Minnesota Real Estate Investors Association, Inc.

Yah… Your mortgages are going to cost you more to help offset the cost of people who have bad credit, isn’t that wonderful?  Yes, it’s true, beginning May 1, 2023, upfront fees for loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan Level Price Adjustments (LLPAs).

Example, beginning May 1, 2023, a buyer with a good credit score of 750 who puts down 25% on a $400,000 home would now pay 0.375% in fees on a 30-year loan, or $1,125, compared to 0.250%, or $750, under the previous fee rules, which is an increase of $375.

Meanwhile, a buyer with a credit score of 650 putting a 25% down payment on a $400,000 home would now pay 1.5% in fees on a 30-year loan, or $4,500. That compares with 2.75%, or $8,250, under the previous rules, which is a decrease of $3,750.

It is true that the increase to buyers with good credit is a small percentage of the overall loan and the borrowers with poor credit are still paying more, albeit less than before.  However, why should those of us who have worked hard and shown prudent money management and done without some things to build up good credit have to pay to lower the costs of those who have not suffered as much as those of us that have built good credit.

taxes.jpg" alt="taxes" align="left" />Beginning on January 1, 2013, a new real estate capital gains tax will take effect to pay for Obama Care. When Obama Care was passed back on March 23, 2010, one of the funding measures was to take from Medicare.

“Bet you didn’t know that, did you?”

So how are they going to recover those costs for Medicare that they stole for Obama Care? Simply increase taxes on real estate and other interest and dividends. This new 3.8% tax is expected to raise $210 billion over the next 10 years.

The new 3.8% Tax Rate applies to:

• Individuals with adjusted gross income (AGI) above $200,000
• Couples filing a joint return with more than $250,000 AGI

Types of Income:

• • Interest, dividends, rents (less expenses), capital gains (less capital losses)

The new tax applies to the LESSER of:

• Investment income amount
• Excess of AGI over the $200,000 or $250,000 amount
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Let me start out by saying that I generally try and stay away from political comments. I prefer to stay on topic and discuss the facts, but this time I have no choice but to comment on politics. This latest round of political games has my blood boiling and I can’t hold back any longer.

Congress just passed another $1 billion dollar emergency homeowners relief fund. You can read all about it on MarketWatch, here is the link: www.marketwatch.com.

Were shall I start?

I guess I will start out with the phrase “emergency homeowners relief”. Emergency, really??? The emergency was almost two years ago when they pasted the TARP funds to help, if you remember, homeowners and bail out the banks and financial institutions, but once the TARP funds were approved by congress, they decided it would be better to just buy stocks in the companies they chose to keep solvent. It didn’t seem to be that much of an emergency to congress in 2008, otherwise they would have spent that money on what they told us was the reason in the first place to pass the TARP funds. I think the only reason it is an emergency right now, is because the midterm elections are in 4 months.

So now that we understand the congressional definition of an “Emergency” we can then start to talk about the facts. They are as follows:  
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As part of President Obama’s American Recovery and Reinvestment Act the $8,000 First-Time Home Buyer Tax Credit gives first time buyers incentive to buy in an effort to increase demand and get a handle on the falling home prices. This provides investors with another means of getting buyers to buy, which is something we all should take advantage of. The details and requirements are fairly straight forward:

• The buyer must not have owned a home in the past three years
• The new house must become the buyer’s primary residence for 3 years, if not, then you must pay back the $8,000
• This credit will only apply if the buyer buys between January 1, 2009 and November 30, 2009.

The 2009 Credit is a true, money in the pocket deal. Those that bought a home under the 2008 version, which was basically an interest free loan to be paid back over the course of 15 years) cannot claim the 2009 credit.

The income qualifications hinge on the Modified Adjusted Gross Income (MAGI)

Adjusted Gross Income is your total annual gross income less your standard deductions or if you itemize, then the deduction would be your total itemized deductions. Example, if you make $50,000 a year and you have $10,000 in itemized deduction then your AGI would be $40,000.

For single tax payers the breakdown is as followed in terms of MAGI:

• Full Credit - x < $75,000
• Partial Credit - $75,000 < x < $95,000 – Partial Credit<
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Just when things are looking like they are settling down, the great DFL of Minnesota is at it again. Today, the MN House of Rep. Tax Committee released a "delete all amendment" to HF2323.

Items of note:

1. Eliminate Mortgage Interest Deduction
   • Replaced with a maximum $420 credit
2. Eliminate Property Tax Deduction

Here is a short video with Christopher Galler from the Minnesota Association of REALTORS explaining this.

Contact your Representative (if you live in Minnesota) and urge them to Vote NO on HF2323.

Tomorrow is the BIG DAY. There will be Tax Day Tea Parties all around the country. Will you be there? If you are like me and agree that government spending has gone completely out of control with no oversight and you don’t like the thought of your children’s grand children paying for this governments spending, then you will be there.

April 15th is the one time a year when most people actually look at what they pay in taxes annually. While I am not against taxes in general, I am against taxation without representation, just like our fore fathers were. It has been over 200 years since the original Boston Tea Party in 1773.

President Obama even said that it was the government’s job to spend money because we the people are not and can’t afford to spend money. Then the question begs to be asked. “If we can’t afford to spend the money, then how are we going to be able to spend the money”?

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Ever wonder were all that money is going from the stimulus bill that congress passed without even ready what was in the bill? I have, and thanks to a colleague of mine who just sent me a link to a very cool website, we can now start tracking were the money is going.

Stimulus Watch is a website setup by many talented programmers that got together to create a website that compiles all the information about projects across the country that’s getting their funding directly from the stimulus bill. Simple got to Stimulus Watch and select your state.