Plano Texas has a new All Star!!!

One of our own QUOTED on BLOOMBERG! Congrats to Tom Burris!

Well, he is an ACTIVE RAINER, an Evil Mortgage Genius, and a Cowboys Fan, but now he is also a "Guru of Wall st". 

 

 

Congrats to TOM BURRIS!  You do not JUST get the GOLD STAR, as I am also bestowing upon you the "BLUE STAR"!

Tom was quoted in this article on Bloomberg.Com by Brian Louis talking about the rising interest rates!

You can access the article by clicking HERE!

Tom said: 

"If people hear that rates are going up, I think they hesitate a little bit," said Tom Burris, a mortgage banker at Supreme Lending in Dallas. "After a while the reality sets in that 5.5 is much better than 8 percent that we had ten years ago. It's a good rate, it's a fair rate."

This is not only great notoriety for Tom personally, but also a testament to his experience,knowledge, willingness to learn, and his active participation on Active Rain!   Whenever someone is featured, interviewed or contributes information on a National Scale, we need to congratulate them and embrace this within our community!

 

 

You can also visit Tom's website by Clicking HERE!

I am pleased to be associated with Tom Burris, and to say that I am in a group here on Active Rain with him!

 

Please join me in congratulating him, and again, you can find the article by clicking on the ICON below!

 

 

Thanks for visiting!

If you would like to subscribe to my blog, please click on the link below!

Keep selling!

Darin

 

Or

You can contact me at Darin@osmwi.com

608-592-2227

 

 

6

$8,000 First Time Homebuyer Tax Credit - Approved by FHA/HUD 5-29-09 - But buyer BEWARE !!!

 

 

BUYER BEWARE of Tax Credit

 

The first time homebuyers tax credit of $8,000 has been approved by HUD for all FHA loans. But don't get too excited too quickly. If you get a chance to read the mortgagee letter, ML 2009-15, it states that you can't use this tax credit for the required down payment of 3.5%.

HUD originally put out mortgagee letter 2009-15 on May 12th, but was rescinded the next day. Please read about that here : $8,000 tax credit rescinded by HUD. For some reason, it was prematurely placed on HUD's web site, but apparently wasn't finalized. Now we have a new version and if not read correctly, you could be putting misinformation out there. So what does the new mortgagee letter state?

 

 

 

Here is the positive part about the tax credit. You can receive the first time homebuyers tax credit upfront, but not through the IRS.  This would be illegal. Please read : It's illegal to receive your tax credit before you close on your home.  Buyers - BEWARE, please read that, because too many people are saying that you can get the money directly from the IRS prior to closing. The IRS & HUD both say no!!!

So how can you receive this upfront?  It can be given to you as a second or a silent second from any Federal, State, or local agencies, and any FHA mortgagee or any FHA approved non-profit organization.  People, in layman's terms, this is already acceptable by HUD's standards, except for the lender that is now able to give the monies upfront in a form of a 2nd mortgage. Another terminology is that this can be an advance loan from any of the entities mentioned above.

 

 

Summary :  Essentially, this means that the entities mentioned above, are purchasing this tax credit on your behalf and giving it back to you. The short version of this is that you can use some of the money from the $8,000 Tax Credit as your down payment, but after you put down the first 3.5% of that down payment. Meaning, you have to come up with 3.5% of your own money still. With FHA loans, it can still be a gift from a relative/family member.  It also can come from non-profit or government agencies to be used as your initial down payment, but not used through the tax credit. Overall, the tax credit that is advanced, can be used for all closing costs. But you can't receive monies back at closing. 

And again, keeping in mind, it's illegal to receive this tax credit upfront directly from the IRS. There is more verbiage in the mortgagee letter 2009-15 , but the main point is that you have to have 3.5% of the downpayment yourself, before you can use the tax credit that would be 'loaned' to you.

