Your HUD Loan Pro! FHA Loans, VA Loans, USDA Rural Development and Down Payment Assistance Info for Florida

A new down payment assitance program is now available!

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 13 Nov 2009 14:09:28 -0600

Our friends at Ameridream have put together another possible solution to overcoming the down payment hurdle. The program is HUD/FHA compliant by providing a collateralized loan for down payment and the program is just hitting the streets. It's offered through the Association for Homeowners Across America (AHAA) and it's called their consumer loan option.

Don't turn any of your potential buyers away because they may lack down payment until you have looked into this program and discussed the various means available for down payment assistance. More details are available at AHAA's website:

https://www.ahaanow.org/Member-Benefits/Consumer-Loan

Gerry Suarez, Jr.

Your FHA Loan Pro!

First Time Homebuyer Tax Credit may not be just for First Time Buyers anymore!

Thomas Mortgage, Florida's FHA Loan Pro — Wed, 04 Nov 2009 19:25:05 -0600

UPDATE- Today, November 5th the House voted for the Act with no changes to the Senate Amendments. Once the President signs it, this is what we will have as law.

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This afternoon at 5:28pm the Senate overwhelmingly approved the Unemployment Compensation Act of 2009 (H.R. 3548 as amended)which includes provisions extending AND expanding the Homebuyer Tax Credit. Now do understand the bill must be reconciled with the House of Representatives and then signed into law by the President, so there are provisions that can change. What it says right now is basically

•· First Time Buyers have what they had before, expiring May 1, 2010. If a buyer is in a binding contract before May 1, then they shall have until June 30, 2010 to close the deal.

•· Buyers will still be able to treat the purchase as if it occurred on December 31^st of the prior year. This means buyers that close in December should still be able to amend their 2008 taxes and get their funds sooner!

•· An exception has been created to allow individuals or married couples that have "owned and used the same residence as such individual's principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence" be categorized as First Time Buyers under this act. The big question I've been asked is do they have to sell old home or can they keep and rent it and thus far the act is silent on that.

•· Long Term Residents as they are called, are limited to $6,500 or $3,250 depending on how they qualify.

•· Income guidelines have been increased to $150,000 for individuals and $225,000 for couples and the purchase price is limited to no more than $800,000.

•· Members of the uniformed services, Foreign Services of the US, or the intelligence community who are forced to no longer occupy their homes as primary residences due to Government orders are exempted from the recapture and don't have to pay the funds back.

•· Persons on extended duty outside the US for at least 90 days may have an extra year to qualify for the program.

•· You must be at least 18 years old to claim the credit and will have to attach a copy of your settlement statement as proof the deal has closed.

There is a lot more fine print to digest but again I can't overemphasize WE MAY STILL SEE SOME CHANGES, so don't quote this as law! Do feel free to share the info as an up to date picture of what is being considered and chances are pretty good we will see it pass essentially as is.

One thing that's for sure is with as long as some short sales are taking to approve, even with the extension there will be no time to waste. Hopefully consumers have realized this and we can avoid some of the last minute rush we are seeing now!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Rates - APR - Points - Fees - GFE's: How the Playing Field is Still "Crooked"

Thomas Mortgage, Florida's FHA Loan Pro — Sat, 03 Oct 2009 08:38:31 -0500

What an awesome post by a buddy of mine Steve Kappre that effectively sums up why you can't shop for a mortgage rate without ALL of the facts. That's why it's best to have a relationship with a mortgage professional you can trust! Thanks for the great blog Steve!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Via Steve Kappre, Gloucester County, NJ Loan Officer/Mortgage Planner - 856.419.3561 (Treasury Mortgage):

Rates - APR - Points - Fees: How the Playing Field is Still "Crooked"

I talked to a client today who was shopping me against some other lenders. I don't blame people, and frankly if I think someone else has a better offer and they are legit, I advise "my client" so and have no hard feelings.

In the scenario today, said client was offered 4.5% with no points. I told him it wasn't possible, but lest I be ignorant, I dropped by this other lender's website. Indeed, the lenders website quoted 4.5% with no points and an APR of 4.878%. The website gave the assumed loan amount and purchase price. So I went and did the math. What did I find out? To make the rate and APR accurate, I had to add 2.25% in points ON TOP OF all of the regular fees (title, appraisal, etc.).

In other words, even though the quote was 4.5% with zero points, the TRUE cost was 4.5%, plus typical closing costs, PLUS 2.25% in additional fees/costs.

Please send me your Goofy Good Fake Faith Estimate!

There are several issues with this scenario

APR is supposed to HELP consumers, not confuse them. Clearly this bank (a large bank at that) is charging hefty fees instead of points. This brings us to our next point ...

Points are tax deductible costs - most other fees are not. Charging high fees in lieu of points is an injustice to the consumer. We see rates quoted with NO POINTS to make them look better to consumers. However the total cost is ultimately higher than a lender that is straight forward, charging the same dollar amount but in the form of points. A loan with the same cost in points (versus fees) is a far better deal, saving a consumer hundreds or thousands in tax deductible costs.

APR is "pliable" - Certain fees are calculated into the APR calculation, others are not. Do not assume lenders don't play with the "names" of fees to artificially lower their APR's. That doesn't seem to be the case in the above example, nonetheless keep this in mind.

Lastly, said bank WOULD NOT give the buyer a good faith estimate without having him apply for a mortgage. OK, not so crazy, but the good faith estimate would not be given for 3 days. And if the bank charged an application fee? That would just be another deceptive way to lure a consumer in and tie them to the bank.

Any lender should be able to offer you a good faith estimate (GFE) in a fairly short amount of time, 24 hours or less, allowing some time for when a lender is very busy. Assuming the lender is honest and accurate with their fees, you should be able to see the true cost of their offered rate. You should be able to see, as in the above scenario, that their rate of 4.5% with no points really has a lender fee of $4,119 (Actual additional cost based on their APR). This same week I had another rate shopper send me a goof good faith estimate with 1% in points and $2,100 in application fees. THIS IS NOT NORMAL or fair to you as a consumer, especially on a purchase loan.

I am not angry for losing business, because I didn't lose business. I am however angry because of the lenders and loan officers that mislead and decieve consumers who are just looking out for themselves by rate shopping. What we often see, is that many consumers that search the world over for the lowest rate, actually end up paying much higher costs via deceptive lenders. Consumers can be blinded by a low rate, not allowing them to see the true cost.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Well is the First Time Buyer Tax Credit getting extended?

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 02 Oct 2009 10:24:02 -0500

Where are we going with this Tax Credit?

There is a lot of talk about whether THE Tax Credit will be extended or even expanded these days. I wrote a post that explained the state of affairs a few days ago but since then I've heard everything imaginable on the topic, so it's time for an update.

Again, let's start with the facts. We still have a bunch bills although a new one was introduced in the Senate (see text here) and is beginning its quest to become law. Essentially little else has happened on the forefront of the Tax Credit battle.

