Good news! The home buyer tax credit has been extended! The new expiration date is June 30th, 2010.
Notice anything missing from that opening line? I have omitted the words "first" and "time" because 'move-up' buyers are now potentially eligible as well (conditions apply see IRS for details etc. etc. etc.). I suppose you could be a move-down buyer as well though... AND it's not well-publicized but almost any home that is your primary residence qualifies. Always wanted to live in a house-boat? Here's your credit. Thought about touring the country in an RV? Yep! You could qualify.
Just remember -- if you don't want to have to pay the credit back, you must live in the home as your primary residence for 3 years. That might be pushing it for the RV trip... Here's a run-down on important considerations;
The new guidelines are effective for transactions that close after today. If your home is closing on November 7th or after (up to June 30th of next year), these new guidelines apply to you.
New Guidelines
Income caps have been increased substantially. The new cap to receive the full credit is now $125K for a single filer or $225K for a joint filer. There is a $20K 'phase-out' on the income, if you make more than the $125K/$225k you would be eligible for a partial credit until your income is over $145K/$245K.
If you're a "long-time homeowner" who has lived in your home for at least 5 out of the last 8 years, you may also qualify for a tax credit if you buy a replacement primary residence before the June 30th, 2010 deadline. The amount is slightly different: $6,500 if you're single or you are filing jointly. If you're married but are filing separately, the amount is cut in half to $3,250.
No more last-minute rush! The new guidelines require home buyers to be under contract on or before April 30th, 2010 to qualify for the credit. But then you have 60 days to close.
If you'd like to read the news release from the IRS's Web site, here it is.
NEWS FLASH: the Department of Housing and Urban Developed announced today that they will delay changes to the FHA Condo policy. This is good news to anyone involved in the low to mid range condo market. The changes have been delayed until December 7th (after initially being delayed from last year until this month, and then were pushed back again until November).
They have also announced additional leniencies to address the difficult market conditions and augment some portions of the Mortgagee Letter 2009-19, providing additional information.
So "Spot Loan Approvals" are still on for another month!
How long -- REALLY -- will interest rates stay low?!?!? This is a question I'm asked almost daily.
It's probably safe to say everyone agrees one of the primary reasons why mortgage rates have stayed so low for so long is the commitment the Fed has to buying Mortgage Backed Securities from Fannie Mae and Freddie Mac. This artificial, temporary demand has kept prices for MBS higher (which means rates are lower) than if we hadn't had the MBS purchase volume coming from the Fed.
By the by -- "the Fed" in this instance refers to the Federal Reserve Bank of New York, which is carrying out the MBS purchases. You can view their Web site here.
By the by the by -- "MBS" refers to Mortgage Backed Securities.
The total amount the Fed is committed to spending by the end of 2009 is $1.25 trillion; to date they have purchased $849 billion, leaving roughly $400 billion to purchase by year-end.
With 15 weeks left it puts the Fed purchasing schedule at approximately $26 billion per week, which they are on-track to accomplish based on their weekly purchasing history.
Here's the kicker: as we get closer to the end of the Fed MBS purchasing, mortgage rates will rise. Let that sink in because we are already 2/3 of the way through the Fed purchasing MBS and we only have 3 1/2 months left in 2009!
There are two reasons why rates will climb:
A) MBS Investors (other than the Fed) know that current high-demand is very temporary and if they wait until after the Fed stops purchasing, they will get a higher return on their investment (often referred to as the 'yield'); and
B) Mortgage lenders know if they commit to a rate of 5% on a $200,000 loan for Bob and Betty Buyer or Russ and Rachel Refinacer but don't sell that loan (called the NOTE) to Fannie Mae or Freddie Mac before the market rate goes up to 6% (the timing of this is often referred to as market risk), they lose money on that loan -- $2K for the first year to be specific.
A loss of $2K may not seems like much, but imagine a lender losing 1% on $100 million dollars' worth of loans (a 1% rate increase could easily happen if demand drops off quickly), then they just lost a million dollars in the first year alone. That's a lot of 'market risk' and lenders will start 'padding' their rates to try to mitigate potential losses as much as possible.
