Mortgage Updates

Thanking our service men, service women and veterans takes many shapes; a thank you note, signs at parades to support our troops, and in the case of the North State BIA (Building Industry Association), it comes in the form of boxes filled with “wish list” items sent overseas. Through the years, my company, VITEK Mortgage Group, has participated on packing day, with several ‘VITEKians’ helping in the packing lines. This year, I had the opportunity to serve on the ‘Boxes From Builders Committee’ and VITEK committed their involvement by sponsoring wish list items.

In the beginning, it felt like a daunting wish list of thirty-one items including, bug spray, toothbrushes, toothpaste, hand sanitizer, note paper, baby wipes, foot spray, books, drink mixes, nail clippers and more. In total we needed all items in quantities of 250. 125 boxes destined for Iraq and 125 for the foxholes of Afghanistan. The Army Reserve base here in Sacramento coordinated the whole drive. So many people affiliated with BIA member companies helped by either, sponsoring items or by soliciting donations from local businesses. Other local companies including, Cool River Pizza, Chevys and BJ’s Brewery, set dates where a percentageof the sales were donated to the cause to help buy items not yet sponsored or donated.

Personally, I was touched by the support and contributions from my fellow VITEKians when the call went out for assistance. As a company, VITEK bought 250 note tablets and our employees, mortgage loan originators and assistants donated 250 paperback books, insuring variety. Several individuals independently sponsored purchasing quantities of baby wipes from twenty-five to fifty units. In addition, the Auburn Lyon Real Estate Office, led by VITEKian Cheryl Foley, completed the book drive, donating cash to purchase unfunded items and donating quantities of five to ten of the items from the wish list. Many thanks to you Auburn Lyon Realtors ®! 

On packing day, several VITEKians were in the assembly line, joining the ranks of local businesses, Morton & Pitalo Inc., Pulte Homes, Coldwell Banker, BJ’s Brewery, Homes by Towne, Regis Homes, Fusion Development, Principle Financial Group, and GE, just to mention a few. The turnout was fantastic, lots of hands made short work of stuffing the boxes to the “no rattle” point.

I’m proud to work for VITEK Mortgage Group, where support of our service men and women goes beyond waving the flag on the 4^th of July. Thank you VITEK for supporting our troops!

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
2. The limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
6. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.
9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

Most IMPORTANT is that you find a knowledgable Tax Preparer.  Preferable, a tax accountant/attorney with IRS experience.  These matters are not for the do it "yourselfer".  There are so many variances and nuances within the tax law that I advise you seek the best advice you can afford.  This is not the time to scrimp - it could be a very costly mistake.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. Taxpayers may obtain a copy of this publication and Form 982 either by downloading them from IRS.gov or by calling 800-TAX-FORM (800-829-3676).

It has been a LONG time since my husband and I purchased our first home. Initially we looked at new homes when we were still living in the San Diego area. We fell in love with a builder’s new home and pre qualified with the lender. All the disclosure documents were mailed to us. No one took time to explain ANYTHING to this first time home buyer family. In our early 20’s…. fresh out of the military, and on the first real job we were trying to settle down. Unfortunately, the Truth-in-Lending disclosure with the APR, and amount financed as well as the TOTAL cost of the house over 30 years, well, it BLEW US AWAY! We said "Wow, why would anyone pay THAT much for a house???!! "– It was five years before we ventured to by a home again.

There was no one to take us by the hand, no one to do a rent vs. buy analysis. No one explained what those imposing numbers really meant. It was all very scary and we lost out. Five years later we did buy. We bought because we finally found the right real estate agent, someone who cared. She didn’t give in to our doubts and concerns about “rejection” or “denial” and correctly identified our true concerns. Applying for a 100% VA loan was still scary, but we did finally buy a home and with only $250! We looked at lots of properties, and finally bought the house 3 doors down the street.

