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A True FHA Story - Cashing an $8017.55 First Time Home Buyer IRS Check

 

Watch the Fox 35 Video here.

 

 

Andrea Tlumacki was one of the people not afraid to take the plunge... and she has been rewarded for it! With the deadline of the $8000 First Time Home Buyer Tax Credit approaching - it is urgent to develop a plan of execution. Most people are focused on the restriction of closing before the expiration of Nov. 30th. Fair enough... but many are not building a time line in order to establish milestones that one needs to meet if they desire to witness the delivery of an $8000 Treasury check. This is done by finding the advice of both a rock-solid Realtor and a Certified Mortgage Planning Specialist. Andrea Tlumacki did. Expert real estate advice from J. Robert Brown - owner of Prefer 1 Real Estate - proved priceless. Not only was she able to nail down a low mortgage rate of 4.500%, but received unparalleled direction from Robert Brown's corporate-world experience to get a purchase price that would make an investor envious. In her interview with Andrea, Tracy Jacim states, "time is running out," and the time to delay is over. Many of us are familiar with Student Syndrome - but the need to:

• get approved for a mortgage,
• identify a dream home, and
• go-under-contract

...has a time line of about a week. Sure, things can be closed a somewhat faster in the proper circumstances, but as volume elevates in the weeks ahead for lenders, the length of time it takes to actually close will be increase. In other words... it is important to engage in the Orlando Real Estate process quickly if you hope to benefit from the First-time Home Buyer Tax Credit before it expires.

Chris is Florida's #1 FHA Mortgage Broker and a syndicated mortgage blogger. He is regular contributor to the three leading industry blog-fronts including The Mortgage Chili Blog, My FHA Mortgage Blog, Top of Mind Networks, and proudly the newest contributor to Lenderama. Chris can be found at Orlando FHA Loans, Chris[at]OrlandoMortgagePro[dot]com, or by calling 407.377.0500 x 210

A few helpful ways to expedite your home puurchase to guarantee the federal tax credit

Need to rush your home purchase? Here's how

The $8,000 first-time homebuyer tax credit runs out Nov. 30, but it can take 45-60 days to close on a home. Here are 4 ways to expedite your home purchase so you can take advantage of this federal freebie.

By Lisa Scherzer of SmartMoney

 The days are numbered for the $8,000 federal tax credit for first-time homebuyers.

The credit expires on Nov. 30 - a deadline that's putting pressure on would-be homeowners trying to take advantage of a real-estate market on the mend.

"Most first-time homebuyers understand that time is running out. Now they need to understand how little time is left to get into action," says Jay Papasan, the vice president of publishing for Keller Williams Realty and co-author of "Your First Home: The Proven Path to Ownership."

In the current housing market, it takes about 45 to 60 days to close on a home from the time you have an accepted offer, Papasan says. So buyers should have their offer accepted no later than mid-October if they're trying to make the Nov. 30 deadline. (For information on who can qualify for the credit, check the IRS Web site.)

Several bills have been introduced in Congress to extend the credit by six months to give the real-estate market another boost, though they are still up for debate. The National Association of Realtors estimates that the credit has generated 350,000 home sales this year. Moody's Economy.com puts the number at 400,000.

The process of buying a home is neither quick nor easy. Compiling your financial paperwork, applying for a loan, negotiating an offer and signing contracts can take months. And that's if everything goes smoothly. There are myriad ways homebuyers - especially novices - can get tripped up by the process.

Here are four strategies that can expedite a closing.

1. Make sure you're liquid
When it's time to make a down payment, homebuyers should make sure they have enough cash available. Their funds should not be tied up in a stock portfolio, 401(k) plan or other investment that could delay the money by days.

Using gift money for a down payment is another potential snag for homebuyers. Say your parents gifted you the $60,000 you'd need for a down payment on a new house. The bank underwriting your mortgage needs a paper trail to track the money's origin, says David Hanna, president of the Chicago Association of Realtors. Money that suddenly shows up in your account can raise a red flag. Buyers should expect a thorough financial examination, a process that "won't necessarily derail [a] transaction," Hanna says. "But it will slow it down."

2. Forget about short sales
A short sale occurs when a homeowner is no longer able to make his mortgage payments and owes more on his home loan than what it can fetch in the current market.

They're attractive from a price point, but they can take months to close. So if you're after the tax credit, "you have no business looking at short sales," says Steven Senter, a real-estate broker and the owner of Keller Williams Fox Valley Realty in St. Charles, Ill. When making an offer on a short sale, not only does the seller have to accept the offer, but the bank must accept and approve it, too - and that can take awhile. "There's no guarantee on when the bank is going to approve it - it may approve it in 30 days, maybe in 300 days," Senter says.