A blog just a few days ago by Joy Goushaw , Will the $8,000 First Time Home Buyer Tax Credit Be Extended? Links an article that argues the credit will be extended based on an interview with Senate Majority Leader Reid, a powerful, influential man; but a lone individual nonetheless. He says we "will be extending that" referring to the $8000 Tax Credit, but makes no specific promises. Of course he can't make any specific promises, in the end he is just one vote.

So those are the facts, as they stand at this time. Now let's talk opinion...

First off I want to make clear, I'm no D.C. insider or Lobbyist (although I used to play the latter on TV- if you want a synopsis of that just email or call me) but I am very much starting to agree with Senator Reid. I do believe (this is MY opinion folks, that's all) the Tax Credit will be extended and that there may be enough support to make it applicable to ALL primary purchases. So what the hell does that mean?

It means if you are a first time homebuyer (FTHB), instead of just competing against all the other FTHB that have the incentive to buy now you will be placing bids against everybody that's looking to buy the best deals available. What do you think happens when a limited supply is met with increased demand?

With that said, and the reasonable certainty that the tax credit would not be increased, for what reason wouldn't a first time buyer that can qualify now choose not to buy? Beats the heck out of me...

Gerry Suarez, Jr.

Your FHA Loan Pro!

USDA Rural Development loans are NOT out of money, and other important facts for Lake County, FL.

Thomas Mortgage, Florida's FHA Loan Pro — Tue, 29 Sep 2009 17:42:44 -0500

Last Friday the USDA formally announced it was entering its annual "roll over" of funding as of its new fiscal year October 1^st. This mainly administrative action results in USDA's funding being delayed until it's made available through the General Accounting Office (GAO). This by no means indicates the USDA is out of funds! What it does do is delay funding for loans and guarantees. While there are still a number of lenders that can and do close and fund loans during this period, the vast majority of lenders do not. This doesn't mean your loan won't close, it just means you may have to wait a bit. How long? Last year the funds were made available by October 17 and this year they expect funds allocated within three weeks.

This means you may have to wait that long to close your loan, or take your loan to a lender that does fund in anticipation of the new allocation. Do note, by the time you can get an appraisal recertified, docs transferred, loan re-underwritten, etc. it's rarely worth it so you're likely best off to sit tight with your lender and wait for a late October close.

The great news is that in spite of crushing volume the USDA actually has $2 billion in funds to carryover from last year! In Florida we went from 2084 loans to over 7000 last year. The increased volume has increased the time it takes to get approvals from the USDA so depending on your area you may need to add from 3 days to two weeks to the process. This will become very critical as we near the deadline for the Tax Credit and the desperate scramble to close by November 30, so plan in advance and plan accordingly.

Lastly for those lenders interested in learning more about the program, consider signing up for the WebEx training offered nationally. This link will take you to the registration page for more information.

Realtors and lenders, if you haven't familiarized yourselves with this incredibly successful 100% financing program you are missing the boat. Home buyers, if you haven't spoken to your lenders and Realtors about the program you may be missing out on the least expensive low down payment program available.

Although the program has income and geographic limitations, all of Lake County, FL is RD eligible and the income limits are very liberal. If you are looking to buy a new home in Lake County, FL you need to know about this loan!

Gerry Suarez, Jr.

Your FHA Loan Pro!

USDA Rural Development loans are NOT out of money, and other important facts…

Thomas Mortgage, Florida's FHA Loan Pro — Tue, 29 Sep 2009 17:37:43 -0500

Gerry Suarez, Jr.

Your FHA Loan Pro!

So what’s the skinny on extending the First Time Buyer Tax Credit?

Thomas Mortgage, Florida's FHA Loan Pro — Thu, 24 Sep 2009 18:57:20 -0500

You hear plenty of talk from NAR (National Association of Realtors) and the NAHB (National Association of Home Builders) regarding the push to extend the First Time Buyer Tax Credit, but what is really going on with it? There is little argument the program has been successful in spurring sales and I can say from experience it's doing great things for many a first time buyer. Will it be continued? Will it be expanded or increased? Will it be forgotten?

Those of you who follow my blogs know I prefer to stay in the realm of fact as opposed to opinion. Much is written about all this legislation that qualifies as "spin", but where do we really sit? A pretty thorough review of the Library of Congress website actually lists 15 different House Bills that have been submitted since the last Tax Credit was signed into law. Unfortunately NONE of those bills has had ANY formal action since mid June 2009 with the exception of a bill that would waive the recapture requirements for members of our uniformed service, Foreign Service or intelligence community required to relocate. It's also important to mention that of the bills that do extend the credit, the one with the most recent action and greatest support currently has eight cosponsors (that isn't much).

Looking at the Senate we find a grand total of two bills regarding the subject. To their credit though S. 1678 was just introduced September 16 and has been referred to the Finance Committee. That bill simply extends what we currently have until June 1, 2010 and has four cosponsors.

OK, now for the opinion part- In a legislative session that is hell bent on changing the way healthcare is paid for in this country are our legislators really going to tackle the tax credit issue now? Truth is an extension of the tax credit could end up imbedded in the healthcare bill but it doesn't seem likely. When you couple that with a Fed that is openly proclaiming the end of the recession and looking at ways to reduce the cost of all this stimulus, you have some strong arguments against any extension. However, it cannot be denied that NAR and NAHB are two very powerful lobbies, and they are pushing full bore to make an extension happen.

What will happen is anyone's guess right now, so if you want assurances you better be entering into a contract to purchase as soon as possible. From a loan perspective underwriting times are already being impacted and it's expected to get worse which means it should take longer to close a loan. Most importantly be sure to work with a lender who is trusted and can deliver. Many buyers will chase the absolute lowest rate posted on an internet website only to find out they don't deliver on time. That can cost you $8000, so don't play around! Most first time buyers need government backed loan programs like FHA, VA and USDA. Your lender will need to be on top of their game or you will pay the price!

By the way, I just had a customer get her tax credit check by mail in only 5 weeks! Her life is changed as a result of this and she is one of many!

Gerry Suarez, Jr.

Your FHA Loan Pro!

So you think you outsmarted the crowd because you skipped the $8,000 first time homebuyers tax credit

Thomas Mortgage, Florida's FHA Loan Pro — Wed, 09 Sep 2009 07:32:51 -0500

A great friend and colleague in NJ wrote this, and it so needs to be shared. With so much talk about the First Time Buyer Tax Credit, and if it may be extended or not, it's good to know what's at stake if you decide to wait.

As for myself, I agree with Jeff Belonger below that waiting is foolish. Our local market here in Central Florida has seen severe price reductions and some very good deals are out there. Though multiple offers are being submitted on the better deals, the fact that sellers are taking offers for $0 down financing and paying all closing costs says volumes about the type of offers they are getting. Buyers certainly continue to have the upper hand, and buyers working with knowledgeable and experienced Realtors are really winning in this market.

