Dont wait to purchase a home! Waiting will cost you $$$ Thousands More This Spring.
First time home buyers can get a tax credit for UP to $8000.00 with a binding contract dated before April 30, 2010.
Also established is a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence on or before April 30, 2010. Qualified long term home owners must have owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, both spouses are required to have lived in the in the home for atleast 5 years with this being confirmed by reviewing the homeownership history. That is, both spouses must qualify as long-time residents, with at least five years of principal residency for each.
One plus is that repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
Now on to more changes in the works..that could add up at the closing table. The Housing and Urban Development (HUD) is to implement several changes for loans guaranteed by the Federal Housing Authority (FHA).
Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates low for over a year), these FHA changes make it even more important to act now to save big.
Here are a few reasons why:
On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.
Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.
There is only one way to avoid being affected by all of these costly changes that lie ahead – Call or email me so I can help you not only find the home of your dreams but to also help you save money.
The Senate passed the 700 Billion dollar Bailout of Freddie Mac and Fannie Mae today. I am curious if everyone out there knows what these companies do and why the Government stepped in to help out.
First, to help clear some of the confusion, these two companies are mortgage guarantors. Fannie Mae was created back in the Great Depression by Roosevelt’s administration to back loans by private banks in order to make homeownership more assesible. Years later the government allowed Fannie Mae to be privately managed. Freddie Mac was created by the government to keep Fannie Mae from becoming to big.
Fannie Mae and Freddie Mac guarantee more than $5 trillion in mortgages, almost half of those in the United States, With many of the mortgages defaulting, the companies are, in effect, bankrupt. These two companies are such a large part of our financial system that failure of one or both would be detrimental Nationally and Globally.
This takeover was put in place to protect us, the taxpayer. How, well the U.S. government will be creating more demand in the marketplace by buying Fannie and Freddie mortgage bonds, homeowners and buyers should start seeing lower mortgage rates. This may become one of the best times to purchase or refinance your home.
I read this article today and wanted to share it regarding The Private Mortgage Industry’s Role in the Current Mortgage Crisis
The blame game for the development of the current mortgage crisis is now in full swing, and, with one exception, no major participant escapes unscathed:
1. Lenders and investment bankers drastically relaxed their underwriting standards in response to the euphoria associated with rapidly rising home prices during 2000-2006. They approved loans that could not possibly be repaid without an indefinite continuation of house price inflation.
2. Bank regulators ignored the breakdown of underwriting standards until it was much too late to take effective action.
3. Mortgage brokers and loan officers encouraged borrowers to buy more house than they could afford, and to accept toxic mortgages that they did not fully understand.
4. Consumers allowed themselves to be seduced into buying houses they couldn’t afford, into purchasing second and third homes on speculation, and into depleting their existing equity through cash-out refinances, in order to maintain lifestyles they could not sustain.
5. Rating agencies provided AAA and AA ratings to securities issued against pools of new types of extremely risky loans, when they had no adequate statistical basis for estimating potential losses on the loans.
6. Fannie Mae and Freddie Mac invested in such securities, taking large losses and weakening their capacity to be a source of strength during the crisis period.
7. The Federal Reserve kept interest rates low well past the point where they should have raised them, and, as a regulator, was as asleep at the same switch as all the other regulatory agencies.
The exception is the private mortgage insurance (PMI) industry. It is the one sector that has not been cited as contributing to the crisis.
Since the industry was reconstituted in the late 1950s, it has enabled borrowers to obtain conventional loans — those not insured or guaranteed by the federal government — with down payments of less than 20 percent. Insurance premiums were scaled to down payment — the smaller the down payment, the higher the premium.
PMIs must place half of their premium inflow in contingency reserves which can’t be touched for 10 years except to meet unusually large losses. This encourages the companies to set premiums based on estimates of losses over long periods, so premium rates change infrequently. And it severely dampens the temptation to make a lot of money in a short period by taking advantage of ebullient markets. PMIs can’t pay themselves premiums net of losses in the current year, as most lenders and investment banks can.
The PMIs did not fully participate in the euphoria and excess that preceded the crash. They did insure some risky loans that would not have been acceptable to them earlier, but for the most part they stuck to their guns. As a result, their market share declined with the emergence of “piggybacks” (when a home is purchased using more than one mortgage from two or more lenders).