 

 

THOUGHTS??? - Well, in all honesty, how does this truly help? What is the gov't thinking here? As a buyer, I would still need the initial 3.5% of my monies for the down payment. Again, needing money to buy. I know some of you are for this fact, that buyers should have skin in the game. But keep in mind, this was not the true demise to our foreclosure mess. We need to sell houses to keep this economy going.  Just my opinions and food for thought.  thanks

 

 

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

FRAUD ALERT - Advice on the $8,000 first time homebuyers Tax Credit - Do you chance it???

 

 

Clarification before you read : Yes, you can use the tax credit as part of your downpayment. I have stated this before. If it comes from non-profit organizations or Federal, local, or state agencies. I mentioned this in my other blog, in the bullet points . But just from the few comments and some on facebook, you are missing the POINT. It’s fraud to apply for this tax credit through the IRS, prior to actually buying your home, if you receive the monies from the IRS DIRECTLY.  Please stop reading into HUD, downpayments, etc, etc and understand what is considered FRAUD by HUD and many lenders.

 

 

 

2^nd UPDATE – 9:01 pm 5/16/09 :  I am not here to throw people under the bus. But I am getting comments and e-mails telling me that this is allowed or that some clients have done this, one who even works for the IRS, and that they would never do anything illegal. Two things on that…

 

1^st – You assume this. Do you know how many people that have worked for the IRS, the trade commission, stock brokers, lenders, and loan officers that have a huge responsibility & should be ethical… yet these same people in these industries that have committed fraud.

 

2^nd – I never said that it’s FRAUD in the eyes of the IRS.  But Lawrence Bland, comment #6, makes this statement. FRAUD -  I said that HUD and many investors, lenders, and underwriters have stated that this is fraud. And if you think about it, this is what matters most, because without them, the deal doesn’t close anyhow.  I know my blog is long, but Ken Cook summarizes it well in his comment.  Ken Cook’s Comment

 

 

 

Do you take the plunge, possibly jeopardizing your career?  If a loan officer told you to jump off a bridge, would you?  You'll see my point below.

 

Who do you listen to?  Where do you get your information from? It's worse now than ever before. I once was able to tell a borrower or a realtor, if you didn't believe me, go call up 5 other loan officers. I would say this, because you would think that you would get at least 3 to 4 people giving you the same answer. PEOPLE.... this is not true anymore. I had two separate examples that took place that 3 out of 4 loan officers gave the same information that was 110% incorrect. Rut row... there goes my theory out the door.

What about all of this hype over the $8,000 first time homebuyers tax credit?  It's gotten way out of hand. I wrote this blog, Tax Credit for downpayment, it's GONE, the story of the $8,000 tax credit. You need to read many of the comments.  Here is a great example of what I am talking about.

 

 

 

Here are 2 examples from comments that I received by a realtor. Keeping in mind, I am not trying to throw them under the bus, but to help educate and bring awareness. How else do we learn and possibly not make mistakes that could be so costly.

 

Example 1 -

"From my understanding from 2 CPA's and mortgage lender that it CAN be done by applying for the credit prior to the closing with an accepted contract.  There are risks like not closing before November 30th.  But this can happen."

OUCH -  No, double ouch.  Okay, so she was able to talk to 2 CPA's and a loan officer that both confirmed this. Okay, so it might be legal from their standpoint. But what about HUD's standpoint and from many lenders and underwriters. Don't they actually have the final say in all of this?  YES, they do !!!

 

 

Example 2 -

"I just wrote up an offer and the loan officer told me that my buyer would be using some of the tax credit for the down payment. So I'm not rescinding my blog post just yet."

My question to this realtor...  What about your fiduciary responsibility to the buyer?  I received an e-mail from this person after asking the same question. Their response?  They know the letter was taken down, but they are looking for an official statement. Huh?  You think HUD or the NAR is going to say, "we screwed up."  ??? Why not call HUD yourself, be proactive.