Lastly with continued tightening of lending standards, and the spector of higher rates it's just not prudent to roll the dice on buying a home now. If you are interested in buying a home in Central Florida, and can qualify now, you are best served to try to close before November 30th and get your tax credit dollars.

Just another opinion from somebody with enough experience to take seriously...

Gerry Suarez, Jr.

Your FHA Loan Pro

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

How smart do you think you are? Do you think you can outsmart people, just because you read some good advice, yet it failed to share with you the opposite side of things. That has been one of my biggest fears and pet peeves when it comes to blogging. And another? That many blogs are opinions, not facts, yet they sound like facts.

Janet Guilbault wrote this interesting post that makes a good point : Outsmart the crowd : Skip the $8,000 tax credit & wait to buy - She talks about skipping the first time homebuyers tax credit in hopes that you could get the house of your choice for $20,000 less. She adds that winter is around the corner and the market should be slower, which could get you that price reduction. Again, some good food for thought, yet forgetting some very key points to her opinion. And just for the fact, in my opinion, this is a risk. Are you willing to chance your $8,000 tax credit? Let's look at this further....

RISK – CHANCE – HOPE – LUCK – FALSE HOPE

Again, Janet states that you should skip the $8,000 tax credit, because you could get a better deal on a house in the winter months. And because there wouldn't be as many buyers in the market, because of the first time homebuyers tax credit of $8,000 would not be available. Overall, I feel really strongly against this kind of advice.

Here are my thoughts on why you should be careful of such advice :

Reduced property values - You got the house for $20,000 cheaper, and based on a $250,000 mortgage, that would save you $120 a month. So you didn't get the $8,000 tax credit. It would take you 5.5 years to save that tax credit with your monthly savings.

Interest Rates - Do you have a crystal ball? Do you know where mortgage rates will be in December? You get that new house for $230,000, yet the rate increased .375 of a percent. Your new savings will now only be $64 a month. That means that it would take you 10.4 years to save that $8,000.

Real Estate Market - Do you know how appraisals truly work? Do you understand that an appraisal is an opinion from a certified appraiser? Not one house is the same and in many cases, not all appraisals of that same house are the same. I could give you many examples of specific homes in recent months, having a few different appraisals that could vary from $3,000 to $20,000 in value.

$8,000 tax credit in your pocket - You now have the $8,000 in your pocket 2 months after settlement. What could you do with that monies?

- Use the money to fix up the house.

- Use the money to pay off some credit cards, which could save you more money in the long run.

- Possibly pay back some debt to those that helped you get into your new home.

- Save for any housing emergencies that could happen at any moment.

- Ryan Shaughnessy, in comment # 11, states that you could use the tax credit to pay for 12 months of your mortgage payments. Imagine that, no mortgage payments for a year.

Waiting for a possible increase to the tax credit, possibly a $15,000 tax credit - So you take Janet's advice and say to yourself, maybe they will extend the tax credit or raise it to $15,000. Ouch, in my opinion, that is a huge risk. If you are actually in the market now, why play the market? If you come across your home now, but it now, don't roll the dice.

Real Estate Market - Each real estate market is different. In my opinion, even the experts can't truly predict what the housing market will do. Some have said that we have hit bottom. Some say it could be a year. But then again, in some markets, prices have increased already. In Janet's post and in a few of the comments, some people have stated that there will be a correction to this. Again, it's an opinion, not a fact.

$20,000 reduced value - You don't physically see this money. You don't get 20k in hand. And what happens if the house was over-priced to begin with? What happens if values don't increase in 5 years? The only equity is that equity that you build yourself. In 5 years, you knocked your principal balance down by $16,000.

Conclusion : Janet ended her post with this ... "If you save $20,000 on your house, do you care if you sacrifice an $8000 tax credit? Probably not. (But don't expect anyone in the real estate industry to talk about this until AFTER the rebate ends)."

Well, I will still be talking about it, no matter if the tax credit continues or ends. I am all about educating the consumer, sharing both perspectives on real estate and mortgage issues. And yes, I would care if I sacrificed the tax credit, especially based on what I stated above. Especially if interest rates went up a half of a percent by December. In my opinion, I can go to Vegas and or Atlantic City to gamble. But why gamble on free money, money that you don't have to pay back. We are in a very tight economy now. I don't think many of you have money to gamble with as you did several years ago. (I don't want to get into the statement of free money, because yes, as tax payers, we are paying for that)

Lastly, excellent time for first time homebuyers. Home values are lowest in the last 5 years, with interests being close to the lowest in several decades, and $8,000 given to you if you qualify.

IMPORTANT REMINDER – The $8,000 first time homebuyers tax credit ends on November 30^th, 2009

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Experience & Knowledge at its BEST !!!

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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 of Infinity Home Mortgage Company, Inc

What the Mortgage Disclosure Improvement Act (MDIA) will mean to our industry

Thomas Mortgage, Florida's FHA Loan Pro — Mon, 03 Aug 2009 11:50:34 -0500

On July 30, 2009 the rules changed- are you ready?

The MDIA is effective for mortgage loan applications taken 07/30/09 and thereafter and places many additional restrictions on how we lenders will have to comply with disclosing loan terms to our borrowers. The effort is laudable- to give customers the information they need to properly shop for a mortgage, when they need it; however it represents an awesome example of how badly government can screw something up.

My vantage point for this fuster cluck is that of a Mortgage Banker. I get to see the Bank and Broker side of this and have seen the many conflicting memos indicating how various lenders are making sure to comply. If you think this act will not impact you, think again.

The document that's causing all this grief is the Truth in Lending disclosure or TIL. Heretofore the TIL has always been one of those many disclosures no consumer ever really pays attention to. It attempts to convert the interest rate and fees associated with getting a mortgage into one, easy to read Annual Percentage Rate or APR. Again, great intention- shitty delivery. The most memorable part of this form is that is DOES NOT have your actual interest rate (what did you expect from the government- and now they want to manage our health care?). Truth is (pun intended) the form does disclose very pertinent information about pre-payment penalties, insurance requirements and late charges, as well as interest costs over the life of the loan but in my many years of working with it I've actually had customers call it the "Not in Truth in Lending" form.

So now we are being challenged to provide an accurate TIL within very strict timelines or we simply cannot proceed with the loan. As mentioned earlier, what's worse is some lenders are interpreting the rules differently. For the most part what I'm seeing is:

All are not allowing the collection of any upfront fees (except for credit reports) until three business days have elapsed from your having sent the TIL to your customer, but many have conflicting definitions of when the disclosure is actually provided. Look for this to slow down appraisals even more.
All are not allowing any loan to actually close within 7 days the original disclosure, but many are defining that disclosure differently too.
Some are requiring additional precise wording be added to the TIL (though all of them should be).
Some are requiring the borrower sign additional disclosures saying all this is actually happening when it should (and you wonder why we kill so many trees in this business).