With all the “scariness” buying in our neighborhood was appealing. The schools wouldn’t change, the neighbors would remain, even the floor plan was similar. Our agent was sensitive and smart. She made sure we followed through on all the required lender paperwork and was at our escrow closing. Of course, after close there were surprises! Oh my…. The house was occupied by the seller when we bought and when we did our final walk through. Then moving into the now vacant home we discovered the seller had wallpapered AROUND the furniture! LOL The house was vacant, but we could still “see” the dresser, the armoire, the hutch… What an unpleasant surprise! This was before the days of Real Estate Disclosure…. Hmmmm, no wonder disclosures became mandatory!

I think this experience makes me a better loan consultant. I like to take time to explain the documents to my customers. I like to give them a road map of what to expect. I let them know that some how when it comes to real estate and real estate transactions… there are times of “surprises”. If that should happen, take it in stride and tuck it away for a future laugh… Just as we laugh over the “furniture left behind”.

With 30 years combined experience in sales and lending I’d like to touch on the most common traps or trip ups when buying a home.

1. The Wrong House. So what does the wrong house look like? It could be one that is either too large or too small for your family. It could be that it needs too many repairs and you’re not handy or don’t have the assets to pay for the work. The location may be to far from work or in an area that isn’t safe after dark or has issues with the school. You need to take time to research what and where you are buying. The internet has been a boon for home buyers. School data is readily available and you can check Megan’s Law data even before looking at a listed property. Of course, before you finish all your inspections you need to take time to drive through the area on a Saturday and after dark to be sure that you’ll be comfortable living there.
2. Bidding Blind. Before writing an offer to purchase, ask your sales agent to prepare a comparable sales report for similar properties in that geographic area. This way you’ll avoid over paying or loosing the house due to underbidding…. Or perhaps not bidding at all on a great value.
3. Trouble Traps in Escrow. Here in Northern California title & escrow or the “closing” is handled by the same company. It may be different in you location, but one thing remains the same; be sure to get a copy of the preliminary title report for your purchase and read it. In most cases, there are no issues. However, there are times when problems arise due to liens, or transactions where the owner of record and your seller are not one and the same. If you have a lender or real estate agent on top of their game, then they will address these issues and have them resolved for closing. However, not all lenders or agents are true professionals.
4. Appraisal Surprises. It could be that there have been “un-permitted” additions to the property. If you aren’t buying from the original owners – say a Bank REO there would be no disclosure. Often, unpermitted additions limit lender choices and some loans may not be available. Other complications and costs would also arise. Additionally, the available comparables sales may not support the sales price for your home. The days of “a willing buyer/willing seller” having the most value on appraisal are long gone. If the value is lower than the sales price, the lenders final “loan-to-value” will be based upon the lower value not the sales price. This could push you into mortgage insurance IF your original down payment was 20% or it would require you to pay the difference if you still wish and can proceed. This is a key reason to have an appraisal “contingency” as part of your purchase agreement, allowing you, the buyer, to renegotiate the sales price if the appraisal comes in lower than contract price.
5. Property Issues. If you are buying an REO it is even more important to have an inspection from a licensed home inspection company. Additionally, even if the house is sold “as is” it is prudent to have a termite inspection. Knowing early on, during your discovery time can save you money or allow you to cancel this transaction with a refund of your earnest money deposit. Even if you loose your deposit, it could be much less expensive than proceeding with the sale.
6. Closing Shockers. Items that can surprise a buyer are pre-paid costs of closing. These consist property tax proration’s, homeowners insurance, home owners dues and transfer fees as well as Condo disclosures including budgets and minutes from the last meeting. Be sure to ask your lender to have the closing company provide an updated settlement statement provided for you to review or for your lender to use in calculating your cash to close.
7. Wrong Loan Program. The varied loan programs over the last few years have been overwhelming. The good and bad news is that the industry has consolidated to more conservative lending instruments. However, there are certain differences for both first time buyers and seasoned professionals. First timers could benefit from various State or local jurisdiction down payment assistance programs. Seasoned buyers or Jumbo buyers have a limited number of the more traditional programs to work with. What ever your situation, be sure to ask the questions to understand the loan product.
8. Hurried Closing. When writing your contract, allow enough time for the financing. Don’t give notice to you’re landlord until you loan has final approval. By this I mean, everything has been received and underwritten – title report, appraisal, any inspections… all your documentation… At that, then give yourself an extra two weeks. It is much better to have two weeks to move, when your closing is on time then to be stressed out about a double move or no place to stay if your closing is delayed.
9. Flips. Flips have become the bane of the lending industry. Banks and investors are loath to loan on properties that are being “flipped”. Many investors have detailed rules and others will not lend until a 90 day timeframe has passed. Much depends on who will fund or buy your loan. FHA has changed their rules somewhat to allow foreclosures to move through the market more quickly to provide homes for new buyers and stabilize ravaged neighborhoods. However, if the increase from one sale to the next exceeds 20% additional documentation will be required from the seller. Most significant will be the seller’s actual rehabilitation or improvement costs for the property. In most cases a 2^nd appraisal to support value is a requirement and as well as a thorough home inspection by a licensed company or general contractor. This is, of course, if the seller is not a non profit institution, a Bank, or HUD which are all exempted.
10. Cash to Close. If your closing funds are coming from a source other than your checking or savings accounts, be sure to inquire how much advance notice is needed for the funds to be available. This also applies to gifts from your family. When the cash to close comes from money market, stock or retirement accounts it may take a day to liquefy the funds and another day to get a wire to escrow. If your company does not wire, and only sends funds via a certified check, then you will need to allow more time. It is wise to check in advance as to your institution’s policy