 

 

In any case, let's study what the IRS says. Here is Form 5405 - The first time homebuyers tax credit form

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As you can see, letter be asks for the date aquired, but tells you to read the instructions. So let's go to that part of the instructions.

 

 

 

Wow... enter the date that you acquired the home.  Acquired?  Wouldn't that mean when you bought it and not when you are going to buy it? It states this right under the first sentence. So why are some CPA's, accountants, and loan officers stating that you can get the money before you buy, while still submitting this form. ???  Inquiring minds want to know.

 

Here is my opinion and some facts.  And you can ask such loan officers as Tom Burris, Ken Cook, and Gerry Suarez, because they have checked also with HUD and with several underwriters with different lenders. Who says what....

• HUD says that it's illegal and they recognize this. But wait, some lenders have allowed this and my buyer has already closed. Keep in mind that HUD still has to insure these loans, so maybe the "shit" will hit the fan in 6 months or so, since this is all still new.

• Underwriters - Gerry and myself have spoken to several underwriters at major lending institutions that have said they will not do this type of loan, if the buyer had received the monies from the IRS, if prior to closing on the home. Not unless it falls into another category. Those categories I have listed in the middle of this blog. Tax Credit - what is allowed prior to closing - Please go to my bullet points in this blog.  This is what is legal and how.

 

 

LINK for - TAX CREDIT FORM 5405 and instructions

 

 

We need to stop the bad press. As you can see, this has gotten out of hand and everyone seems to be an expert. Yet, nobody is speaking to the correct experts. Be proactive. If not sure, call HUD yourself. Call a trusted loan officer/expert and not one that claims to be. Again, keep in mind that you can use the $8,000 tax credit for the downpayment and get these monies before you apply for the tax credit with the IRS.... BUT... this in regards to specific circumstances that I have mentioned. And if you get the money the correct way from other sources. This blog is not about this. Please read the other blog.  What this blog is about is that if you don't get the money from other sounrces prior to closing, and that you just apply for the money itself, prior to closing, this is the FRAUD part. Please understand the difference. Many of the commenters below have confused themselves on these issues.

Since I was trying to clarify several things, Tom Burris made this comment, which details what I was trying to convey. Please read : Tom Burris's comment -

 

Lastly, I want to share this which comes directly from the IRS site in regards to the $8,000 tax credit : This was supplied by Matt Stigliano - The IRS questions & answers :

Q. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.

A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit.  IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.

 

 

Lesson of the Day :   When you hear real estate related news stories, maybe you should check the sources and double check the stories. I could give you 10 examples of this just from what I have read in the last 5 months. As we say, "Buyer Beware"....  how about we say, Realtor/loan officer Beware !!!

 

LEGAL WAY of obtaining your tax credit before settlement. Please read : $8,000 First time homebuyers tax credit informartion. Please go down about 1/2 way, next to the 1st picture with the calculator and the money showing. It talks about reducing your deductions.

 

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

A contest for Mommies..... Courtesy of Southwest Airlines.

Buying Points on your Mortgage aren't EVIL - Just your thoughts are.......

 

And the borrower screamed out from on top of Mount Olympus, "I want the cheapest mortgage, with no points and no costs." 

The gods then just chuckled and said, No problamo, you want the infamous "no cost" mortgage or the "no closing cost" mortgage. It sounds cheap, but it comes with a higher price depending on your short and long term goals. Do you want to sell your soul to the devil?  Oh, wait.... nobody asked you about those goals?  hhhhmmmm - You might want to seek out someone that will explain to you the terminology and educate you on the basics of mortgages. You don't want someone that will tell you what you want to hear.

Now my borrower.... head out unto that dreadful world of lies and misinformation, and hope that you not only choose someone ethical, but someone that wants you to know what you are doing. And if they have a red tail behind them, just move onto the next one. Just because they are nice doesn't always mean that you will get treated fairly. Giving someone the benefit of the doubt for a long extensive period of time is not always wise.

