It is now official; the current home buyer tax credit has been extended. In addition, the new plan is an expanded version of the original plan that allows some existing homeowners to take advantage of the credit as well.
The latest version of the credit still provides up to an $8,000 tax credit for first-time homebuyers. However, it also provides up to $6,500 for existing homeowners looking to trade up to a bigger primary residence and who have already lived in their current home for five years. This expands on the amount of home buyers who can now take advantage of the tax credit.
In addition, to qualify for the full credit, homebuyers must have adjusted gross income of less than $125,000 or $225,000 for married couples filing jointly. Furthemore, the credit will only apply to homes sold for $800,000 or less.
Under the new plan purchase contracts must be signed by April 30, 2010 (extended from November 30, 2009). However, the purchases have until June 30, 2010 to close in order for a buyer to qualify for the credit.
The expansion of the home buyer tax credit means that a potential new wave of additional first time home buyers can now still take advantage of this special tax credit. While also now allowing existing homeowners to take advantage of the credit as well. How this will affect the home buying market over the next year is to be seen. However, for now we know that home buyer tax credit will be available until mid 2010. As additional information is available we will present it on this important housing issue.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
This next week was supposed to mark additional changes to lending standards by the Federal Housing Administration to their home loan standards. However, for the second time, the FHA has pushed back the date of these changes, originally set to go into effect on October 1st, to December 7th, 2009.
The major changes that we are supposed to see with these new revised rules most affect condominium financing through the FHA. The proposed changed would include the following:
The elimination of "Spot approvals" , as the entire condominium project has to meet FHA approval before a borrower can get an FHA-insured mortgage.
30 percent of the units maximum will be allowed to have FHA-insured mortgages.
50% of the units in a new complex will need to be sold before the FHA will insure a mortgage on a condo sold.
50% of the units in a project must be owner occupied.
However, the new rules do allow for some flexibility as well in the approval process of condo complexes and that is where the delay in releasing these new rules may stem from. The indication in the initial update is that Direct Endorsement Lenders can approve an entire project (not an individual spot approval ) and therefore allow a buyer to purchase a condo unit in that project using an FHA loan. However, it has been argued that this puts too much responsibility on Direct Endorsement Lenders and Underwriters and thus may be revised for the final rules being released December 7th.
As always we will provide additional information and analysis as it becomes available on these latest proposed regulation changes.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
As we near the final two months of the year, two major issues in housing seem to have remained constant from the beginning of the year, housing prices and the first time home buyer tax credit.
In regard to falling housing prices, Rochdale Securities banking analyst Richard Bove this past week stated on CNBC that, "I really believe that the industry has bottomed, that we're not going to see further crashes in home prices or in home sales."
He followed that up by stating that analysts are no longer happy with banks breaking earnings and revenue forecasts and are now looking at early stage delinquencies, which appear to be declining.
If that is the case then perhaps the worse portion of foreclosures has already started. We will monitor to see how much this rings true going forward.
Home Buyer Tax Credit
On other fronts, HUD Secretary Shaun Donovan spoke in front of the Senate Banking Committee with one of the key issues being discussed being a possible extension of the first-time home buyer tax credit, set to expire November 30th. Mr. Donovan said the government is weighing the costs and benefits very closely and will have an answer in the coming weeks, before the deadline, on an extension or not. Although this did not provide us an answer for now, it at least sets a time table for getting one. As always we will provide information as available.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
The news this week is that banks will begin to push the Obama administration to expand its mortgage-modification program to allow interest-only periods on reworked loans, seeking to bring more homeowners into the initiative while recognizing concern that it may only postpone defaults.
This plan is part of a new round of ideas and plans to refine the $75 billion "Home Affordable" program, announced in February as a bid to rework as many as 4 million loans. The program's latest phase also is marked by a need to permanently convert more than 500,000 trial modifications by collecting paperwork so consumers' mortgage payments don't revert within months. See last week's article for information about efforts that even include going door to door to reach borrowers.
In addition, the Treasury will soon announce details of a program to encourage short sales of properties by homeowners who don't qualify for modifications. It will include "capped" payments to retire second mortgages that may form an "industry standard" and help curb the "back and forth" with owners of that debt which creates one of the biggest hurdles.
Furthermore, under the current federal program, taxpayer subsidies to lenders, servicers and homeowners are used to encourage the reworking of borrowers' mortgages to cut their monthly payments to 31 percent of their incomes. Servicers are first directed to lower interest rates to as low 2 percent, then extend terms to as long as 40 years and then suspend payments on a portion of the debt until maturity.
Therefore, banks have intimated that the benefit of allowing interest-only periods as well would be a significant pickup in terms of modifications being done, because the current methods often fail to allow loans to pass required tests on whether modifications serve lenders better than foreclosures.
However, there has also been concern that Interest-only periods of five or 10 years would mean a risk of defaults only being delayed, as payments would need to eventually include principal as well.