I think you get the drift by now. Different rules in different places so be prepared to hear conflicting information depending on who you ask.

The real big deal with this act is that it will not allow us to close a loan until our borrower has had a correct (to within .125% in interest) TIL for three days. This means any change that would trigger a new TIL will delay your closing at least 3 days. If the new TIL must be mailed it is considered to be received by the borrower 3 days later so that would delay your closing 6 days. Some lenders say it's only if the APR goes up by .125% but if your read the Act it applies for any change, up or down. See where I'm going with this?

OK- so you want to know some specific instances that could make the TIL wrong at the last minute. Considering that $125 is enough to throw a $100,000 loan out of compliance it doesn't take much. Regulation Z tells us what is considered a finance charge and some of the easiest to trip over are:

fees charged by the title company or closing agent when required by the lender
rate lock extension fees
prepaid interest that changes daily (although typically it should take about 8 days before you get into trouble)
up front private mortgage insurance premiums (how many lenders do you know that can accurately calculate the guarantee fee on a USDA Rural Development loan? Hint- there's not many.)

By now I hope you've realized how vital it will be to use a knowledgeable lender if you want to avoid unnecessary delays. I know this info is boring; it's the nature of our business folks. Paying attention to this boring stuff is what you need your lender for. The devil is hiding in the details more than ever before so make sure your lender is on the ball or you may find yourself behind the eight ball.

Gerry Suarez, Jr.

Your FHA Loan Pro!

Pace of Home sales spikes up for June in Lake County, FL

Thomas Mortgage, Florida's FHA Loan Pro — Thu, 16 Jul 2009 08:35:15 -0500

The typically busy spring home buying season has sprung in Lake County which surpassed the 300 unit per month threshold topping out at 317 for the month of June, '09 as reported by the National Association of Realtors. Prior to this April had seen the best sales so far this year with 288 and the June sales blow away January's total of 187 sales. Sales are clearly trending upward with price and rate affordability playing a big role, coupled with the first time buyer tax credit incentive.

While sales of single family homes under $50k took a sharp jump it was sales ranging from $140k to $200k that saw the biggest increase. This reverses earlier trends showing the most activity from $120-$140k and suggests inventory at the lower levels is becoming scarcer.

Speaking of inventory, that's the real shocker! With only 4084 units listed for sale we now have the lowest inventory levels since January, '07 and with the increase rate of sales that reflects a 15.53 month supply, the lowest level since December, '06! Put in perspective as of January, '09- a scant five months ago- we had over 700 MORE homes listed for sale that represented an over 31 month supply!

The trend is now clear folks and if you are looking to buy, all indications are you missed the bottom. It's still a buyer's market and good deals can be found, although the best deals are seeing multiple offers and selling quickly.

So buyers need to be ready to move fast on a good deal and have financing arranged in advance of any offers to negotiate the best price. Speedy closings can also help tip the odds in your favor so having a strong team has never been more important. Government loan programs have become ever more popular as regulations continue to hamstring conventional financing. Appraisal and private mortgage insurance restrictions make FHA/VA/USDA loans the go to sources of financing, especially for first time buyers.

Lastly it is worth mentioning the pace of sales is likely to increase as the deadline for the tax credit nears. Although some buyers may be holding out for an extension or even an increase in the tax credit, it seems unlikely given the excessive levels of government spending that any increases or extensions will make it thru Congress. Once that is made clear look for all the "fence sitters" to jump into the market and further strain demand on what is fast becoming limited inventory. If you don't believe me just look at the numbers- as of June there are only 267 homes listed in the ever popular $100k-120k price range which represents an 8.1 month supply. Someone looking for a home in that price range is already seeing a lot of competition!

Gerry Suarez, Jr.

Your FHA Loan Pro!

203k Made SIMPLE? Yes, for your clients..........

Thomas Mortgage, Florida's FHA Loan Pro — Tue, 14 Jul 2009 11:00:13 -0500

This post by my associate Colleen Craig from way out in the west coast was too good not to share. Although the 203k is much more like a construction to perm loan and does carry more costs as such, it's a super program for bank REO's.

And don't forget the streamline 203k is much easier and allows for a considerable amount in repairs too! For questions regarding any of these loan programs call Colleen if you're in California, or call me if you are in Florida

Gerry Suarez, Jr.

Your FHA Loan Pro!

Via Colleen Craig (Southern California Mortgage Professional):

203k MADE SIMPLE?

Ok, maybe not, but I will attempt to make it as simple as possible for the client to understand and want to read on.  For many of us in the business who are " in the know" we forget that we need to go back to the basics and spell it out in simple terms for others to understand. So I've compiled some information based on my most recent commonly asked questions just this week.

In Southern California, FHA loans were just not utilized over the past 10 or so years because of the FHA Maximum Mortgage limits But now that the limits have been increased and the prices have decreased, FHA loans have become the most utilized loan in recent months. HOWEVER, because it was not a popluar loan, you would be amazed at how many lenders/brokers do not know what they are doing. Especially when it comes to the 203k loan. I spoke to a client today that was given such mis information it made me cringe.



Apparently they told the client that 203k loans were no longer being done (Gee, you think it was after realizing that they had no idea what they were doing?) and they tried to flip them into another loan. This was after telling my client that their loan amount would be for the contract price and the extra money would just be separate and sit in an impound account to be disbursed over the next 6 months. Ok partially true, the extra amount would be in escrow to be disbursed as the remodel progressed, but for free? Who pays for the extra 50,000 dollars you just borrowed for repairs? Your loan amount is for the entire amount you are borrowing. Makes sense right?

So what is a 203k loan and why use one?

When a buyer wants to buy a home that needs repairs utilizing FHA financing, normally the repairs would have to be completed prior to the close of escrow.   The repairs would normally fall on the responsiblity of the seller. With so many foreclosures in today's market, the bank is the seller. And many times the home in need of repair is listed "as is". Which in the past would require a cash buyer or conventional financing. This is another reason that people in the business decided to shy away from FHA loans. I believe it was pure ignorance of the programs that were available by the brokers and the realtors couldn't properly prepare their seller for what to expect that gave FHA loans a bitter taste.

My associate Jeff Belonger said it best in his post about ignoring what your listing agent tells you about FHA loans

Here we go....203k loans of dummies



* 203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean? I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000? Too good to be true? NOPE. That's it in a nutshell....

ok details please.........

* Down payment is basesd on the sale price PLUS the final cost of the repairs x 3.5% so for example:

Sale price is 200,000 (DO not calculate 3.5% on this) PLUS 50,000 in repairs/costs (which includes certain costs and reservesthe lender will require) 250,000 x 3.5%. Down payment is $8750.00 (closing costs are separate as usual)

* Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant  to go to the property with the buyer to determine the required repairs and wish list repairs.

The fee charged by the consultant can be included in the mortgage. The fee can range anywhere between $ 400 to $1200 depending on the repairs required. Please check with the consultant prior to scheduling your appointment.

*Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs.

Three estimates are recommended for each contractor but not necessary. The buyer can act as their own general contractor only if experienced and licensed. (FHA says experienced, but most investors require the buyer to be licensed) The contractors must provide documentation to be approved by the lender prior to approval.

The consultant will determine the "required" repairs versus the "wish list repairs". You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don't over improve the home and exceed the comparable properties in the area.

* Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an "After Improved Value". This is where you may run into problems with OVER improving the property based on current values. Between the consultant, appraiser and buyer - the FINAL FINAL report will be tweeked to come up with a final report that the contractors will be hired to do.

* So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur.

(BIG PLUS - you can include 6 months of mortgage payments in the new loan amount since it's assumed that you will have TWO housing payments during the rehabiliation of the new home. This money will be deducted each month during the reahab process) This is optional.

* Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money - however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due)

* Disbursments are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but this can be increased for higher repair amounts) as the work is completed.

Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed)

Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT........you are done! Simple ast 1 2 3 - okay maybe not, but that's why having an experienced lender on your side is crucial!

There are specific properties and repair requirements for this type of loan, so please call me for specific details if this sounds like the right loan for your new home.

Please send me your before and after pics! I would love to see them and maybe even post them for people to see what can be done with this awesome program! Or contact Colleen Craig FHA 203k Specialist for more details

Happy Rehabbing!

Using the $8000 tax credit as down payment in Lake County Florida-update

Thomas Mortgage, Florida's FHA Loan Pro — Tue, 07 Jul 2009 15:35:18 -0500

To sum it up, the program will not be available in Lake County until early August at best. Applications cannot be accepted until that time. If you have buyers anticipating the need for these funds, now is the time to have them begin working with your lender to ensure they are ready to submit their application as soon as allowed.

There is only $402,343 allocated to Lake County. Assuming we get only 1 use per family at $8000 per family that means we will be able to help only 50 families. If you have a buyer that needs this program they are well advised to act quickly.

Do note a maximum purchase price of $247,387 does apply. Much more information is available at this link. If you have any specific questions, you know where to call.

Gerry Suarez, Jr.

Your FHA Loan Pro!

USDA appraisal requirements changing July 01, 2009

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 26 Jun 2009 15:37:22 -0500

The last holdout- USDA- will be requiring the 1004MC addendum to the appraisal on all Rural Development loans effective July 1, 2009. Up to now they were the only loan program to not require it so the news certainly doesn't come as a surprise.

The memo from USDA states files in process prior to that date can be submitted without the 1004MC until July 31, 2009. After that all files must include the addendum. Personally I have not seen any negative impact from the inclusion of the addendum on FHA and VA loans, so I expect no negative repercussions from the USDA as well.

In a seperate memo the USDA advises changes coming for the GUS automated underwriting system that will require full package submissions on some GUS approved loans. What I have heard is that credit explanations for certain situations such as bankruptcies will be required even if the 620 "streamline" credit score threshold is surpassed. Again, it's not really tightening as much as conforming with other loan programs in an effort to keep the loan quality were it needs to be.

Defaults on Rural Development loans, although rising, are still below FHA levels and considering the loan requires no down payment that is great news!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Call to Action - We must fix the real estate market ourselves !!!

Thomas Mortgage, Florida's FHA Loan Pro — Thu, 18 Jun 2009 07:51:09 -0500

Great post from a great guy. If you are not part of the solution, you're part of the problem!

Let's get the dialog started to truly help our industry. Let's team up to keep politicians from trying to look good and instead make them DO good.

You've got my support Jeff!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Via Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans (Infinity Home Mortgage Company, Inc):

If the public and government ever needs to hear our voice, it's NOW !!! I never like to sound negative in my blogs, but we need to face reality. Yes, there are some reports saying that the economy is turning around. There are some reports that say that people are spending money. And even some realtors are saying that they are busier than ever before, in the last 4 months or year. But let's break down some of the reasons why it might seem positive, when overall, I believe that it's really bad out there. And keep in mind, this is just my opinion.

Real Estate is very local. Some markets are flourishing now, some are average, and some are just outright sluggish. Part of the problem is that many first time homebuyers can't buy, which doesn't allow for those that own a home to move up or out. I call this the ripple effect. I'll talk about this later.

The news reports that people are spending more money. Okay, but what about unemployment that might hit 10% very soon. What about the fact that many Americans just got their tax refunds back and might just be willing to spend it, rather than save. The summer and nicer weather makes many of us spend also.

Many companies reducing their prices, such as airlines and companies that book trips. People are using this to their advantage. Yet, specific foods are costing much more, which isn't mentioned often.

Let's not forget about the news. People report what they want us to hear in many cases. No matter if it's right or wrong. In other cases, realtors or loan officers are interviewed, giving misleading information. Or there are some that claim to be experts in their field, yet they have no clue in what they are talking about. I wrote about it here, "Hey media outlets, I am pissed."

Overall, we need to be heard, in regards to real estate solutions. Talk to those in the trenches and possibly help correct this mess.

Target Money - We need to create better outlets - Call to Action

- Foreclosures- We keep seeing more and more foreclosures and inventory that is not selling. We need to figure out a few programs to help get these foreclosures off the market. I talk about possibly using the seller-funded DPA's as a way to increase the purchases of foreclosures. Please read : Seller-Funded programs can work and have worked in the past.

    What about using the $8,000 Tax Credit as a way to help curb the foreclosures. How allowing to get the whole tax credit and be able to use it as your down payment, if you by a foreclosure. How about increasing the first time homebuyers tax credit to $10,000 if you buy a foreclosure.

- Investor properties- How about making better programs and giving incentives if you buy an investment property. Now, I am not talking about just anyone. You would need to have a proven track record when it comes to investment properties. There have been many realtors that have stated that rentals have picked up in certain areas. Beth Forbes wrote about how she solved the housing crisis. Explaining how we can turn around some of the real estate crisis by getting investors more involved.

           - Seller funded down payment assistance programs and or 100% financing - Many of you will disagree with these statements, that we need to bring back seller-funded down payment assistance and or 100% financing. Sure, I will agree partially that buyers should have some skin in the game. But what about VA loans and USDA loans. They allow for 100% financing and they have a decent track record. I am currently working on some stats to prove this. As mentioned above, how about allowing some of the first time homebuyers tax creditbe used for the initial down payment. As of now, this is how the tax credit can be used. : Tax Credit can be used for partial down payment & closing costs.

       HUD did try to get 100% financing approved, but congress shot it down. And HUD wanted seller-funded DPA's discontinued at the same time. I will agree, that with these types of loans comes higher risk. But many of the figures from the past were of those that had credit scores under 600. If we raise the standards and requirements on these kinds of programs, it will lower risk in my opinion. There is a main reason to these foreclosures, and it wasn't seller funded DPA's. Sure, some did foreclosure, but so did every other type of loan program. Besides, most FHA programs require 620 credit scores now anyhow. SO we can use this as a standard/guideline. And I would rather my client keep $3,000 to $5,000 in their pocket after closing, then dump it into the house. In my opinion, Lenn Harley did a great job in bringing up this point. And please read the 2nd comment. Please read : Skin in the game? WHo? Homebuyers or Wall Street?