 

 

 

Balancing your rate and perception vs Reality

In today's world of news and misinformation, you will typically hear the things that sound good to you. Rates are very low. Lowest rates ever.  No cost mortgages. No points and or closing costs. But did you ever hear an ad that said lowest rates with no costs or points in one sentence? Ever read that fine print on the tv commercials? Oh, they don't give you enough time to read it?  It's too small?  I wonder why.... think about it.

I was talking to Ken Cook today, a very wise loan officer, that will just shoot straight from the hip as I do.  He stated that we are getting many borrowers that want the low rates that are being advertised, yet they don't understand what costs come with those lower rates.

 

Before I start, just a quick educational piece. We all basically get the same rates from the same place. And when I say we, I mean banks, mortgage bankers, and mortgage brokers. It doesn't matter what animal you are, what type of lender you are. It all comes down to that companies profit margin.  Some might be an 1/8 of a percent better in rate or $500 better in fees. In my opinion, if you are looking for the cheapest loan out there, that will usually turn out to be the most expensive one. Why is this?

• You might not get great service.

• Your loan officer might not respond to your phone calls or e-mails in a timely manner.

• You might get the bait and switch at closing. Yes, this does happen in some cases.

• Or you might just be dragged through the mud, just because the loan officer wanted to try and bring a loan into their office, to show some sort of production.

 

 

 

Conclusion :  Everyones situation is different. Not one person is the same when it comes to getting a mortgage. There is a cost for doing mortgages, remember this. Just because you don't see the cost, doesn't mean there isn't one. Some key points to think about when speaking to your loan officer.

• Make sure you go over your goals. If you are going to be in the house for more than 5 years, if might be worth it to buy the rate down with points. You want to know what your break even point is.

• Points aren't a bad thing. It doesn't always mean that you are spending more money. This could be a wise investment. As it stands, it certainly is better than investing in the stock market and the points are tax deductible.
  

• Good faith estimates.  These points and fees are spelled out on your good faith estimates. Make you sure you get one in a timely manner. Please read these two very important articles about good faith estimates.

Understanding how to read a good faith estimate

Getting a good faith estimate now, not later

 

 

UPDATE as of 3/31/09 @ 10:30 am - I am adding this because of some of the comments below.  Some mention thatit's not worth paying the points because it could be a waste of money, people could move sooner, and most of all, that people refinance. I just wanted to add to that....   especially more than ever, with rates being the lowest ever in most cases in the last 20 years or so.... that lenders quidelines are more harsh now than they have been in the last 10 to 15 years, and that house values in some cases aren't appraising, I don't think you can use those reasons now. I never did in the past, because again, each borrower is different. But again, more now than ever before, why ignore the lower rates even if it costs more and it could better you in the long run?  I am just curious on that one...  thanks 

PS.. Tom Burris makes an excellent point in his comment. Tom's Comment - Sometimes this doesn't make sense when the loan officer might be charging you more points for a larger profit. This can offset your breakeven point also.

PPS.....  Brian Brady gives some good mortgage history in regards to the past vs the present and how it's much cheaper to buy down the rate in today's market.  Brian Brady's comment

 

 

For more educational pieces and understanding mortgages?  Please read :

The myths behind zero points mortgages

The APR vs the Mortgage Interest Rate

 

 

First Time Homebuyers Series :

• First Time Homebuyer Tips : FHA - Conventional - VA - Subprime - The Basics -- Part 1 of 5
  

• First Time Homebuyer Tips : Getting Qualified & Knowing your Credit -- Part 2 of 5

• First Time Homebuyer Tips : Understanding the total mortgage process -- Part 3 of 5
  

• First Time Homebuyer Tips : FHA, a better mortgage program? -- Best Programs & Why -- Part 4 of 5
  

• First Time Homebuyer Tips : Summary - Red Flags to be aware of -- Part 5 of 5

 

 

 

 

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

Is your lender a responsible organization? - Personal info found in trash

Latest update on availability of funds for Rural Development loans

Pursuant to my sources at the USDA it will be taking about another two weeks for the funding allocated by the recent economic stimulus bill to trickle down to retail levels. For those who are seeking a Guaranteed Rural Development loan from a lender such as myself, this should not affect you since we are still funding loans in anticipation of the money we know is coming. If you are working with another lender who is not funding loans, it's probably worth it to wait with them as opposed to starting over with another lender. Do know, however, they have no reason to be holding back on funding your loan.

