The House of Representatives on Thursday approved an extension of jobless benefits and a tax credit for home buyers, sending the measure to President Barack Obama for signature. The bill, approved unanimously by the Senate late Wednesday, keeps a first-time home buyer tax credit alive until next spring, and expands it to include some people who already own a house.
Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.
Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.
Military deadline: The deadline is extended by a year for members of the military who have served outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010.
Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.
How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
Joseph Metzler, MMS, UMB 33 Wentworth Ave E #290 West St Paul, MN 55118 Ph: (651) 552-3681 Cell: (651) 592-4460 Fax: (651) 994-6425 www.JoeMetzler.com
With the amount of offers coming in on REO properties(Bank Owned Properties), there has been a new trend among buyers. The trend is to just offer as high as possible to get the property under contract. After the contract is accepted by the bank, they have to get an appraisal for the loan.
The appraisal comes in quite a bit lower then their original offer price, which means the buyers won't be able to get the financing. These buyers then have the right to withdraw from the contract based on the appraisal contingency. The deal is dead right?
Not so fast. The buyers agent has been planning this all along. The agent and the buyers will submit an addendum to the price to meet the appraisal, and will re-submit to the bank.
Now, the bank wants to get this deal done, and knows the same thing will happen with any other buyer. The appraisal has already been done. So, the bank just accepts the lower price, and the buyers get away with it. They knew the appraisal would not meet the original offering price, and they get a great deal.
With the new appraisal guidelines, this is happening more and more. Appraisals are coming in low, buyers are aware this is what's happening, they are offering high to get the property over the competition, and just wait out the appraisal to get a great deal.
How fair is it to the buyers that put in an offer closer to asking price? Is this fair and balanced? Is it unfair to the other buyers that put in a reasonable offer? Or is it a smart way to get your buyers the house they wanted?
Here are the details directly from a contact in DC:
1) Sen Isakson, Dodd, Lieberman have agreed, and Senate Finance [Baucus and tax staff] have agreed to this credit extension and expansion: 2) For first time homebuyers, the income level to qualify is $ 75,000 single / $150,000 married 3) Move up buyers AND first time home buyers qualify 4) For move up buyers the income level to qualify is $125,000 single / $250,000 married 5) For move up buyers, they must have been residing in their primary residence for 5 years 6) The credit is 10% of the sales price, with a maximum of $ 7290. 7) The credit runs from Dec. 1, 2009 to April 30, 2010. 8) For legitimate sales contracts as of April 30, 2010 you have 60 days to close. 9) There is a waiver for military. 10) This will be added to the Unemployment Insurance bill. It will then go to the House.
Signs are that they House will accept this proposal. It could go to the President soon.
Stay tuned for details, but remember, as of this posting, IT IS NOT OFFICIAL
How Does It Work? Simple. Just qualify for a traditional financing with at least 3% down. Then you MUST select a home to buy from the list of available foreclosed Fannie Mae owned properties
Where can I see the list of available houses? Easy. Simply contact us, and we'll put you in contact with a qualified Realtor Partner who will analyze your needs, and show you a list of qualified HomePath properties. Follow this link to instantly view homes: http://www.homepath.com
What about closing costs? Closing costs can be rolled into the transaction, up to 6% of the loan amount.
EXTRA BENEFITS: The benefits include:
Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
You may qualify even if your credit is less than perfect
Available to both owner occupiers and investors
Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
No mortgage insurance
No appraisal fees
Also eligible for HomePath ® Renovation Mortgage
This is a national program, and there are qualifying homes in every state.
We lend on this program for homes ONLY in Minnesota and Wisconsin, so please do NOT contact us about other states. However, if you are looking for HomePath in MN or WI, it all starts with a no obligation online loan application or a call to (651) 552-3681, where one of our specially trained Loan Officers will assist you.
A common mistake shoppers make is to ask: "What's your best interest rate?" or "What are your closing costs?" Both logical questions to ask, but they do not give the response most borrowers need to make a proper decision. Borrowers must understand both rates and fees. Rates are only half the answer to getting the best deal. It is possible end up with the lowest rate, or with low or no closing costs, but not necessarily the best deal.
Remember that nothing is ever free. Lenders simply use "reverse points" whenever they claim to offer any sort of low closing costs, or no fee mortgage.
Simply put, the lowest rate & the lowest fees do not go hand-in-hand. NO LENDER can offer both together. I can give you rock bottom rates, but it will cost you in fees. I can give you the lowest fees, but it will cost you in interest rate. Most lenders quote their best rate in combination with covering all third party fees (appraisal, credit report, title company, state taxes, county recording fees, etc) with 1% origination ("standard" in the example below).