Conclusion : Here is some information that doesn't get mentioned often. The tax credit being raised to $15,000, in my opinion, will not open up the real estate flood gates. Keep in mind, you need at least 3.5% of your own money for the down payment. Also, these tax credits will cost the tax payer money in the near future. Who do you think is paying for this kind of money being printed by the government.

Foreclosures, because of 100% financing? So many scream that you need skin in the game, money into the real estate transaction. This can be a matter of opinion, backed up by misleading information. Keep in mind, the subprime market and 100% subprime loans didn't help in many cases. Coupled with borrower who had low credit scores and who were assisted with such programs as the seller-funded down payment assistance. Let's look at the reality of this. People losing jobs is a huge reason to why people lose their homes and go into foreclosure. We can sit here and point fingers at so many issues, such as the DPA programs and or not putting skin into the transaction. People without income, just can't pay their bills.

Lastly, those that state that the current tax credit, and possibly raising the tax credit to $15,000, will boost the economy. That it will stimulate it immensely. Yes, it will help, but I don't think it will solve our real estate industry or help it as some think. As mentioned, we need to make the monies available upfront to be used as your initial downpayment.

My pleadge to you : I want to make this work, hoping to get some changes made in congress now. Not waiting for the economy to get worse. If you have other ideas or want to add to some of my ideas above, please list them in your comment. My goal is to get some loan officers, realtors, and politicians to meet at a round table in the next month, to possibly hear these thoughts and opinions. I am working on this and hope to get some big time media coverage for this event also. Anyone that has any contacts with both politicians or the media, please let me know. And anyone that might want to participate in this round table discussion, please let me know. My goal is to possibly hold something in D.C. in the next 3 weeks. thanks

Further thought & explanation - Matt Stigliano expanded on my post and we actually think a like. He did an excellent job at breaking down some of my thoughts and elaborating on them, expanding on them. Please read : Thoughts from a Round Table



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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

USDA Rural Development funds for refi’s and pools is in!

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 24 Apr 2009 18:37:46 -0500

Today the USDA announced it regular allocation of funding had been credited is now available for use. These are the funds that can be used to guarantee refinance loans (you can only refinance a current Rural Development loan) and homes with pools.

Remember pools still require a special exception t be approved. If the appraised value of the home doesn't exceed the purchase price by the value given to the pool, your buyer would have to pay the difference. Talk to a knowledgeable RD lender for more details.

Also, if you are considering purchasing a home and using the RD program do know demand has skyrocketed. If funding is again exhausted later this year you may be forced by some lenders to wait until new funds are allocated. With the first time buyer's tax credit expiring after Nov. 30, 2009 that's a risk not worth taking!

Gerry Suarez, Jr.

Your FHA Loan Pro!

USDA income limits change April 20, 2009 in Mount Dora!

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 10 Apr 2009 07:23:55 -0500

It's been confirmed! The income limits in Lake County (and the entire Orlando area) for USDA Guaranteed Rural Development loans will go up to $70,750 for households from 1-4 persons and $92,400 for households from 5-8 persons. No false start anymore folks. We can start taking and processing applications immediately but cannot submit them to the USDA until 04/20.

Folks don't take this lightly. I did my preliminary research on this change when it was first announced and discovered EVERY FHA deal I had done would have qualified for RD. Why is this a big deal? RD has no monthly private mortgage insurance and can save our customers an average of $50-$80 per month.

Please communicate this to any buyers you had going FHA. In some cases it can mean the difference between qualifying or not, and of course feel free to call with any questions!

Gerry Suarez, Jr.

Your FHA Loan Pro!

USDA income limits change April 20, 2009 in Eustis!

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 10 Apr 2009 07:22:22 -0500

Please communicate this to any buyers you had going FHA. In some cases it can mean the difference between qualifying or not, and of course feel free to call with any questions!

Gerry Suarez, Jr.

Your FHA Loan Pro!

USDA income limits change April 20, 2009 for Lake County

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 10 Apr 2009 07:19:42 -0500

Please communicate this to any buyers you had going FHA. In some cases it can mean the difference between qualifying or not, and of course feel free to call with any questions!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Rural Development loans not jumping on the appraisal change bandwagon

Thomas Mortgage, Florida's FHA Loan Pro — Tue, 07 Apr 2009 15:10:05 -0500

I just confirmed that the USDA will not be requiring the new 1004MC form for their appraisals. This in spite of the fact that Fannie and Freddie, FHA/HUD and the VA are requiring them. That effectively makes RD loans the only ones NOT requiring this additional info.

Coupled with the fact you can still order your own appraisals through local expert appraisers, not some national company, this makes the RD loan program mighty attractive! As if you didn't have enough reasons before to like the program- count these benefits on top of such attractive features like:

100% financing, that can include closing costs if the appraisal supports it
Fixed rates similar to FHA/VA
Make sense underwriting guidelines and liberal credit score standards
no monthly private mortgage insurance and one of the least expensive up front

So if you are not using rural development loans by now, you have missed the boat!

Gerry Suarez, Jr.

Your FHA Loan Pro!

USDA Rural Development loans no longer accepting ANY pools?-updated 04/08/09

Thomas Mortgage, Florida's FHA Loan Pro — Mon, 06 Apr 2009 18:35:33 -0500

Those who know me know I don't usually repeat hearsay. I like to confirm things beyond a shadow of a doubt before writing about it but this is just too important not to share.

I heard from a reliable source today that because of some wording in the new funding allocation for USDA RD loans that they were no longer accepting pools under any circumstances. Those of us familiar with RD loans know there has always been an exception process to approving pools. It seems that may now be gone.

My trusted source in Florida is out until tomorrow so I will verify this and report back. Anyone considering an RD deal with a pool though is encouraged to call their local USDA office (the link to find them is in the RD Group description) and make sure you will not have a problem.

Gerry Suarez, Jr.

Your FHA Loan Pro!

UPDATE! I have been explained the pool waivers are continuing as before. The exception is that the funds to guarantee loans with pools will not be able to come from the Stimulus/Recovery Act funds because of the wording used to grant those funds. Funds to guarantee homes with pools will come from the USDA's regular allocation which I'm told will be received in a matter of days. The USDA is continuing to issue commitments, much like when we were waiting on funding earlier this year, for homes with pools. What this means in a worse case is that you may have to wait a little with some lenders before you can close if you are buying a home with a pool.

Hope this clears the waters some!