As always, I welcome your comments or questions.

So, what is a complete loan application and why is that important?  Over the course of the last few years with the "easy" lending, I have found that folks (including some loan consultants) have gotten lazy when it comes to the loan application.  What I mean by that is the application comes in with lots of blanks.  A professional loan consultant will take time to review the application with you asking the right questions to provide the Lender's underwriter and ultimately the investor a complete picture. In today's market it is even more important to provide a good picture, thereby increasing the odds of loan approval. 
 
Let's begin with employment.  All loan applications require a solid 2 year employment history.  If you have changed jobs, exact dates will be necessary.  If your job has variable income from over time or time differential it will be important to document receipt from the past job as well as the current.  It will be helpful for you to have the last pay stub from your previous employer with ytd income.  If as has been the case recently, you have had a job "gap" this will need to be explained - and evaluated. 
 
Be sure to include all sources of income needed to qualify.  There are certain questions your lender may not ask.  A borrower is not required to disclose income from family or child support. If this is something you wish not to disclose, that's OK.  If, however, the income will bring your ratio's in line for loan approval - It would be up to you to disclose the amount as well as the source and provide certain documentation to the lender.
 
Residence history.  This too is important and a 2 year history here also needs to be accurately provided.  If you didn't pay rent for a time by living with family, that's OK... but needs to be noted.
 
An important, and often understated part of every application are assets:  Assets; Lenders  analyze both your liquid and non liquid assets.  That means, money in the bank, savings, checking, CD's, money market accounts are considered liquid assets.  Your auto, jewelry, household goods, other "toys" are non liquid.  This means these items have value but cannot be readily converted to "cash".  Retirement accounts - 401K or IRA's, cash value life insurance, bonds, are semi-liquid.  All these assets should be included in your loan application. 
 
There are several ways that underwriter's analyze your application when reviewing assets. First they review the balance between what you owe to and all your assets.  This is called evaluating "net worth".
 
An application that has $55,000 in debts and only $5,000 in assets would indicate a potentially marginal buyer.  Take that same application and show $5,000 in checking,  $12,000 in 401K,  $30,000 in auto value (make, model year) $15,000 in Household Goods $7,500 in tools $3,500 in jewelry... Now there is a positive 'Net worth". 
 
From that point a lender will look for three key aspects;
 
1.  Confirmation of sufficient assets and personal money to make the down payment on the property and to pay closing costs without having to borrow.  Sometimes borrowers do not have sufficient cash for closing and are saving.  This is sometimes the case when the purchase is a new home, under construction.  If there is a "short fall" in the savings... and an asset needs to be sold to provide the necessary funds... That asset had better be on the application in the beginning.  A motorcycle "to be sold" cannot just "appear" when cash is tight.  It has to have been on the application from the start.  The same with a beater car... or a collection of baseball cards, or grandma's ring.  So think carefully when completing your loan application.
 