Here is an example of Rate vs. Costs on a $200,000 - 30 year fixed loan
RATES NOT ACTUALLY OFFERED - THIS IS JUST A SAMPLE FOR EDUCATIONAL PURPOSES
Lower Rate
Standard Quote
Low Cost
Total NO Cost
Rate
4.75%
5.0%
5.25%
5.75%
Origination
1%
1%
None
None
Discount Points
1%
None
None
None
Closing Costs
$5042
$5042
$3042
$0.00
Closing Costs with Points
$7167
n/a
n/a
n/a
Monthly P & I Payment
$1043.29
$1073.64
$1104.41
$1,167.15
10 Years of Interest
$92,352
$95,240
$98,151
$108,037
20 Years of Interest
$155,609
$162,618
$169,718
$188,181
30 Years of Interest
$181,300
$190,232
$199,311
$221,909
WHICH LOAN VERSION is RIGHT FOR YOU? I can offer you all four options on all of our loans.
The combination of rate & fees can be very confusing. One lender is screaming "No closing costs." A second lender may quote you 5.25% with $2246 in fees, while another lender is offering 5.00% with $4130 in fees. So are closing costs and fees bad? Well if you ask everyone's brother who has a real estate license and knows everything about mortgages, then the answer you will most likely hear is yes. I am here to tell you everyone's brother is probably wrong.
Good enough answer? I didn't think so...
Begin by asking yourself "How long am I going to be in this property?" This is the single most important question to determine which option is best for you. Now look at the chart above. It becomes very obvious based on how long you are going to be in the home if 'Best Rate or Lowest Cost' makes the most sense for you and your family.
To properly shop, you must get all estimates on the same day at the same time. All estimates must have the exact same interest rate. Then you are only comparing cost.
Congratulations, you are now smarter than everyone's brother, mother and sister with a real estate license.
$8000 Tax Credit Possibly Extended For Military Personal
No news yet about the possible extension of the $8,000 Federal Tax Credit beyond November 30, 2009 for all first time home buyers, but the House of Representatives has voted unanimously to extend the first time buyer tax credit to active military personnel, foreign service and intelligence officers. The bill (HR3950) would extend the existing tax credit to this group only until November 30th, 2010. The bill now goes to the Senate, and is expected to pass with the same ease.
The bill was brought up because it was thought that military personal serving oversees this year did not have the same opportunity to take advantage of the tax credit as other future home owners. The extension applies to military personnel who spent at least 90 days of the current calendar year oversees. It also does not require borrowers to payback the tax credit if they are deployed after receiving it. The current tax credit requires borrowers payback the tax credit if they do not occupy the home within three years of receiving the tax credit.
THIS IS NOT LAW as of the time of this posting, but should be soon.
Combining the $8000 federal tax credit with a VA 30-year fixed loan is something I as a loan officer and Mortgages Unlimited are proud to be able to offer all military personal, both active and discharged, for properties located in the Minneapolis St Paul area, and all of Minnesota and Wisconsin.
FHA Changes Streamline Refinance Rules - makes it harder!
FHA streamline refinance has always been a great tool for home owners. In the most simple format, a person who currently has an FHA loan could fill out some paperwork, and close a new loan shortly thereafter with a new lower rate (payment), and with no out of pocket closing costs.
As long as the person had made their past 12 FHA loan payments on time, and had a job, you were approved. There was no appraisal, no credit score requirement, and no income or asset documents required. The client still has normal closing costs, but they could be rolled into the new loan.
The new rule revises current procedures for streamline refinance transactions to establish new requirements for loan seasoning, payment history, income verification, and demonstration of net tangible benefit to the borrower. It also provide for collection of credit score information; and to cap maximum loan-to-value at 125 percent.
A BIG CHANGE IN THE RULES will be that in order to roll in the closing costs, an appraisal will now be REQUIRED. If the loan-to-value is UNDER 125%, this shouldn't be an issue other than they now have the added cost of an appraisal. If the customer wishes to pay closing costs out-of-pocket with cash at the closing, then an appraisal will NOT be required. This rule alone will effectively kill FHA streamline refinances as we know them today as EVERYONE rolls closing costs into their new loan.
These revisions also bring NEW documentation standards for streamline refinance transactions in line with other FHA loan origination guidelines, ensures the borrower's capacity to repay the new mortgage, and prohibits the dangerous practice of loan churning, where borrowers raise cash through successive cash-out refinancing that put them further in debt.