Lenders discovered that they could make 95 percent and even 100 percent loans by getting other lenders to offer second mortgages for the amounts over 80 percent of property value. Piggybacks carried higher rates than the first mortgages, but in many cases the cost to the borrower was smaller than the cost of mortgage insurance. The interest on piggybacks was deductible, while mortgage insurance premiums were not. In addition, borrowers could pay off the second mortgage in full at any time, whereas getting rid of PMI was a hassle.
Of course, the PMIs did not give up market share willingly. They induced Congress to make mortgage insurance premiums deductible, at least for a period, but this had only a small impact.
Had PMIs followed the prevailing pattern during the go-go years, they would have cut their insurance premiums sharply and gone after the riskier loans. But they didn’t, and the piggyback market thrived until the crisis hit. At that point, the market got an object lesson in the value of PMI. First mortgage lenders discovered that piggybacks provided substantially less protection against loss than PMI. As home prices declined and the crisis grew, a large proportion of piggybacks (the market has now virtually vanished) lost all or virtually all of their value.
Borrowers experiencing payment problems discovered that having to deal with two lenders was a substantial barrier to getting loan contracts modified. In contrast, mortgage insurers will often help borrowers negotiate modified contracts with first mortgage lenders.
Nonetheless, the PMIs have been badly hurt. Losses have been eroding their capital and reserves, and their stock prices have tumbled badly. Yet the industry is doing exactly what it was set up to do, which is to cover losses to lenders during a period of stress, out of reserves that they accumulated during periods of prosperity. The industry should play a more prominent role in the very different housing finance system that emerges in the future.
I was reading an article in a real estate magazine “Texas Realtor” regarding flood insurance and wanted to touch briefly on it with you all. Flood Insurance like earthquake insurance is considered ’single peril’ insurance and is sold seperately by the Insurance company. For most people this is an extra expense that they feel is unnecessary until the unforeseen happens and their home floods.
Most of the time you will find that a home will be located in a 100 year flood zone, but what does that mean? Well, it means that there is a 1% chance that a major flood will occur in any given year, not once in a 100 years as the name implies.
Can a home that has flooded before be covered under flood insurance.. the answer depends on if the home is in an area that participates in the National Flood Insurance Program. Areas that flooded two consecutive years are considered to be in a flood plain also know as Special Flood Hazard Area (SFHA). These homes are at a high risk for a major flood event - a 26%+ chance over the life of a 30 year mortgage. If a home lies within an SFHA the lender will require flood insurance.
Should you get Flood insurance? Statistics show that 25% of the homes that flood come from areas considered to be low to moderate risk. FEMA works hard to redraw the imaginery lines for flood zones. So it is up to you as a homeowner to decide whether or not to purchase flood insurance just keep in mind that it doesn’t take a major Hurricane like Katrina to flood an area. A slow-moving system can do just as much damage.
If you still are unsure please visit www.floodSmart.gov for more information on flood insurance, risk of flood and tips for homeowners.
Talk to you again soon,
Patti
p.s. “People will forget what you said. People will forget what you did.”
“But people will never forget how you made them feel.”
After looking at the comparables for the area a reasonable offer for the home of your dreams is agreed upon and your realtor will submit to the sellers real estate agent. Once submitted, the Sellers agent will come back with an accepted offer, or the negotiations will begin until an agreement is met. With Foreclosures or Short Sales the time frame will be longer. Foreclosures can take up to 60 days from offer acceptance to closing.
Now that the offer is accepted the contract is sent over by your realtor to the Mortgage Broker or Bank and they will start the loan completion process. Up until now you as the buyer have a pre-approval letter. It is your mortgage broker/bankers’ responsiblity to stay on top of getting your loan closed. There will be various documents needed to complete this process. Whatever you do, do not go purchase anything on credit that might change your approval status.
While this is going on there is an option period that you as a buyer can pay a small fee normally $10 a day for 10days. This will give you time to have the home inspected to ensure there is no costly damage, such as foundation or roof repairs needed and to ensure no termite damage.