2.  Confirmation that you have enough reserves to cover two or more months of PITI mortgage payments after making the down payment and paying the closing costs.  Most loan programs and investor underwriting guides require a minimum of two months reserves.  Some loans especially jumbo loans or investment property loans will require a six month minimum.
 
3.  Confirmation that you have other assets showing an ability to manage money and a resource, if needed, to handle emergencies and make mortgage payments.  Reserves can be a big deal and make the difference between approval and decline especially where the desired qualifying ratio's for the loan program are exceeded.  Reserves show the ability to save.  Reserves show that you live within your means.  If the home you are buying increases your housing payment by 1/3 ... and you have a good savings history evidenced by reserves your likelihood for loan approval increases, even in the face of potentially higher than desired housing ratio's.

Other assets include real estate with equity.  This is based on market value less any outstanding loans and would show on the schedule of real estate which is found on page three of the loan application. 
 
Sometimes the "whole story" isn't told on the application form.  That is when a letter from you, the customer is helpful.  Don't be surprised if your loan consultant asks you to write a letter of explanation or "motivation" or both. These letters, written by you (not the loan consultant) can also make a significant difference when the loan application is reviewed by underwriting.  As always, let me know if you have questions.

Comments are always welcome.

Identity thieves get your personal information by many different means, including stealing a wallet or purse or accessing information you provide to an unsecured Internet site. (If on social media sites... DO NOT include your birthday information beyond day and month.

They even look for personal information in your trash. They also pose as someone who needs information through a phone call or e-mail.

If you receive an e-mail scam, forward it to the IRS at phishing@irs.gov.

If you receive a letter from the IRS leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice.

Your identity may be stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don’t know.

If your Social Security number is stolen, it may be used by another individual to get a job. That person’s employer would report income earned to the IRS using your Social Security number, making it appear that you did not report all of your income on your tax return.

This could allow that individual to acquire credit under your ssi number... You can get an annual free credit report through http://www.annualcreditreport.gov   This is a truly FREE report.  Also, it will not negatively impact your credit scores.

If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity.

You should submit a copy of your valid government-issued identification – such as a Social Security card, driver's license, or passport – along with a copy of a police report and/or a completed Form 14039, IRS Identity Theft Affidavit.

Just a smart thing to do... Only show your Social Security card to your employer when you start a job or to your financial institution for tax reporting  or loan purposes. Do not routinely carry your card or other documents that display your SSN.

The IRS has a special phone line for Identity Theft- IRS Identity Protection Specialized Unit, toll-free at 1-800-908-4490.

For more information about identity theft – including information about how to report identity theft, phishing and related fraudulent activity – visit the IRS Identity Theft Resource Page, click here

Without the proper documentation your IRS 1st Time Buyer tax credit will be delayed.  Below are tips on what you need to gather before you make your claim.   It is important that you provide the appropriate for your transaction:

Settlement Statement: Your closing agent will send you a certified copy of your final settlement statement a from called HUD-1.

1. Properly Executed Settle Statement: Generally, a properly executed settlement statement shows all parties' names and signatures, property address, sales price and date of purchase. However, settlement documents, including the Form HUD-1, can vary from one location to another and may not include the signatures of both the buyer and seller. In areas where signatures are not required on the settlement document, the IRS encourages buyers to sign the settlement statement when they file their tax return -- even in cases where the settlement form does not include a signature line.
2. Mobile Homes: Purchasers of mobile homes who are unable to get a settlement statement must attach a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
3. New Construction: For a newly constructed home, where a settlement statement is not available, attach a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
4. Long-Time Residents: If you are a longtime resident claiming the credit, the IRS recommends that you also attach documentation covering the five-consecutive-year period such as Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

For more information about the First-Time Homebuyer Tax Credit and the documentation requirements, visit IRS.gov/recovery.