I am asked the following daily:
Q: James, what do you think is going to happen with interest rates?
A: My guess is they'll start rising in the next 30-45 days and be above 6% by the end of the year, based on my above assessment. And if they don't hit that mark then I owe fellow ActiveRainer Paul McFadden a cup of coffee.
Don't get me wrong -- low rates is good for business. I would very happily be wrong about this (and Paul, I won't even wimper if I end up shelling out for coffee. But when I ask my Magic 8-ball the question: Will interest rates stay low? It gives me the same answer, nearly every time:
James, don't hold your breath.
And by the way -- because rates will be going up very shortly in my honest opinion, if you've been waiting to refinance then it's time to put the pedal to the metal; due to great values and the first-time home buyer tax credit that expires after November 30th, if you're waiting to buy then let's kick it into high-gear.
And Paul, I'll take a double-tall vanilla latte, no whip.
For those who are acronym-challenged, MTOTD stands for "Marketing Tip of the Day." Yes I made the acronym up and really didn't expect anyone to get it, but thought it might at least get someone's attention...
Marketing Tip of the Day: Coffee on you!
Pair-up with a business partner (Title Rep, Escrow Rep, your favorite Mortgage Loan Originator hint hint, nudge nudge), meet at your preferred walk-in coffee spot and each of you put $20 onto a gift card from that location. Then hand the gift card to the cashier and ask them to pass the word -- that you would like to pay for each single order of coffee until the gift card runs out. Let them know where you will be sitting and that you'll be talking about home buying and selling if anyone asks who paid for your coffee. Then grab a drink of choice for the two of you and strike up a conversation about -- you guessed it - home buying and selling!
I've done this 3 times. We chose off-peak hours because a) we didn't want the money to be gone in 10 minutes and b) we didn't want to hassle the cashiers (who are often also the baristas) during their rush times. Plus we were there to catch up and talk about -- once again -- home buying and selling.
The $40 ($20 from each of you) should buy around 10 coffee orders. Each time I've done this, I or my Real Estate Agent partner (or both of us) received at least one real lead or referral. Nothing like saving someone $4 to get the conversation started! Every time someone's drink was paid for they came over and at least said thank you and nearly every time had a question or two and took our business cards.
The first time I did this, one of the contacts came from a barista who came over to thank us for the extra tips (people were putting half or more of what their coffee would have cost into the tip jar), and turned out that she and her husband were looking for an equestrian property in rural Snohomish county and the Agent happened to know of one.
Not bad for spending $20, wouldn't you agree? If you're anxious at all about approaching strangers or are just looking for a fresh way to do it -- I highly recommend this. It's about the best $20 in marketing I can think of. Definitely worth passing on.
For the life of me I cannot remember who originally suggested this, I'd love for someone to comment on the source of the idea if you've heard of it before.
greetings all! Today marks my first day at Bank of America Home Loans. With this change comes additional responsibilities a shorter commute (a.k.a. a happier wife) and a new home city: Mill Creek! I'm very excited about this new chapter of my career and I am re-affirming my commitment to blogging and providing useful information to Real Estate Agents and home buyers/owners alike.
My contact information has been updated and I will be providing additional finormation as I become settled in my new office inside the Mill Creek Town Center! South Snohomish/North King County folks, please come by and say hi (I'll be in the office as of Thursday).
Making Home Affordable, announced in February 2009 to much fanfare, promised to be the solution for 9 million homeowners.
The two programs, Home Affordable Modification Program targeting homeonwers unable to make their payments because of financial hardship; and Home Affordable Refinance Program targeting homeowners who were able to make their payments but unable to refinance into a lower rate because their equity had fallen, seemed to be the answer.
30 days later, Making Home Afordable struggled to launch but gained momentum as lenders began making announcements that they were adopting the standards and 'participating' in the programs.
Five months later, if you google "Home Affordable Modification" -- and then click through the first several pages of the government listings (how the heck do they get such good placement) and beyond the solicitations of countless mortgage companies and modification companies promising to deliver on the, well, promises, of the program -- you will begin to see blogs and message boards overwhelmed with stories of homeowners either unable to get an answer from their lender on whether they qualify or worese, their lender says they don't. And this despite the "makinghomeaffordable.gov" Web site indicating that they 'may qualify.'