These new rules are in part due to the increasing level of FHA foreclosures. FHA doesn't actually provide loans, rather, it guarantees loans for lenders in exchange for lenders taking on higher risk, lower credit score, and small down payment home buyers according to FHA guidelines. FHA foreclosures have increased steadily recently as the mortgage industry no longer offers sub-prime and exotic loans, leaving many potential home buyers with no other option BUT FHA.
The FHA plans to propose to increase the net worth requirement for approved mortgagees to meet industry standards.
The requirement is currently at $250,000 and has not been increased since 1993. HUD is proposing an initial increase of approximately $1,000,000 that would be in place within one year of the enactment of this rule.
To maintain consistency with industry standards, HUD may propose that the net worth requirements be increased further in future years to a level comparable to those required by GSEs (Fannie Mae and Freddie Mac) and other market institutions.
These changes will help to ensure that FHA lenders are sufficiently capitalized to meet potential needs, thereby permitting HUD to mitigate losses and decrease risks to the FHA insurance fund.
As with anything the government does, this proposed networth requirement is both good and bad.
GOOD: It potentially eliminates many small lenders who lack the proper knowledge, experience, and oversight.
BAD: It eliminated many small lenders who do a great job, and gives more power and control to the BIG BANK lenders. As the big banks continue to gain more control, the consumer options drop, competion drops, and ultimately, the consumer will end up paying more and get less as they deal with the application takers versus knowledgable mortgage professionals.
MORTGAGE INTEREST RATES ARE GREAT TODAY. BUT WHAT ABOUT TOMORROW?
Let's face it, mortgage interest rates have been averaging in the low 5% range, and that is great for the real estate market. But do you know where mortgage interest rates come from and why they change?
Lenders don't just make up rates! Long-term interest rates are based on Mortgage Backed Securities, also known as Mortgage Bonds. As money flows in and out of the bond market, the bond "yield" changes and the corresponding interest rate goes up or down.
May people think the 10-year Treasury Note is the correct index to "follow rates" with. While this note usually trends in he same directs as Mortgage Bonds, it is not unusual to see them move in completely opposite diretions. Be careful not to work with a Loan Officer who has their eyes on the wrong indicators.
This is a bit simplistic, but you can look at Fannie Mae and Freddie Mac as a clearing house which "buys" loans from lenders based upon rules they make, then package those loans into Mortgage Bonds, which the public buys on the bond market.
With everything going on in the mortgage world, bond players ramped DOWN the purchase of Mortgage Backed Securities. If no one buys Mortgage Bonds, there is no money for Fannie and Freddie to buy loans from lenders. If lenders can't sell the notes, they run out of money, the supply dries up, and consumers can no longer get a mortgage loan.
With no confidence in the mortgage market, bond players simply stopped buying mortgage back securities, creating a huge liquidity problem in 2007 and 2008.
In order to calm, and ease the strain on the markets, the US Treasury Department started buying up to $1.25 trillion worth of Mortgage Backed Securities which would help keep money flowing to the mortgage markets. By spring 2009, the Treasury Department was buying 2/3rds of all mortgage bonds, which has kept 30-year fixed mortgage rates artificially low.
The overall mortgage bond market has started to improve, and confidence is starting to return because "new loans" are being written to more traditional safer and strictor guidelines. Traditional private sector bond players have started to again purchase mortgage bonds, which is good, as the money pledged by the Treasury to buy bonds in expected to run out over the next few months.
Once the Treasury Department stops buying bonds, all bets are off as to what interest rates will do. If the private market continues to increase their rate of buying bonds, interest rates should continue to stay low, or increase slightly. If the private-sector doesn't carry the load, expect to see mortgage interest rates climb.
While it is too early to know exactly what is going to happen, but if you are on the fence about buying a new home or refinancing an existing home, I'd suggest you take advantage of today's mortgage interest rates RIGHT NOW.
In this market it takes an extraordinary amount of energy to get a loan closed with new regulations, lenders changing their guidelines and rates shooting up and down.
Are you working with the right Loan Officer?
For most people, a home is the biggest investment they will ever make. However, few people do the research necessary to make a good buying decision. The home-purchase process is extremely confusing for most people. With a little bit of homework, and some advice from family and friends who have been through the process before, you can make this a little easier on yourself. There is no substitute for taking the time to educate yourself before you buy or refinance a house, which typically costs you 25% to 40% of your gross income!