Links:

• Special Information Regarding Signature Requirements
• Information About the First-Time Homebuyer Credit

As a lender I am continually asked so many questions about the 1st Time Home buyer tax credit and the Home buyer tax credit.  Since I am not a tax advisor it is just best to go directly to the source....

Q. I am a long-time resident (have owned and used my current home as a principal residence for five consecutive years out of the eight-year period ending on the date of purchase of the new residence) but my spouse has lived there for only three years. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both spouses must have owned and used the same previous principal residence for five consecutive years out of the 8-year period ending on the date of purchase of the new principal residence to qualify for the credit. (12/14/09)

Q.  I am a long-time resident and current homeowner and my spouse is a first-time homebuyer (has had no ownership interest in a principal residence during the three-year period ending on the date of purchase of a new principal residence) and we purchased a new principal residence. Can we qualify for either the first-time homebuyer credit or the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both you and your spouse must be first-time homebuyers in order to qualify for the first-time homebuyer tax credit. Since you had an ownership interest in a principal residence during the three-year period ending on the date of purchase, neither you nor your spouse qualifies for the credit. Similarly, both you and your spouse must be long-time homeowners of the same previous principal residence in order to qualify for the long-time resident homebuyer credit. Since your spouse is not a long-time homeowner of your current principal residence, neither of you qualify for the credit. (12/14/09)

Q. I am a long-time homeowner of a principal residence and my spouse is a long-time homeowner of a different principal residence. Can we qualify for the long-time resident homebuyer credit if we purchase a new principal residence?

A. No. Both spouses must have owned and used the same previous principal residence for five consecutive years out of the eight-year period ending on the date of purchase of the new principal residence to be eligible for the credit. Since you and your spouse owned and used different principal residences, neither of you qualify. (12/14/09)

Q. How does the allocation provision work when unmarried taxpayers purchase a home together and both qualify for the first-time homebuyer credit under different tests? 

A. Co-purchasers who are not married may allocate the credit using a reasonable method. A reasonable method is any method that does not allocate any portion of the credit to a taxpayer who is not eligible for that portion of the credit. The maximum credit for a taxpayer who qualifies under the long-time resident test is $6,500, and the maximum credit for a taxpayer who qualifies under the first-time homebuyer test is $8,000. One example of a reasonable method is to allocate $6,500 to the long-time resident homebuyer and $1,500 to the first-time homebuyer. (12/14/09)

Hopefully this will help you to better understand this Federal Tax credit.

To access the IRS website for other detailed answers click here

The days of adding unlimited "upgrades" to your new home purchase seem to have run amuck with real estate appraisers using the deflated values of the foreclosure market when measuring the value of your dream home.  Never mind that the foreclosure was a "beater" and needed to be rebuilt... painted, new appliances and flooring.  The minimal difference ascribed for condition by some appraisers can really hurt your lender's ability to provide maximum financing.

Even in a good market not all possible upgrade options will reflect in a higher appraised value for your home.  If most homes sell with tile counters, you won't get a higher value by matching the "upgrade"  Do you realize that opening a wall to create a nice master-suite can actually lower your value, because your bedroom count is now reduced. So how will a lower appraisal affect your purchase? 

Lenders base loan- to -value  (LTV) on the lower of the two numbers.  If the sales price is lower than the appraisal then "no problem" all things stay the same.  However, if your value comes in lower then your new LTV is based off the appraisal and NOT the sales price.  If you are planning on a 3.5% minimum down payment - your down payment will now increase by the amount of the short fall, if you continue with the purchase transaction.

Over the last year I have seen this happen several times.  When it did occur, the buyers had already been prepared that this was a possibility and when making their selections were prepared to come in with the additional funds -if that possibility played out.  They really wanted what they wanted and were prepared to pay the additional "cash" for the items.

It pays to work with a lender that does new home lending on a regular basis and works with appraisers that are knowledgeable in the new home market as well as the resale market.  Admittedly, it is difficult when all "outside" comparables are distress or foreclosure sales but knowledgeable professionals can minimize the damage.

