Locking Your Interest Rate when Buying a Tucson Home
December 28, 2009
Getting a home loan can be a big deal. There’s a lot of news out there about interest rates being low – I remember my first interest rate on my home loan was 8% and that was a FABULOUS deal back in 2000. Generally, rates are even lower now; my past few clients have ended up with home loan interest rates between 4.5% and 6% (depending on the loan program they selected and their credit scores).
There comes a point when you buy a home in Tucson that you’ll decide to lock your interest rate. When you’re out shopping for a house, you get pre-approved for a loan and they’ll quote you rates as of that day – but rates can change daily, if not several times a day sometimes. So you don’t know exactly what interest rate you’re going to get until you lock it. And generally, you can’t lock it until you have a home under contract. You have to have an accepted contract on a house to lock that rate.
Contractually, if you used the typical purchase contract and loan approval form in Arizona, you’ve made a couple of declarations and commitments about your interest rate in the contract to purchase your home. For example, you’ll declare a maximum rate that you’re willing to pay for your home loan. If rates go above that maximum, then you’re not obligated to buy the home.
BUT – the pre-approval form we use in Arizona, called the LSR or Loan Status Report, says that you’re going to lock your interest rate in your inspection period. Or else you lose the ability to walk away from the home if rates exceed your stated maximum.
So timelines matter. You need to lock your rate within your inspection period or else you lose that contingency. Which gives you, typically, 10 shopping days to lock that rate. It’s not a huge window of time, but home loan interest rates can fluctuate often. And interest rate locks also often come with an expiration date – most rate locks are good for 30-45 days. Look at your timelines carefully. You want your rate lock to last until you close on the house. If you’ve got a short inspection period and a long contract interval, you need to make that locking decision carefully.
Getting the $6500 Tax Credit as an Existing Home Owner
December 18, 2009
So if you read regularly, you remember that the former $8000 first time home buyer tax credit got extended and expanded so that now it includes those people who already own a home.
And, by the way, a homeowner is defined as someone who has owned and used a home consecutively for at least 5 of the 8 previous years.
There’s a little confusion though with the wording. Because you don’t actually have to sell your existing home to get the credit. Michelle Lind, general counsel for the Arizona Association of REALTORs explains.
Q: I’m already a homeowner. If I buy a replacement home after Nov. 6, 2009, to use as my principal residence, do I have to sell my home to qualify for the homebuyer tax credit?
A: If you meet all of the requirements for the credit, the law does not require you to sell or otherwise dispose of your current principal residence to qualify for a credit of up to $6,500 when you buy a replacement home to use as your principal residence. The requirements are that you must buy, or enter into a binding contract to buy, the replacement principal residence after Nov. 6, 2009, and on or before April 30, 2010, and close on the home by June 30, 2010. Additionally, you must have lived in the same principal residence for any five-consecutive-year period during the eight-year period that ended on the date the replacement home is purchased. For example, if you bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009. (11/17/09).
(h/t to my friend Dru Bloomfield for the find)
Just remember – to take advantage of the $6500 credit, you need to be under contract on a home that is to be your new principal residence by April 30, 2010 and close by July 1, 2010. The credit applies to homes priced up to $800,000. Income limits for couples are $225k and $125k for singles, with an additional $20k phase out.
And the rule that didn’t change: if you sell the home within 3 years of buying it – or stop using it as your principal residence in those 3 years – you gotta pay back Uncle Sam for the full amount.
There’s an excellent IRS Q&A on the Tax Credit here.
TEP Temporary Power Program
December 3, 2009
Tucson Electric Power (TEP) and the City of Tucson Planning and Development Services Department are rolling out a new temporary power program for distressed properties.
If you’ve ever been shopping for a distressed home, you’ll know that often the utilities are off. Sometimes, utilities are turned on if an offer is accepted and sometimes the owner refuses to turn on the utilities – more common if the owner is a bank and the property is in very poor condition. Often, it is up to the prospective purchaser to have utilities turned on in their name in order to conduct inspections.
Every once in a while, TEP will refuse to turn on power to a home because of minor code violations or safety issues. Which makes sense – if turning on the power is a safety issue, then yeah, don’t turn the power on. But sometimes there are just minor code violations that a purchaser would be happy to correct in the process of fixing the rest of the house. In those instances, TEP will now provide a 15 day temporary power permit for that prospective home buyer to look at the house with the power on.
The brochure for the TEP temporary power program is here.
Basically, the house has to be vacant and have no life/safety issues. I believe the real estate agent has to request the temporary permit, and after TEP does an initial inspection (I’m still looking to see if there’s a cost involved with that inspection), the power can be turned on for 15 days for $75.
It’s just a pilot program right now, lasting through the end of May 2010, and – oddly – is only open to licensed real estate agents.
photo via Flickr, by andrecarol
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