Latest daily news tips for Buyers
Gov’t official warns on home downpayment hikes
WASHINGTON – March 12, 2010–
FHA commissioner David Stevens said at a House hearing Thursday that his agency would insure 300,000 fewer loans per year if the mandatory downpayment was hiked from the current level of 3.5 percent to 5 percent. The FHA does not make loans, but offers insurance against their default. It has been insuring roughly 30 percent of new loans, and is the largest backer of mortgages to first-time buyers.
The agency said in January it would raise fees and tighten lending standards to shore up its strapped finances in hopes of avoiding a taxpayer bailout. The government agency, which has faced rising losses from foreclosed homes, has seen its reserves sink below the minimum level required by Congress.
Under the proposed changes, many of which need to be approved by Congress, homebuyers would pay an upfront mortgage insurance premium of 2.25 percent of the total loan amount. That’s an increase from the current level of 1.75 percent. A borrower taking out a $200,000 mortgage would pay a $4,500 fee, for example, rather than the current fee of $3,500.
Credit score requirements also will be hiked. Borrowers with a score lower than 580 now would need a downpayment of at least 10 percent.
Tax credit extended for active duty military
WASHINGTON – March 16, 2010 – U.S. servicemen out of the country for 90 days (since 2008) may have an extra year to get the tax credit, up to $8,000, for buying a home.
The qualification must be for “official extended duty outside the United States for at least 90 days after 2008 and before May 1, 2010.”
Should that be the case, however, the homebuyer has an extra year to buy a home. He or she has until April 30, 2011, to secure a binding contract, and until June 30, 2011 to close on the home. Other conditions such as a maximum $8,000 for first-time buyers and $6,500 for move-up buyers still apply.
For advice in any specific case, consult a qualified tax advisor. The applicable IRS publication is posted online (PDF format) at: http://www.irs.gov/pub/irs-pdf/p3.pdf
Getting a mortgage without perfect credit
WASHINGTON – March 17, 2010
Today it is unquestionably more complicated and difficult to get a home loan than it used to be. Burned by the recent housing meltdown they helped to create, lenders currently go over every requirement with a fine-tooth comb. They are looking for higher credit scores and more money down.
What about more complicated scenarios? I checked on a number of specific situations – for example, people who can put 20 percent down but have a credit score of only 630, or people who have a score of 630 and only 10 percent to put down. I found these deals can get done but, not surprisingly, you will pay an additional quarter- or half-point. This means that instead of getting a 30-year mortgage at 5 percent, you would have to pay from 5.25 percent to 5.5 percent. Not too bad.
Don’t assume your hands are tied
How can you determine which opportunities are available to you and which best suit your particular circumstances? I’m still a big fan of doing homework. I recommend that you consider seeking input from multiple sources, such as your current servicer, your local bank and your mortgage broker, and your local real estate professional.
If you’re in the market to buy a home, set these levels as your minimum standards, understanding that the better your credit and the more you can put down, the better your chances of getting the lowest mortgage rate available.
Tax credit has Realtors’ phones ringing as deadline draws near
Phones are ringing a lot more in recent weeks as folks scurry to sell and or buy homes before next month’s tax credit deadline.
To qualify for the credit, buyers must have fully executed sales contracts in place by April 30 and the deal must close by June 30.
First-time homebuyers are eligible for up to $8,000. Buyers who have owned a home for five consecutive years within the past eight years can get a credit of up to $6,500.
“People are no longer afraid to do something. They were afraid for so long.”
Real estate agents estimate that as many as 60 percent of homes for sale are listed as short sales. Some buyers, agents say, are even willing to pay a little higher purchase price to ensure they’ll get the tax credit.
Rates on 30-year home loans fall to 4.93%
Mortgage Rate Trend Index. WASHINGTON – Feb. 19, 2010 – Rates for 30-year home loan went lower for the second straight week, a report said Thursday, but remained above last year’s record lows.
NAR rolls out consumer website
WASHINGTON – Feb. 17, 2010 – The National Association of Realtors® (NAR) launched HouseLogic. The free website helps homeowners plan and organize their home projects and provides timely articles and news; home improvement advice and how-to’s; and information about taxes, home finance, insurance, and how increase the value of their homes.
Users who choose to register can save information, create to-do lists and set project reminders.
Visit HouseLogic at www.houselogic.com.
Investors squeezing out homebuyers by paying cash?
WASHINGTON – Feb. 16, 2010 – The residential property market – characterized by favorable prices and tax breaks – is heavily weighted in favor of buyers.
Both first-time buyers and investors who see a good opportunity are making a run at the deeply discounted foreclosures that have flooded the market.
But, even though a first-time buyer may be offering the same price as an investor, or a higher price, the investor has the edge. The investor may actually pay less but, it’s cash, right now.