3. Don't go on a shopping spree before you close
Refrain from making big purchases on a credit card before closing on the home and completing the transaction, Papasan says.

Big buys can trigger concern because a buyer's debt-to-income ratio is usually the most important factor lenders use to determine how much they can borrow. This ratio compares the amount you earn to the amount you owe (including credit-card debt, student loans and car loans). Once you enter into the loan application process, that ratio is set. If you're in the middle of securing financing, buying a $5,000 living room set might throw that balance off. Any increase in credit-card debt can come under scrutiny from a lender, who may be looking at buyers' credit reports until the day of the closing. It can also prompt an inquiry on your credit report, which then might have a negative impact - albeit a slight one - on your credit score.

4. Be aware of closing costs
Each state has its own closing requirements, and first-time buyers should know in advance what and how much they're required to cover. For example, in Maryland, the buyer pays the closing costs. In most states, the buyer and seller share the costs. In many states, closing costs must be paid in cash at the closing.

Buyers "need to hold onto every penny until they make sure they get it done," Papasan says. "You don't want to be short at the last minute."

 

I hope you found this information helpful. Happy hosue hunting! :)

 

 

Mortgage Delinquencies - The Coming Storm

This is one of those posts where I wish I didn't have to write it, but felt it was so important to my readers that I would be remiss not to at least talk about it.

Everyone out there probably knows somebody who is behind on their mortgage payments, looking for alternatives and likely also just finding out that their home's value has dipped below what their loan amount is.  I know some within my own personal circles.  It's a tough situation for me to advise them as a professional because it's such a personal challenge to their pride and self-worth, not to mention their plans and dreams for the family. The question we're asking is "when is this going to stop and where are we heading?"

I'm going to put up a few graphs that show the trends nationally with regards to mortgage delinquincies:

This chart is by quarter - Single-family mortgages set a new record delinquency rate in the second quarter of 2009, according to a quarterly survey by the Mortgage Bankers Association. Those of us in the real estate business see the foreclosure process (just visit the local Sheriff Sale docket to see the current numbers) but the looming delinqency-to-foreclosure issue is far, far larger.

The Wall Street Journal on 8/3/09 reported the following quote: “While subprime mortgages sparked the first round of housing problems two years ago, now "troubles are lurking further up the food chain," says Joshua Shapiro, chief U.S. economist at MFR Inc. White-collar job losses have accelerated while more adjustable-rate loans to prime borrowers are resetting to higher payments.  ‘You put all that together, it leads me to believe that the next leg down on home prices is going to come from the top,’ he says.”

The first objection someone may have would be to say "yes, but historically those who are delinqent usually get their act together and come current on the mortgage after a while".  That WAS true, but not anymore!  We call that the "Cure Rate", that is the rate of delinquencies that go back to current.  The Wall Street Journal reported on 8/24/09 about a Fitch analysis that found that the Cure Rate from 2000-2006 was 45% (which means about half of people fix their delinquency).  However, as of July 2009 the rate had dropped to just 6.6%!  That means that over 90% of delinquent customers are going to foreclosure.  Take a look again at the above chart...

The next thing someone will say is "well, that's the 'sand states' and not my area".  Here's the chart for all 50 states showing the same breakdown of delinquencies and foreclosures.  Guess what - most states have a significant problem, especially compared to historical figures.

Now the next thing someone may say is "aren't those loans going to get 'fixed' by a loan modification?"  I know several people right now who are applying for a Lancaster County loan modification but are waiting and waiting.  I hope it works out for them...

In reality, loan modifications are hardly making a dent.  To me, that's a burning question.  Why arent banks being more aggressive in giving customers the option to extend their loan and/or reset to a lower rate?  Why are they being SO difficult? The people I know don't want to be foreclosed.  They CAN make payments.  They just need the terms redrawn to allow them to catch & keep up.  Loan modifications are not helping us get this crisis under control.

What are the causes of all these delinquencies?  Here's a chart that is enlightening:

We hear a lot about adjustable rate mortgages being the culprit, but the reality is that it's the loss of jobs and the tanking real estate market that's the perfect storm.  See my previous post on unemployment in the nation, the state and Lancaster County.

Keep in mind, this post is not intended to give us "good news".  You may be experiencing good things in your market and that's great.  My intent is to get us thinking about the challenges that aren't going away and how we're going to address them as homeowners, agents and professionals.  I'd love to hear your ideas!

 

 

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