As always as additional plans and details are released we will provide both information and analysis on the latest changes to home loan and home retention programs.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
This past week, Freddie Mac, the very larger and now government controlled mortgage entity announced a plan to come door to door to get in touch with delinquent borrowers. The plan will be to touch base with borrowers that are behind on mortgage payments in an effort to help them complete the process of qualifying for programs such as the Making Homes Affordable Plan. Below is the information on this new effort as described by Freddie Mac themselves.
"Freddie Mac today announced it has hired Titanium Solutions, Inc. to meet with delinquent borrowers at their homes and help them supply missing information, documents and complete other actions needed to begin their three month trial payment periods for Home Affordable Modifications under President Obama's Making Home Affordable program.
Titanium Solutions will target late-paying borrowers with Freddie Mac-owned mortgages who have not returned letters or phone calls sent by their servicers, or who need to provide additional information or documents to launch their three-month Home Affordable Modification trial periods. Titanium will also help those borrowers who have started their Trial periods complete the documentation process to enable them to be converted into final modifications.
"By meeting with our borrowers, one on one, in their homes Titanium Solutions can help them overcome the roadblocks keeping them from starting their Home Affordable Modification trial periods, "said Ingrid Beckles, Senior Vice President Of Default Asset Management at Freddie Mac. "We believe this can give borrowers seeking Home Affordable Modifications the same type of personalized guidance they may have had when they were buying their home or applying for their mortgage."
"Through this initiative, Freddie Mac again demonstrates their commitment to helping homeowners in need. We are pleased to work with them to improve contact with at risk homeowners who are in jeopardy of losing their homes to foreclosure, as well as increasing the number of homeowners who receive and are approved for a modification," said Patrick Carey, Chief Executive Officer at Titanium Solutions, Inc.
Reaching Delinquent Borrowers in their Homes
Titanium Solutions representatives will provide borrowers seeking Home Affordable Modifications with a wide range of support and expertise from reviewing program requirements, to explaining which documents are needed, to securing signatures and walking them through unfamiliar processes.
To minimize potential fraud by imposters, Titanium Solutions representatives will not accept mortgage payments or any other money from borrowers. Representatives will also carry a copy of their servicers' solicitation letter the borrower initially received. These letters are specially formatted and include unique information about the mortgage loan.
For more information about Freddie Mac efforts to help borrowers and support Making Home Affordable, visit freddiemac.com/avoidforeclosure."
As more information on this program and others to help current and potential home owners develops we will of course provide information.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
In just recently released numbers, sales of existing homes rose in August for the fifth consecutive month, adding support as the real estate market continues to try and rebound.
The report indicated a rise in home sale of 0.7% from August 2008 to August 2009 and while this number was less than gains in recent months, it was still an encouraging sign as we transition from the summer into the fall and head near the end of the current version of the home buyer tax credit.
However, the more interesting information in the latest report is the geographic split in the numbers. With the West providing much of the positive in the report and far outpacing other parts of the country in sales. As home sales rose 12% in the West in August.
In addition, the report shows that new and existing home inventories continue to drop, which is a good sign for the market. And that 93.3% of all sales were existing homes, which should continue to help inventories.
Also, in looking at the numbers, the report shows us that currently there is only a 3 month supply of housing on homes between $100,000 and $250,000 in the West. That is perhaps the most encouraging sign that lower end home prices are moving and should provide support in the market from the bottom up and perhaps eventually lead to a recovery.
As always we will provide updates and additional analysis as it comes. However, the latest home sales report definitely provides information that provides positive information on a national basis and even more so for housing in the West.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
As we head into October the $8,000 first time home buyer tax credit nears its deadline of November30th. Meaning that buyers have very little time to left to purchase a home and close on the home to take advantage of the credit. However, multiple campaigns have begun from lawmakers to introduce a six month to one year extension of the $8,000 first-time homebuyer's tax credit.
In addition to lawmakers, we have see realtors, bankers and homebuilders joining in the push, starting a campaign that encourages Congress to extend the program for one year with the tag line: "Don't Let America's Real Estate Recovery Expire."
Specifically from the White House, spokesman Robert Gibbs told reporters that President Barack Obama's economic team is looking at the tax credit and "evaluating the impact" on new home sales.
"Through that evaluation we'll come to something to give the president a recommendation," Gibbs said.
One more popular version of the legislation would extend the program through the end of 2010, almost double the credit to $15,000 and remove restrictions that prohibit individuals who already own homes or earn $75,000 -- $150,000 for couples -- from getting the tax break. The bill, first introduced in June, failed in a 47-50 Senate vote in August. And it seems that with the current budget deficit that this specific version of the legislation may not pass. However, additional is mounting to extend the tax form in its current state for a longer period.
That is because the home buyer tax credit has received much praise for increased home sales and even some increased average housing prices seen over the summer season, as indicated by Realtors and Commerce Department data and the S&P/Case-Shiller index respectively.
