I have just had an opportunity to review a summary of the new housing bill that was put together by the Mortgage Bankers Association. It appears that we will still be able to utilize the Down Payment Assistance (DPA) programs for all loans "credit approved" prior to 10/1/2008. So now we know our window of time is 60 days. It is very important to get this word out to potential buyers, especially if they are already pre-approved using a DPA! I see this as a HUGE opportunity for us to create a sense of urgency and get some buyers off the fence in the next 2 months!
Even after the 10/1 date, I still see some positives in this whole situation. The FHA down payment requirement does increase from 3 - 3.5%. However, it now allows for not only gifts from family members but also loans from family members, provided the loan is subordinated and the total CLTV does not exceed 100%. Seller concessions remain untouched at 6%. HOME & HOP funds (locally using mainly "Community Connections") are still allowed although please keep in mind that the City of Fort Wayne grant money is already gone for 2008. We do, however, highly encourage all First Time Homebuyers to apply for the MCC tax credit that can still save them up to $2,000 year and is very inexpensive, not to mention relatively simple for us to process here at Hallmark. All in all, we believe this new bill will ultimately bring forth a stronger, more prepared homeowner which will benefit all of us in the long term. Those who are serious about homeownership should be able to find a way to save, borrow or be gifted their 3.5% and be more committed to making house payments because of it. There may be a short lag time for the public to change their mind set of 100% financing, but it will happen.
One question we have already been asked a few people is, "What is the $7,500 tax credit we have heard about?" The following can be found in the attached file under "Division C - Tax-Related Provisions" on page 9:
"TITLE I - HOUSING TAX INCENTIVES (Division C, Title I)
• First-Time Homebuyer Tax Credit: Makes a qualifying individual or a couple, who is a first-time homebuyer of a principal residence in the United States from April 9, 2008 through April 1, 2009 eligible for a tax credit not to exceed $7,500 (to be paid back over 15 years) Credit will begin to phase out if single taxpayer's income exceeds $75,000 per year or the couple's income exceeds $150,000. "
I am sure you are thinking the same thing we are about are the details relating to the tax credit having to be paid back over 15 years. We haven't seen any more details than that as of yet but it appears that it isn't free money!
We all need to stay positive and see this as a short-term opportunity to get some of our on the fence customers to buy sooner instead of later and a long-term opportunity to strengthen the entire housing market in Fort Wayne!
Have a great day & visit my website www.HallmarkHomeMortgage.com/ngaier