"The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to botched appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it's not fair to compare distressed properties to brand-new homes." Excerpt from http://abcnews.go.com/Business/wireStory?id=9468512  

On November 6th Congress passed legislation renewing the government's $8,000 tax credit for first-time home buyers!  The bill states that the first-time home buyer must sign their contract by April 30,2010 and close on by June 30, 2010.

Even better, the bill will extend tax credits up to $6,500 for qualified repeat homebuyers! This is a huge opportunity.  It allows up to a $6,500 credit/refund if they purchase a new principle residence after November 6,2009 and on or before April 30,2010 (or closed by June 30, 2010 with a binding sales contraact signed by April 30,2010.

For detailed information about the IRS requirements click here.

December is the time to start looking for ways to avoid the last-minute rush for doing your taxes. Here are some stress-relieving tips to help you.

1. Don’t Procrastinate – Resist the temptation to put off your taxes until the very last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.  Things to consider: 

* Organize your deductions and supporting receipts now.  You still have a month to plan what expenses to take now or postpone.  * If you bought a home, check to see if you qualify for the IRS tax credit, pull your final closing statement to be sure not to overlook the tax deductable closing fees.. *  Don't forget interest AND property taxes as well as points are tax deductible. * Check with your accountant about benefits of additional deposits to your IRA or 401K. 

2. Visit the IRS Online – In 2008, there were more than 330 million visits to IRS.gov. Anyone with Internet access can find tax law information and answers to frequently asked tax questions.  click here

3. File Your Return Electronically – Nearly 90 million taxpayers filed their returns electronically in 2008. Aside from ease of filing, IRS e-file is the fastest and most accurate way to file a tax return. If you’re due a refund, the waiting time for e-filers is half that of paper filers.

4. Don’t Panic if You Can’t Pay – If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. More than 75 percent of taxpayers eligible for an Installment Agreement can apply using the Web-based Online Payment Agreement application available on IRS.gov. To find out more about this simple and convenient process type “Online Payment Agreement” in the search box on the IRS.gov homepage.

5. Request an Extension of Time to File – But Pay on Time. If the clock runs out, you can get an automatic six month extension of time to file to October 15. However, this extension of time to file does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date.

See IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return for a variety of easy ways to apply for an extension. Form 4868 is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Taxpayers needing Form 4868 should act early to be sure they have the item in time to meet the April deadline.

For questions be sure to contact your accountant, CPA or tax advisor who are your best source for specific tax guidance and  information.

Until Real Estate markets and the housing  industry return our economy will continue to flounder.  Housing brings construction jobs, home improvements and the eventual purchase of landscaping - gardening supplies and new or almost new furniture.  This in turn creates jobs, production and retail sales.  Perhaps this cash for appliances program, which really comes out of global warming beliefs, will further help families afford their homes. 

The coming "carbon foot prints" legislation will have a dramatic effect on the cost of utilities, heating air conditioning and general household use of electricity.  The wise person will take advantage of these credits to provide for future savings.  In California we have a State run program called CHEERS (California Home Energy Efficiency Rating Service) which oversees energy raters.  It is the responsibility of these raters to evaluate a home's energy efficiency, provide a plan to increase the that efficiency through a cost benefit  analysis.  This is something any home owner can order.  The fee for this service is similar to an appraisal fee.

For a home buyer, the energy rating can be used to increase the energy savings by adding the cost (provided by the analysis) to the loan amount.  This is only in the case of government loans.  The lender qualifies the borrower for the purchase, then ads the energy improvement costs to the loan. (No additional qualifying.)  This can make a significant difference in utility costs for buyers of older homes since the EEM (Energy Efficient Mortgage) also covers replacing single pane windows, adding insulation in addition to the afore mentioned items like updated heating and air systems.  In newer homes with raised foundations, often the "blower/pressure test" shows that the ducting has loosened and is leaking - a less costly fix but a money savor.  With the work being completed after the close of escrow there has been little resistance to the program from Realtors or sellers.

The additional "cash for appliance" program just ads another incentive to make energy efficiency part of the home buying process. With the rebates available, even existing homeowners may want to take a closer look at increasing the energy efficiency of their homes since the EEM is also available for government loan refinance transactions.