By far, the #1 Mistake is choosing a lender simply because they are recommended by your Realtor, or using the Realtor's affiliated companies. While your real estate agent has basic mortgage knowledge, your Realtor is not a mortgage finance expert! They are trained & licensed to help you buy & sell homes. They are NOT trained in mortgage financing! They may not know what's the best loan for you. The Realtor only gets a commission when your house closes. As a result, the Realtor may refer you to a lender that is sure to close the loan, but not necessarily the lender that has favorable rates or fees. Also, many Realtors refer you to their friends in the loan business––who again may not be able to get the best loan for you. Even if the Realtor is very professional and looking out for your best interest, you should still do homework on your own.
WARNING: Be wary of "affiliated companies" (Example: XYZ Realty Company, XYZ Mortgage, and XYZ Title Company). Usually all in the same building, and all owned by the same people. Although it is very convenient to use the affiliated lender and title company across the hall, you typically PAY for that convenience with higher rates and fees than you could find elsewhere. Sometimes the Realtor makes it sound as if you have to use their affiliated companies. YOU DON'T.
A very large portion of my business comes from Realtors referring clients to us (and we appreciate it!) But if you are already approved with a lender, and your Realtor or Builder is now 'pushing', 'forcing' or speaking negatively about your choice while pushing hard for you to use their lender or title company, it almost always means you pay more!
If your Realtor walked you across the hall to get approved with their in house lender, and you haven't gotten a SECOND OPINION, call me right now! You are entitled to a second opinion, even if you have already been pre-approved for your mortgage with them!
Federal Law Requires Choice of Title Insurers & Lenders The Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2600, requires that all Buyers and Borrowers be given the choice of title insurance providers and lenders. Many people working in the sale, purchase, or construction of real estate have a financial interest in the title and mortgage company and are receiving compensation for settlement and lending services.
I recently took a loan away from a large local Real Estate Company that very aggressively twists their real estate agent's arms to get them to get you to use both their title company and mortgage company. I beat their mortgage company by $1500 in closing costs and 1/2% in interest rate. The title company I suggested using was cheaper by $400. Their purchase agreement VERBIAGE even goes as far as making is sound like your loan won't close if you use someone else.
We recommend shopping for a loan with at least 2 mortgage companies before you make a decision, maybe the one your Realtor suggested, and someone else! Remember to GET A GOOD FAITH ESTIMATE IN WRITING. There are countless stories of consumers who wind up paying higher rates or getting a loan program that was not right for them because they blindly followed their Realtor's mortgage advice.
Choosing a lender just because she/he has the lowest "quoted" rate or cost, or not getting a written good-faith estimate is also another major mistake. While interest rate is important, you have to look at the overall cost of your loan. Your largest financial transaction is too important to place in the hands of a rate quoter, or the high cost in-house lender across the hall.
This includes looking at the APR, the loan fees, as well as the discount and origination points. Some lenders include origination points in their quoted points, while other lenders add an origination point in addition to their quoted points. So when one lenders says 2 points they mean 2 points, whereas another lender means 2 points plus 1% origination. Click HERE for closing cost information.
The cost of the mortgage, however, cannot be your only criteria. There is no substitute for asking family and friends for referrals and for interviewing prospective mortgage companies. Learn how to Pick a Good Lender. You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what he/she promises. Often, the company that has the absolute lowest quoted rate (far from everyone else) may not be telling you something. It is hard to compare apples to apples, when someone is slipping you an orange. Your mortgage company is required to provide you with a written good-faith estimate of closing costs within 3 working days of receiving the application. When you do receive one from each lender, CHECK THEM CAREFULLY! All lenders have basically the same fees and costs for doing your loan. If one lender is significantly lower, chances are they are not telling you something up front. Check the other Good Faith Estimates to see what is missing.
Call me at (651) 552-3681. I will be happy to go over a competitors Good Faith Estimate with you. Also, be sure to read our article "Beware of the BAD, Good Faith Estimate.
Mortgage industry news and insights from a 10+ year industry expert. Mortgage are Real Estate News You Can Use. Joe is a Certified Minnesota Mortgage Specialist
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.
With the amount of offers coming in on REO properties(Bank Owned Properties), there has been a new trend among buyers. The trend is to just offer as high as possible to get the property under contract. After the contract is accepted by the bank, they have to get an appraisal for the loan.
No news yet about the possible extension of the $8,000 Federal Tax Credit beyond November 30, 2009 for all first time home buyers, but the House of Representatives has voted unanimously to extend the 
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