Whether or not the tax credit will be extended is obviously still very much so up in the air. As additional information develops we will pass along the information. In the mean time, with many new home buyers trying to take advantage before the credit goes away, October could be a very busy month for new homes sales.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
The FHA 203K loan is available for the purchase or refinance of a property and takes into account the purchase price or payoff (in the case of a refinance) and then adds in the cost of repairs to create your new loan balance. The repairs are then completed after the loan closing.
Property Value
The property must be appraised based on what the property will be worth after repairs. This value will then be used for a property value and the loan to value will be based off of the new loan value.
Streamlined
The maximum repair amount allowable is $35,000 with no minimum amount that can be taken for repairs. The funds will be escrowed at closing and released as the work is completed. A general contractor is not needed, but the work must be completed by a licensed professional.
Eligible Improvements
Eligible improvements include: repair/replacements of roofs/gutters, hvac, plumbing, electrical, flooring, painting, appliances, patios, porches, driveways, windows, doors, septic systems and other common repairs.
Ineligible Improvements
Ineligible improvements include: complete remodeling, new construction, structural issues, landscaping. As well any repairs taking longer than three months or not starting within 30 days of closing are ineligible.
These are just some of the basics of the FHA 203K Loan. In today's market this can be a very important loan program for both new buyers and existing home owners. If you have a property that needs minor repairs, this may be the loan for you.
For more information on the FHA 203K loan as well as additional loan programs and current rates, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
As we head into the fall, recent housing numbers and anecdotal evidence, suggests that home buying has certainly picked up. One of the reasons for the increase in home sales, outside of lower prices and interest rates, is the $8,000 first time home buyer tax credit. This credit applies to new home buyers (or those who have not owned a home in the past three years) and it comes to an end on Monday November 30, 2009.
What that means, is that in order to take advantage of this credit, your home purchase must close by that date. With most home closings taking between 30 and 45 days in the current market, that means we are getting closer and closer to the deadline to where new home buyers will be certain they will be able to take advantage of this credit.
For those that have interest in purchasing and obtaining the tax credit, now would be the time to act. Especially if you have concerns which may lengthen the process, such as credit or down payment issues that may affect the loan process.
In addition, there is also a negative in the positive that is increased buyers; that is a more difficult time in getting your purchase offer accepted. Home buyers and real estate agents in the current market have reported that multiple offers are common place on almost all bank owned homes in the current market. Meaning that it could take longer until you have your offer accepted, as you may end up having to bid on more than one property.
In addition, other transactions such as short sales, will typically take longer to close as well, as a third party bank must approve the sale.
What this all means is that this is certainly an opportune time to purchase, with the combination of affordability and tax credits in the current market for buyers. However, with the time length from start to finish of purchasing a home in the current market, November 30th is a lot closer then it may seem. If you are looking to purchase, now may be the time to contact a mortgage broker to begin the prequalification process and real estate agent to begin searching for homes.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
Credit Scores and Down Payments for Mortgage Loans
In today's mortgage and real estate market, two of the most common questions we receive are, what type of credit score do I need to purchase or refinance a home. And what type of down payment do I need to purchase a home. The answer is, it depends on the type of loan you can obtain, what type of property it is and whether you plan on living in the home or renting it, among other things. As always, this information is subject to change, but here is a brief synopsis of where we sit in the current market.
Credit Scores: First, one of the most important issues to consider is your credit score. We have written articles in the past which can be read on our blog about keeping good credit and improving your credit score and will provide more information in the near future as the scoring models change. But, the credit score you need will depend upon the type of loan you obtain.
The minimum score you will realistically be able to obtain financing with in this market will be a 620 fico score. With a 620 credit score you will be able to obtain an FHA loan, a Veterans Administration (if you are active or retired military) or even a conventional loan. However, if you score is in this range, it will probably make sense to not obtain a conventional loan as it will be pricier for a fico in that range.
Instead if you are looking to obtain a conventional loan, to obtain the most ideal rates you will now need a 740 fico, with good rates still available, but not the lowest available at 740, 720, 700, 680, and 660 and down to a 620 fico.
Down Payments:Next you must consider down payments for the type of loan you are looking for. The lowest down payment available is currently, nothing, as Veterans Administration loans do not require any down payment. These loans are of course for current or retired military with proper qualification however and only can be used for the home you will live in, no investment or second homes.
Then there is FHA mortgages which now have a minimum down payment of 3.5%. There are no restrictions on who can obtain an FHA loan and these types of loan even allow for someone not living in the home to help the buyer qualify, such as a parent co-signing for a child. However, these loans are again only for primary residences and no investment or second homes.
Finally, there are conventional loans. The minimum down payment for conventional loans will be 5% for a primary residence and even that is getting more and more difficult with 10% now becoming the norm. However, you can also finance second homes and investment properties as well through conventional loans, with a minimum of a 20% down payment required.
These are just some of the many factors to consider when purchasing or refinancing a home, but this should provide answers to two of the most common questions in today's market.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
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.
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