higher than September 2006.

The good news for buyers:

  • Median sales price down 21% in the past year, 27% from Sept 2005;
  • Mortgage funding under $730,000 is readily available (with income documentation and good credit, i.e. over 700 credit score) and very reasonable – still well under 7%, and signs point to it getting back under 6% fairly soon. FHA and VA are extremely active – about 33% of all purchases, compared to 53% for conventional mortgages. (This might seem low, but last September the FHA/VA percentage was less than 3%.) This is important because FHA and VA are the primary sources for mortgage funding if you have less than 10% down – FHA goes with 3% and VA with zero.

UPDATE: Article in the Washington Post today mentioning sales in Prince William County going up 235% compared to Sept 2007, and stats on detached home sales in Loudoun and Fairfax counties. My stats discuss sales in “Northern Virginia” which includes Fairfax, Arlington, and Alexandria and incorporated cities within.

Contact me if you have any questions about Northern Virginia real estate.


A Few Things About The Housing Recovery Act

October 9, 2008

You’re probably tired of hearing about it, but it is an important bill. 

Federal Mortgage Loan Limits: After December 31, 2008, conforming loan limits changed to $417,000 or 115% of the local area median home price, capped at $625,500. FHA loan limits will be the greater of $271,050 or 115% of the local area median home price, capped at $625,500. The downpayment requirement on FHA loans will go up to 3.5%. VA loan limits are raised to the same level as the Economic Stimulus limits through December 31, 2008 ($729,750 here in NoVa). 

Downpayment Assistance: Effective October 1, 2008, FHA has prohibited the use of downpayment assistance programs funded by those who have a financial interest in the sale (e.g. the seller). This will not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. There is some political pressure to restore seller downpayment assistance in some form – that might be on hold for a while now, with the financial markets in disarray. Sellers still can, of course, subsidize buyer closing costs.

Homebuyer Tax Credit: A $7500 tax credit is available for any qualified purchase closing between April 9, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan). 

Additional Property Tax Deduction: A one-year benefit that will be available to all homeowners. Under current law, property taxes are deductible only if an individual itemizes his/her deductions on Schedule A of their tax return. The new provision will permit a deduction of up to $500 ($1000 on a joint return) for all individuals who utilize the standard deduction. Instructions will be provided on the 2008 tax return when it is distributed at year-end. 

There are many other provisions, mostly of the regulatory type, and I would be happy to answer any questions that don’t require a lawyer or a tax accountant. If you have a second home you were planning to turn into your principal residence for tax purposes, call me for the bad news.


Crisis? Yes, But Not Armageddon

October 9, 2008

Two editorials this week in The Washington Post – Is It 1929 Again? and No Depression – suggest that, while the current financial situation is dangerous, it isn’t the end of the earth. My thoughts exactly – we’ll muddle through.

There is not going to be massive unemployment. There is not going to be a major run on the banks. The US government is not going to let that happen, no matter who is elected next month. Smart investors are going to be buying, not selling – judiciously, to be sure – and if you don’t believe me, ask Warren Buffett.

Solving all the economic issues we face is going to take some work. We are inevitably going to have to deal with the Social Security overhang and health care, and both of these are going to require national government solutions – sorry, neocons and libertarians. The tax structure will have to be overhauled, with less income sheltered or excluded from tax, while at the same time lower- and middle-income taxpayers bear a lesser share.

For homeowners, I think limits are eventually going to be placed on deductions for mortgage interest – but I think most homeowners (or, I should say, mortgage-payers) will still be covered. Despite the mortgage debacle, encouraging home ownership remains in the best interest of the country and the community.