For those awaiting a Direct Rural Development loan it's a different story. Since you are working directly (hence the name) with the USDA with no lender involved, you will need to wait until they can actually write the check to close. Again that should be about two weeks from now, but you should be able to confirm that with your local USDA office.

For more local information please feel free to contact your local USDA offices. You can find them at this link.

Gerry Suarez, Jr.

Your FHA Loan Pro!

First Time Home Buyer Tax Credit - Quick Reference Guide

The High Cost of Waiting for Lower Mortgage Rates

Many of you reading this have been waiting for those government promised mortgage rates of 4.5%, or even lower.  Do you realize those rates may never come in actuality?  Can you comprehend how much money you are wasting by not refinancing or outright purchasing a property right now?

First, let's look at those of you waiting to refinance.  Since rates are currently around 5% and it usually doesn't make sense to refinance with less than a 1% drop in rate, let's put together a scenario.  You have a $200,000 loan at 6%, with monthly mortgage payments (not including taxes and insurance) of $1,199.  You are now faced with the dilemma of refinancing since rates dropped lower, down into the 4's, but you didn't take advantage of them and they have now risen to 5%.  You hear the media talk about lower mortgage rates, namely 4.5%, throughout the headlines and this causes you to wait longer in anticipation.  As we near the passage of a new stimulus package, along with headlines from the federal Reserve stating they will keep buying mortgage backed securities, you think to yourself that mortgage rates must be heading lower, so I will wait.

But how much money are you wasting while you wait.  Let's say that it takes 6 months to get rates that low (personally I don't think it will happen) and we will leave the tax benefits aside.  If you refinanced that $200,000 right now, your monthly payment would drop to $1,074, giving you an extra $125 in cash flow.  That $125 can go a long way to paying off high interest debt, or we can simply save it.  That means that 6 months down the road, you would have saved $750, right?  Actually it is more since when you have a lower interest rate, more money each month goes to the principal, so your savings actually are $1,000, even more if you invested the savings instead, which I highly recommend.  It would take you over 15 months to recover those losses if you refinanced into a 4.5% mortgage at 6 months.  And what if rates continue to go up?  How much more will that cost you in the long run?

What about those of you whom continue to rent, say at $1,000 a month?  If you were to buy a home with a $200,000 mortgage at 5% right now, your payment would go up, yes, to $1,074.  But what about the tax savings you gain, not to mention the equity building?  Let's take a look, of course I need an estimated tax bracket, so we will just use 25%.

If you were to buy the home now, your net after tax payments would go down to $865, yielding a savings of $135 each month.  You can adjust your W-4 form with your employer and start reaping that savings immediately as well, instead of lending it to Uncle Sam interest free.  So, in 6 months you would have paid down $1,457 in principal, plus had a net savings of $810, for a total savings of $2,267!!  Again, what if mortgage rates don't go down or even continue their climb?  Are you willing to risk those losses?

The reason I am writing this is not to get you to rush into taking on that new mortgage right now.  rather, this is to ignite in you the realization that every decision you make, even not making one, has a profound effect on your finances, especially when it comes to your mortgage.  Use your mortgage as a financial tool, and it can be the best investment you ever made.  Enter into a mortgage without incorporating into your overall financial and investment plans, it could easily lead to financial disaster, and you could become another statistic or part of the next hews headline.  I cannot stress the importance of seeking a genuine mortgage planner, and those are hard to come by as mortgage professionals across the country struggle to survive.