It is becoming increasingly apparent that the programs are struggling to reach critical mass.
I have posted a number of blogs on this subject in an effort to act as a resource for homeowners struggling to understand these programs here, here, here, and here, and I've received countless private ActiveRain messages from homeowners nationwide turning over every rock they can find in search for answers. What have I told them?
Make your voices heard.
I've suggested contacting their lenders repeatedly (squeaky wheel gets the grease), contact their State Representaves (which you can do here), and I'm writing today to offer another solution:
I've created an online petition, designed to unite the voices of the many who are for numerous reason either not getting an answer on whether they qualify, or just flat out are being told they don't.
The petition calls for transparency and accountability in the face of so much uncertainty. After all, it's already tough enough to be faced with losing a home...
Please take a moment, if you are so inclined, to add your voice.
If I'm the only one in this boat, I'd be very surprised.
Things have been, let's say, interesting lately. Actually, "challenging" would be putting it mildly. Many changes in the mortgage business and I've found myself scrambling a bit to keep up with everything. Unfortunately, my blog posting frequency has paid the price although I have done my best to return private messages received.
So, where is the mortgage market?!? Hovering above 5% based on the standard information I post regarding rates. I'll try to get back in here again very soon and give a more formal update. But in this post I want to pass along a nice tool I've often referred to when working with potential clients currently renting. It makes a very good attempt at cracking the age-old question of:
Should I buy or should I rent?
It's from our good friends at the New York Times Web site, is quite interactive and does a very fair job at addressing the pros and cons.
The US Department of Housing and Urban Development announced today that the $8,000 tax credit is officially approved for use as down payment provided at closing!
Woah, pump the brakes dude.
Before you leave work early to write an offer, we're still one step away -- getting the lenders ready to implement this. BUT, today was a HUGE leap forward and many of the logistical details are now know. I would caution everyone to be patient, however, and if you're writing an offer and relying on this, a contingency for this being available may be a prudent step.
So far this is specifically for FHA loans. It remains to be seen whether it makes sense on a conventional loan or whether they will allow this, but the majority of my buyers waiting for this are looking at FHA anyway.
Mortgage Rates have gotten a little squirrelly of late, and are up about .25% from my last posting, here (yes, you must read my previous post -- it's the ol' bait-and-switch).
Many Economists (whoever that guy is, he sure is mysterious) say that rates are likely going to climb to 6% by the end of the year.
THIS COULD BE IT PEOPLE!
Ok, that may be slightly dramatic, but rates always go up faster than they go down, so if you're getting close to buying or refinancing...
"Hello, this is James Wirth with your red carpet room service. It's now time to WAKE UP... or I mean... LOCK YOUR RATE!
Washington State legislature passed a law recently that allocated funds to be used as short-term loans that would provide the $8K tax credit up-front, at closing to be used as down payment or for closing costs! You can read a recent article on the subject here. We've bumped into a bit of an accidental IRS road block, that they are currently working through.
And now, FHA SEcretary Shaun Donovan indicated to a NAR conference in Washington that 'that important changes, which the National Association of Realtors® has been calling for, will help consumers purchase a home. "We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment," Donovan said. According to Donovan, the FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.'
Much of the details have not been announced, but thi sis very exciting stuff! You can read more here
Read more information on the Realtor.org site here.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
For those who are acronym-challenged, MTOTD stands for "Marketing Tip of the Day." Yes I made the acronym up and really didn't expect anyone to get it, but thought it might at least get someone's attention...
Marketing Tip of the Day: Coffee on you!
The $40 ($20 from each of you) should buy around 10 coffee orders. Each time I've done this, I or my Real Estate Agent partner (or both of us) received at least one real lead or referral. Nothing like saving someone $4 to get the conversation started! Every time someone's drink was paid for they came over and at least said thank you and nearly every time had a question or two and took our business cards.
;)
;)