USDA Rural Development program receives new funding

Thomas Mortgage, Florida's FHA Loan Pro — Mon, 23 Mar 2009 17:20:59 -0500

The USDA announced Friday that the funding allocated by the recent economic stimulus bill had been received. Many lenders continued to close and fund RD loans awaiting this allocation but others stopped closing them. With this notice look for many lenders to get back into the RD game. Indeed Suntrust just announced today that they are once again accepting RD loans.

On a separate note, we have been notified the anticipated income guideline changes will not become effective until late April or early May, and although there is no guarantee they will pass "the Agency is very optimistic the change will take place".

Gerry Suarez, Jr.

Your FHA Loan Pro!

Mortgage Pro Week in Review 3/16/09 thru 3/22/09

Thomas Mortgage, Florida's FHA Loan Pro — Mon, 23 Mar 2009 01:58:32 -0500

Jeff must be running out of people to write if he asked me to, but I must say I was honored to accept the challenge.

There were as many good posts this week as there were topics to cover. With the AIG bonus scandal playing second fiddle to the Fed's bond purchase announcement there was plenty to talk about. Though many wrote posts worthy of feature here, I tried to pick some of the less noticed ones. Enough jabber, let's get to the meat of things...

Paul McFadden wrote this post that helps remind us it's tough times like these that teach us the best lessons- Five things we can be thankful for amidst the economic turmoil

Gail Szeluga spells out a dilemma facing us all these days as we struggle to be available for each and every call- Why don't I take a day off...the answer is one word...GUILT!

Matt Heaton provides some spot on perspective of what may yet come with this eye opener- The next big asset bubble

This oft repeated message was well said by Glenn Phillips, and it's something we all need reinforced- "Pop-Tart" or a "Toaster Pastry," Are you THE Standard in your Market?

Gwenn Tanvas so eloquently states a topic that was on many minds this week. How crazy is the credit score craze getting? Read here and see- Get Into The NO-FEE Zone - Your 717 Credit Score Is Simply NOT Good Enough Anymore!

This post of Janet Guilbault touches on what I feel may soon be a huge topic. Volumes are growing and if you want in, you best realize lending may be a 45-60 day game soon- Insider Advice to California Homeowners: How to WIN the Refinance Game in 2009

And in an ever more "wired" world, Realtor Amy Seaholt shows us a great way to look at things from a consumer's perspective- Is Facebook a Substitute for a Good Realtor?

Some of the featured and/or well commented stuff was too important to leave out though...

The Mortgage Man himself, Jeff Belonger, reflects on a rare public moment by our Fed Chairman Ben B and says it like it is. Although it may sound negative, it's an on target perspective of the economy we are living- I would like to interview Mr. Bernanke because I am scared!!!

The venerable Lenn Harleyhits home with this comparison of why the government bailouts aren't getting us anywhere. Where are our priorities? Lenn makes it pretty clear here- Re-blogged by 6 agents- IF YOU CAUSED THE MORTGAGE MESS, YOU GET BAILED OUT. IF YOU ARE A HOMEOWNER. . . . . .

Fellow Floridian and Realtor Midori Miller reminds us to keep an eye on the ball when talking and writing about our industry in these turbulent times- There Are Occasions Where Your Opinion Doesn't Count- Less Is More!

Last and certainly not least is this jewel from one of the best AR writers. The first paragraph into this one I knew it was a pick for this week's review. Jason Sardi delivers more sage advice for consumers shopping for a mortgage- Consumer Quickies: Five Things You Need To Know About The Mortgage Market Right Now!

The next members for the Mortgage Pro Week in Review :

1. Darin Osenberg 03/23/2009 through 03/29/2009 (loan officer)

2. Volunteer 03/30/2009 through 04/05/2009 ( )

3. Beth Forbes 04/06/2009 through 04/12/2009 (loan officer)

Mortgage blogs by loan officers Here is a list of Loan Officers. If you are not listed, please email Jeff Belonger to be added. This way the person doing the Mortgage Pro week in review can try and find most mortgage related posts in one section. ActiveRain is growing rapidly and it is difficult to keep up.... If you think you have been ignored, you have not. This is open to all!!! Update : 1/23/09 - The AR groups only show about 35 people, but hold an unlimited number. So just ask...

All About Mortgages/Mortgage Networking Here is a group that many loan officers post their mortgage related blogs in. A good place to learn more about the type of programs, new industry news, and sometimes some inside tips. Don't hesitate to join.

The FHA Mortgage Group - Here is a group that specifically talks about FHA, FHA updates, and what FHA can do for your buyers and sellers.

Mortgages - Another group with anything and everything about mortgages. A diversified group.

We really could use some new volunteers for the Mortgage Pro Week in Review. Even if you are a realtor, a title person, or someone else that is related to the mortgage/real estate industry..... please read below.

MORTGAGE PRO Week in Review A repository for the Mortgage Week in Review. Please don't hesitate in joining this group. And any volunteers for the mortgage week in review, please e-mail Jeff Belonger at jbelonger@ihmci.com

February ’09 sales stats for Lake County, FL. Have we seen the bottom?

Thomas Mortgage, Florida's FHA Loan Pro — Thu, 12 Mar 2009 23:20:55 -0500

After a rough January the real estate market in Lake County found some footing in February. A number of very positive stats stick out:

•· The average sales price jumped over $10k from the previous month. Thirteen single family homes over $300k sold compared to just 6 in January.

•· Although a total of 55.2% of the homes sold were under $140k, the bulk of them were priced between $100-$140k.

•· With the exception of last December, we now have less inventory than any time since April of 2007.

Yes we still have over 5000 homes which represents an over 2 year supply at the current rate of sales, and we also have the specter of more foreclosures looming in the future; but we also have a new first time buyers tax credit and continued low interest rates. Most in the industry will agree that foreclosures and short sales have become the bulk of what's selling but multiple offers are becoming a regular occurrence on properly priced properties (say that as fast as you can 3 times!).

The uncertainty that gripped the real estate market in February has been greatly alleviated with the passing of the economic recovery act. With the new $8000 true tax credit (no folks, you don't have to pay it back any more!) and adequate appropriations for the USDA Rural Development loan program we have all seen a marked increase in inquiries for March so far. Buyers are enjoying this buyer's market, but fast realizing any seller with a good deal can't be toyed with- many of the best deals are selling within the first week.

Employment, or the lack of, will play a huge role in determining if this is the beginning of the bottom or not. If the ranks of the unemployed cease to swell, I'd say we may be looking back and realizing this was the beginning of the bottom. Do I predict prices will start to climb from here? Heck no- but are we starting to see more balance in supply and demand? I think we are.

First time buyers especially should ask themselves- how much more do you feel prices may drop? Remember the tax credit represents 7.5% of a $120k purchase so if you answered less than 10%, you are taking a chance that mortgage rates won't increase by not buying now. Also many mortgage programs are still tightening their guidelines. Don't assume if you can qualify for a loan today that you will be able to tomorrow! Mortgage financing in Lake County, FL is still available with zero down by using the USDA and VA loans, and with 3.5% down with FHA. A reasonable tax refund can easily put you into a home today and by filing an amended return you could collect your tax credit money shortly after you buy (speak to your tax advisor for confirmation and details).

