Legislation Modernizes FHA Lending

The U.S. House of Representatives has passed "The Expanding American Homeownership Act,” which will increase homeownership opportunities for millions of Americans by modernizing the Federal Housing Administration (FHA) and returning it to its traditional role as an important financing option in today’s housing market.

The Expanding American Homeownership Act will:

1) Eliminate the current statutory three percent minimum down payment, reducing a significant barrier to homeownership. FHA’s existing down payment requirement does not meet the demands of today’s marketplace, where most first-time homebuyers put down two percent or less. The "new” FHA would offer a variety of down payment options.

2) Create a new, risk-based insurance premium structure for FHA that would match the premium amount with the credit profile of the borrower. It would replace the current structure, in which there is standard premium amount for all borrowers, while still protecting the soundness of its Insurance Fund. FHA would have the flexibility to charge a lower premium for low-risk borrowers, and to charge higher-risk borrowers a slightly higher premium.

3) Increase and simplify FHA’s loan limits. FHA’s loan limit in high-cost areas would rise from 87 to 100 percent of the GSE conforming loan limit and in lower-cost areas from 48 to 65 percent of the conforming loan limit. This change is crucial in today’s housing market. In many areas of the country, the existing FHA limits are lower than the cost of new construction, eliminating FHA financing as an option for buyers of new homes in those markets. FHA has simply been priced out of the market in other areas, such as California, where FHA insured only about 5,000 home mortgages in all of 2005, down 95 percent from 109,000 in 2000.
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Tags: HUD, FHA, loan, legislation, insurance, buy, sell, real estate, Knox County

10 Best Big Cities

Congratulations to our neighbors in Columbus, Ohio for making Money Magazine's Top 10 Best Big Cities list, coming in at #8 behind Colorado Springs, CO, Austin, TX, Mesa, AZ, Raleigh, NC, San Diego, CA, Virginia Beach, VA and Omaha, NE.

Median housing prices in Columbus are $188,987 compared to the average price of $259,566 for other Top Cities. Columbus also scored high marks for it's higher education opportunities with 12 campuses compared to an average of 8 for the other cities on the list. High 'Quality of Life' scores make Columbus the city we know and love.

Columbus we are proud to your 'best small town' neighbors!
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Thinking of buying or selliing a home in Knox County? Visit my website to view all real estate listings, get a free market analysis for your home, free reports and more.

Tags: columbus, ohio, money magazine, top 10, higher education, housing, prices, knox county, buy, sell, real estate

Commissioners Adopt Amendments

The Knox County Board of Commissioners passed three motions yesterday adopting amendments to the Knox County Subdivision Regulations. The amendments will become effective on Aug. 12.

The first amendment clarifies the definition of subdivision, as to what can be reviewed in a minor subdivision, and requires a preliminary plat for all major subdivisions.

The second amendment enacts rules governing the subdivision of land between 5.001 acres and 20 acres. Adoption of this amendment formalizes procedures which have already been in effect informally in the county.

The third amendment defines the term “original tract.” The amendment allows the setting of a point in time when all tracts in Knox County would become “original tracts.” That point in time will be Aug. 12, 2006, the effective date of the amendment. After that date, a maximum of four subdivisions (5 lots) under Ohio Revised Code 711.131 would apply to that parcel without regard to ownership.
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Thinking of buying or selling a home in Knox County? Visit my website to view all real estate listings, get a free home evaluation, free reports and more!

Tags: know county, amendment, commissioners, subdivision, real estate

What is a tax-deferred exchange?

In a typical transaction, the property owner is taxed on any gain realized from the sale. However, through a Section 1031 Exchange, the tax on the gain is deferred until some future date.

Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment. A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of "like-kind", while deferring the payment of federal income taxes and some state taxes on the transaction.

The theory behind Section 1031 is that when a property owner has reinvested the sale proceeds into another property, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer's investment is still the same, only the form has changed (e.g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a "paper" gain.

The like-kind exchange under Section 1031 is tax-deferred, not tax-free. When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.

If you have questions on tax deferred exchanges or Ohio real estate in general, contact me or visit my website. I'm glad to help!