Once the inspection is done and the loan is approval process is completed the mortgage folks will order an appraisal, and the title company orders the survey,
This process is normally done within a 30 day period unless it is a foreclosure and then it can take longer. Before you go to closing your realtor will receive a HUD statement which breaks down the expenses for closing on the home and will let you know what $$ amount is needed. There are a lot of documents that must be signed so expect the closing to take about 45 minutes.
Heres to wishing you luck on your new home purchase, give me a call I will help you….www.pattimace.com or pattimace@sbcglobal.net.
Talk again soon,
Patti
Now that you understand where credit scores are derived from the next step in your home purchase is to go to your bank or a mortgage broker and get a pre-approval letter. This pre-qualification will let you know based on your income and debt ratio what price range your home purchase needs to be at/under.
Realtors do not want to disappoint their clients in anyways so as a realtor when a client comes in the first step is the pre-qualification with a mortgage broker or bank. This prevents the realtor from showing clients homes that are not within their ratio and ultimately making it more difficult to find them a home that fits their personality.
The next step in your home purchase is knowing where you want to live. Is there a subdivision or rural area that particularly interest you? If you are new to the area then this could be a difficult decision but ask around your job or friends to see what opinions they have.
Now that you have the pre-approval and know what area you would like to live in then the next step is to get with your realtor and/or find a realtor if you do not have one yet. This step is easy if you live in Texas near the Woodlands, Houston, Spring, or surrounding areas you can contact me at pattimace@sbcglobal.net, if not then I would be glad to assist you in finding someone in your area, or speak with a family member, or friend.
Realtors and clients then work together to find out what type of home you like, traditional, colonial, modern. Then how many bedrooms, bathrooms, and other areas you desire such as a study, or a gameroom. Do you want an older home in a mature area with grown trees or do you like the feel of a new home in an up and coming area.
Once this is all figured out off we will go to look at the inside of the homes to see how well they have been maintained and if the home fulfills your desires. Most clients like to see 8-10 homes or more before making a decision and will usually narrow down to two and go and look at them again to make their final decision.
See you back here soon to check out my next blog on ….Now that the home has been chosen what is the next step……..
www.pattimace.com …. pattimace@sbclgoblal.net
This home has been well taken care of, great for entertaining and I hear it calling your name. Please give me a call to see this home. Will not last long on the market. www.pattimace.com, email pattimace@sbcglobal.net.
FHA and Down Payment Assistance Update :
The California Federal Judge has ruled in favor of the Down Payment Assistance Programs. This is definitely Great news especiallay since Hud has been trying to have the Down Payment Assistance programs ruled against by the Federal Judge, however, the Judge has ruled against Hud and for the Down Payment Assistance programs. Hud has now been stopped from ruling against the DPA’s permanently, Safe at last!.
Another issue that is good for buyers and was approved is the FHA Loan amount has now increased to $271,050.00 for Harris and surrounding counties. This will give buyers more options when deciding on which loan option to take FHA, VA, or Conventional.
For Buyers
Buying a home is an exciting time in one’s life. Making the smart move of choosing a REALTOR® is your first step to ensuring that your new home and community meets your needs. My services and experience range from financial aid to helping you find the home that best suits you and your family. For your convenience, I also provide listings by email. I pride myself on repeat business and hope you’ll come to understand why.
As Your Agent, I Will:
* Assure that you see all the properties in the area that meet your criteria.
* Guide you through the entire home buying process, from finding homes to look at, to getting the best financing.
* Make sure you don’t pay too much for your new home and help you avoid costly mistakes.
* Answer all of your questions about the local market area, including schools, neighborhoods, the local economy, and more.
Before You Start Looking For Your New Home:
* Check your credit rating. Straighten out any errors before its too late.
* Determine a comfortable monthly budget for your new purchase, including down payment and monthly payment.
* Find a loan program that meets your needs and get pre-qualified (preferably pre-approved).
* Choose a REALTOR® that you trust and who understands your needs.
* Determine what neighborhood best matches your needs.
* Identify important features you need your new home to have.
Closing Costs to Expect:
* Lender fees include charges for loan processing, underwriting, preparation and establishing an escrow account.
* Third-party fees include charges for insurance, title search, and other inspections such as termites.
* Government fees include deed recording and state & local mortgage taxes.
* Escrow and interest fees include homeowner’s insurance, loan interest, real estate taxes, and occasionally private mortgage insurance.