Gerry Suarez, Jr.

Your FHA Loan Pro!

FHA downpayment 101-rules to live by

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 06 Mar 2009 07:21:30 -0600

First Time and FHA buyers have always had down payment as their biggest hurdle to homeownership. As recently as last year we had seller funded down payment assistance that often bridged that gap but it seems pretty clear that option may not come back. So what can we do to get to the magic 3.5% needed by FHA when our buyers haven't saved it? The HUD Housing Handbook 4155 is our bible to reference this information. Let's start with the basics.

Of course the funds can come from the borrower as long as they have been seasoned. That means we need to know where they came from and that they did not come from unacceptable sources. Credit card cash advances and unsecured loans are the usual suspects, but any untraceable cash deposits will fall under this heading. It should be said here that once you can provide two months worth of bank statements showing the funds in the account holder's name the funds are considered seasoned (this applies to stock, mutual fund, 401k and IRA accounts as well). But say we don't have any seasoned funds and our buyer needs to buy now, what do we do?

The common answer is a gift from a family member. Documenting the gift is a must but we'll save that for later. The 4155 has this to say about gifts:

An outright gift of the cash investment is acceptable if the donor is the borrower's relative, the borrower's employer or labor union, a charitable organization, a governmental agency or public entity that has a program to provide homeownership assistance to low- and moderate-income families or first-time homebuyers, or a close friend with a clearly defined and documented interest in the borrower. The gift donor may not be a person or entity with an interest in the sale of the property, such as the seller, real estate agent or broker, builder, or any entity associated with them.

All of the funds a buyer needs to contribute to the deal can come from any of these sources as well:

-Public down payment assistance funds- either loans or grants

-Loan from a family member (Yes Realtor's can gift or loan their commission to assist family members)

-Secured borrowed funds (by refinancing a car that may be paid off or a 401k loan)

-Sale of personal property, as long as the value can be documented

-Employer bonus or assistance plans (cannot be a salary advance!)

-Commission from the sale if the buyer is a Realtor

-Tax refunds (just in time for the Spring buying season!)

-Disaster relief grants and loans

-Savings Clubs and Church groups

A few other sources are more difficult but good to know such as:

-Rent credits in a Lease/Option (Only the amount above what is considered "fair market rent")

-Sweat Equity, including labor and materials (can also be gifted to the buyer)

-Cash saved at home (requires a host of "reasonableness" tests)

-Bridal Registry accounts

So as you can see, there are still quite a few alternatives for buyers to come up with the funds needed to close. The trick, as always, is to be familiar with the latitude available and to know precisely how to document your transaction. I must say historically if my buyer credit and income qualified for an FHA loan, the issue of cash to close was usually resolved in one of the ways mentioned.

Also don't forget with the new tax rebate for first time buyers, family members may be more apt to issue a loan that can be paid from those proceeds. It's an angle I've been pursuing with success already.

Your loan will always be only as good as your lender so partner with an experienced and knowledgeable lender to make sure you get the best deal!

Gerry Suarez, Jr.

Your FHA Loan Pro

The Power of Panic

Thomas Mortgage, Florida's FHA Loan Pro — Fri, 27 Feb 2009 14:04:14 -0600

A truly spot on post by Ken Cook that I believe everyone should read. Also you would do well to check out Robert Ashby's posts if you want a no spin commentary on rates and the economy!

Thanks Ken and Robert!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Via Ken Cook - Lender - Investor Specialist:

As I have written one of my favorite movie quotes of all time (next to most of Cool Hand Luke) is the line from Men In Black where K says to J, "A person is smart. People are dumb, panicky, dangerous animals." Go get some coffee ... and maybe a sandwich - you'll need it. Hang on, though, there is hope in this message!

Most of us have never lived through so much financial panic. The real estate market has all but frozen, the credit market has frozen and then some, joblessness is on the rise and will continue to be so for the next 12 to 18 months by most predictions, the dollar is amazingly holding some value, and there are about a thousand other macro and micro economic indications reacting like compasses in a magnetic storm. Ask Robert Ashby what that means. In fact as Robert what vertigo can do to a pilot who has not learned to trust his instruments.

The reason J made that statement to K was because K asked why the men in black didn't just tell everyone about the aliens. K's thought was that if everyone knew the aliens were all over the place it would end their fears and that knowledge would be all the earth needed to get along peacefully. J knew better. J knew that even with the knowledge of the truth people's initial reaction would be to panic and make war on the aliens - he was probably correct.

So what have we today? What aliens are among us which have so panicked us? Moreover how do we become the peacemakers to still the stormy todays and tomorrows of our clients, neighbors, friends and family?

What causes panic?

Panic is almost always caused by one of three things: a lack of understanding, a repeated traumatic experience or imagined fears. The lack of understanding is simple enough to cure through training and education. Even the repeated traumatic experience can result in limited panic through training and experience. Imagined fears, on the other hand, are the tools of our enemies, our opponents and those who have reason to put us into a panic so they may better control us. Still, the latter can be contained through having key people in key locations to help others see the truth and to understand those fears may be unwarranted.

Right now the entire world (with the exception of some of those remote tribes that shoot arrows at helicopters and right in their hieroglyphs about the noisy monster that can from heaven and shook the ground and trees) is in a panic about the global economy. Production and employment is down in almost every sector around the world. Unfortunately we, and by we I mean us, think it a wise idea to leave the power of correction in the hands of some of the least experienced business people in the world. We leave decisions affecting our life today and tomorrow in the hands, and votes, of people who have never had to generate an income for our family and our employees. Then when anyone who has that experience dares to question the almighties we are called, by we I mean me, "tool" "drunken monkey" and "sieve brain". That last one was a new one.

Read this for information - it's not an attack on any one government official - it's an accusation of them all: Our elected government just passed the largest spending bill in the history of the world. Support for it was and is garnered by executing a base level attack on the fears of the unwitting. If you think most of them who voted for this bill are not going to prosper greatly from it then you fit in category 1: a lack of understanding.

Okay Mr. Genius, where do we get this understanding? Oh I am so glad you asked. I actually get mine from an ancient manuscript that says things like this have to happen. It also says money and everything that comes along with it is worthless when you are dead. But I also get it from people just like you - people who comment on my blogs and write your own blogs. I get it from the guy who sells me advertising and the guy who delivers my water. Why? Because K was right, too. A person is smart.

Recently I have started or begun participating in a couple of small groups who talk about either business or politics. We are generally 12 to 20 people per meeting and everyone has something to add to the group. We all feel better when we leave the group than before we came.

The HOPE is not in Washington DC.

The HOPE is not in Wall Street.

The HOPE is not on CNN, FoxNews or MSNBC.

The HOPE is in strengthening the bonds in your family, your friendships and right here on Active Rain.