The Stimulus Plan encourages homeowners to make energy-efficient home improvements by providing a sizeable tax credit to benefit homeowners that do. Congress has allocated approximately $4 billion for the tax credit, in the hope that it will not only stimulate spending by homeowners, but that it will encourage owners of existing homes to make improvements in a responsible way which conserve energy use. A recent study conducted in California showed that 70 percent of greenhouse-gas emissions coming from single-family properties come from homes built before 1983. According to that study, new homes are fairly energy-efficient, but existing homes — particularly older homes — could benefit a great deal from the use of energy-efficient materials and appliances. If you need certain specific home improvements and can afford them, now is a great time to do them. Which home improvements are eligible for the tax credit? Well, if you install energy-efficient windows… read more →
The new stimulus plan, passed just last week, provides an incredible tax incentive to first-time homebuyers if they purchase a home between January 1, 2009 and November 30, 2009. First-time homebuyers can claim a credit of 10% of the value of their home or $8,000, whichever is less, on either their 2008 or 2009 tax return. In other words, if you’ve already bought your first home in the beginning of 2009, you can claim the tax refund on your 2008 taxes; you don’t even have to wait until next year. If you’ve already filed your 2008 taxes and want to claim the credit now, you can file an amended return. Moreover, the definition of “first-time homebuyer” has been relaxed. For the purposes of the stimulus plan, a “first-time” homebuyer is anyone who has not owned a home in the past three years. If you qualify as a first-time homebuyer and… read more →
During the course of a residential closing transaction, the question inevitably comes up: What about the real estate taxes? Well, during the attorney review process, your attorney and the other attorney will typically reach a resolution of what to do with the real estate taxes. It’s helpful, however, if the buyer and seller understand how and when real estate taxes in Illinois are billed first, so that they can better understand how and why taxes are prorated at closing. For the basics on how Illinois real estate taxes are billed, please click here. Once you’re familiar with the process, you can understand the following better: In the vast majority of residential sales contracts in Illinois, taxes that have already accrued, but are not yet billed, are credited by the seller to the purchaser at closing. This credit is typically, though not always, final. In certain circumstances, a tax reproration agreement… read more →
During the course of a real estate purchase or sale transaction, the parties’ attorneys will work to make sure that a fair tax credit is provided to minimize the burden of real estate taxes on both parties in the transaction. While other methods are used as well, in some instances, a real estate tax reproration agreement is the best option available. Tax reproration agreements are almost universally used in large commercial transactions (though not always in smaller commercial transactions), and are also often used in new residential construction. They are also used in residential resale transactions when an accurate tax credit cannot be determined at the time of closing, which could happen for any number of reasons. So what is a real estate tax reproration agreement? Basically, it is an agreement between the parties to reprorate the tax bills when they become available in the future. Such agreements come in… read more →
In the last couple of days, most Cook County property owners have received their 2008 First Installment Tax Bill. During the course of a closing transaction, I inevitably have to explain how and when real estate taxes are billed in Illinois. Here’s a primer: Taxes in Illinois are billed and become due approximately one year after they accrue. In other words, the taxes for January 1, 2007 – June 30, 2007 became due in the first half of 2008. Likewise, taxes for July 1, 2007 – December 31, 2007 became due in the second half of 2008. Similarly, taxes for the first half of 2008 will become due in early 2009, and taxes for the second half of 2008 will become due in the second half of 2009. Most Illinois counties, including the collar counties (Lake County, DuPage County, McHenry County, and Will County), follow a fairly straightforward system. They… read more →
In order to make HUD-1 closing statements more transparent for the parties involved, the Department of Housing and Urban Development (HUD) has made a number of changes that will take effect on January 1, 2010. HUD has tried to protect consumers, particularly buyers, during the course of dealing with their lenders and at the closing table. Here are some of the changes: 1) Mortgage brokers will need to calculate their commissions from their lenders (known as yield-spread premiums) as part of the loan origination fee. HUD hopes that by integrating the yield-spread premium into the origination fee, brokers will be less likely to place their customers into loans at the high end of the interest-rate spread. 2) Lenders will have to complete a new good faith estimate form, which will be three pages long as opposed to the current two-page form. 3) Origination fees and transfer taxes on the HUD-1… read more →
Many lenders will work with homeowners who are unable to pay their monthly mortgage. If you are having difficulty making your mortgage payment, you might want to consider trying to get a loan modification. Modifications come in many forms — you might get a temporary or permanent payment reduction, an interest rate reduction, temporary abatement, extension of the payment period, or some sort of mixture of these options. However, the bottom line is that help may be available to you; most importantly, you may be able to keep your home. Of course, getting your lender to negotiate their loan with you is not easy. Many lenders won’t discuss the matter with you until you’ve missed a number of monthly payments. You may not want to get yourself in that situation for any number of reasons — it will affect your credit, you feel it will tarnish your name, you are… read more →
In today’s real estate market, more and more contracts tend to fall apart, often because the buyer is unable to procure a mortgage on satisfactory terms, if at all. As the lending market gets tougher, I hear the following questions a lot from buyers: “Is my earnest money protected? Can I get my earnest money back?” I also hear the inverse from Sellers: “Can I keep the earnest money?” A standard real estate contract will set forth various contingencies that the parties must meet in order to close. One of these contingencies is the mortgage contingency. For a detailed explanation of what a mortgage contingency clause is, click here. To see how the mortgage contingency affects your earnest money, keep reading! If the buyer is unable to procure a mortgage commitment stating that the lender’s various conditions have been met, and the buyer thus does not have a loan, then… read more →
Short sales may be simple or complex, but they are almost always time-consuming. If you are considering selling your home through a short sale, there are certain things you can do to expedite the process. First and foremost, call your lender. Most large lenders have a division or an outside company that is handling short sales for them; your lender should be able to put you in touch with the right people. Some banks will send you their forms, etc. right away, open a file for you, and then hold it until you have an offer. Other banks will want you to have a contract in hand before starting the process. Regardless of which route your bank takes, you should assemble documentation to support your short sale right away. If your attorney is negotiating the short sale for you, he or she will want these documents up front so they… read more →
What if you contract to sell one piece of property to a buyer, but end up selling the wrong piece of land at closing? What if you promise to sell the buyer a whole piece of land, but mistakenly only deed a part of the land to the buyer? Worse yet, what if you promise to deed the buyer only a portion of the land, but you inadvertently deed the entire land to the buyer at closing? Can these errors be rectified? The simple answer is yes, but it must be qualified. An error in the transfer of property can only be corrected if there is a mutual mistake of fact between the parties. In such an instance, the court can modify or re-write the deed to make it consistent with the seller’s and buyer’s actual mutual intent. What happens when the seller and buyer cannot agree? A recent court… read more →