Declining First Time Home Buyers Slows Recovery

Bloomberg Personal Finance is reporting that Americans are being shut out of the housing recovery

because of rising prices and tougher credit standards. First-time buyers accounted for 26 percent of purchases in January, the lowest level recorded by the National Association of Realtors (NAR) since it began tracking the data in October 2008. The decline of these buyers threatens to slow the pace of the economic recovery.

Inventory Smaller

More moderately priced homes are usually the main inventory for first time home buyers, and that inventory has shrunk do to cash investors snapping them up for rentals. In December, 47 percent of U.S. purchases were paid for with cash, up from 27 percent a year earlier. In addition adding to the already shortened supply, thirty-nine percent of owners looking for better homes plan to keep their current house as a rental. Higher mortgage costs are also a burden for first timers. Rates for 30-year fixed loans climbed to 4.37 percent last week from a near-record low of 3.35 percent in early May.

Lender Issues

The FHA, the biggest source of financing for first-time buyers, has raised the cost of borrowing and tightened underwriting to cope with losses on mortgages it insured as the property bubble burst. The number of FHA borrowers purchasing their first homes declined by 38 percent last year. For buyers whom go with other lenders they are requiring higher FICO scores. More than 40 percent of borrowers in 2013 had FICO scores above 760, compared with about 25 percent in 2001. Because of these difficulties, new home owners aren't even applying for home loans.

Young People Home Ownership Down

The home ownership rate for people in their 20's and 30's fell to 42.2 percent in 2013, the lowest in 19 years of Census data. While purchases rose 8.2 percent for residences costing more than $250,000, they fell 10.7 percent for homes worth less. Leslie Appleton-Young, chief economist for the California Association of Realtors sees the decline as ‘a huge problem’. Another economic factor to add to the decline of first time home buyers is, housing prices are rising faster than incomes at this point. What’s a first time home owner to do? Focused strategy oriented planning is the best path for those interested in purchasing their first home. 

Why Winter Is a Great Time to Buy Real Estate

This Story was originally posted on LearnVest  by Pauline Millard on Dec 23, 2013

December is usually when people are looking to deck their own halls—not buy new ones. But buying a home in December and January can be a smart move.

Michael Corbett, Trulia’s real estate expert and a bestselling author, is a big fan of the holiday season, what he likes to call “the lull.” He says that savvy home buyers should take advantage of this time if they’re serious about buying.

Why?

“Mortgage rates are low now, although they are higher than they were six months ago, and higher than they were last March,” Corbett says. “The price increases that were common in metro markets such as Las Vegas, Fort Lauderdale and Orlando are slowing. Even Atlanta, which had an average 19% price increase last year, is showing signs of cooling.”  Corbett explains why the holidays are no time to take a long winter’s nap if you want to buy a home.

LearnVest: What do you like about what you call The Lull, which is in December and January?

Corbett: There isn’t a lot of competition. People know they’re going to be busy or traveling during the holidays, so most deals have been wrapped up or people have put off looking until after the New Year. There are still homes on the market, but not as many people gunning for them. This is an advantage to both buyers.

LearnVest: If it’s a slow season, doesn’t that mean inventory will be lower?

Corbett: Yes, but the sellers are motivated. These are likely the homes that for whatever reason didn’t go during the peak season. The sellers will want to get the deal closed, especially for tax purposes. For a lot of people, it’s mental. It’s the end of the year and they want to tie up loose ends. This is an advantage for buyers, especially if there are points to negotiate.

LearnVest: Would other key people in the equation, such as realtors and mortgage brokers, also be scarce?

Corbett: I know a lot of realtors who love this time of year. They say they get a lot of business done because the people who are out looking are serious. As a buyer, your broker will have more time to focus on you, as opposed to other times of the year when they might be juggling more clients. You may not be able to close before the end of the year, but it’s a good time to get something under contract.

“Buying in winter may be the ultimate litmus test for a home, since all the big systems such as heating, plumbing, and the roof and gutters are put to the test in the cold.”

LearnVest Could a homebuyer miss or overlook something while buying in the dead of winter?

Corbett: Buying in winter may be the ultimate litmus test for a home, since all the big systems such as heating, plumbing and the roof and gutters are put to the test in the cold. Some of the curb appeal may be gone, but fixing landscaping is a lot less expensive than finding out months later that your boiler doesn’t work.

LearnVest Would a slow winter market be prime time for investors?

Corbett: Investors are looking for fresh properties, often things that aren’t even on the market yet. The chances of getting outbid by an investor during a winter house hunt is unlikely. Few brand-new properties come on the market this time of year, so the investors won’t be circling.

Mortgages Rates Rising & QM Standards in 2014 are Loans Hard to Get?

An analysis of home loans showed that 1 in 5 current mortgages would not meet the qualified

mortgage safe harbor standard that goes into effect in January.

What the New Rule Means for Borrowers:

AOL Real Estate:  "Under a provision in the Dodd-Frank Act, lenders must verify a mortgage applicant's ability to repay the loan. A borrower's debt-to-income ratio must be 43 percent or lower, plus the mortgage rate needs to be close to the national average prime mortgage rate (within 1.5 percentage points for first-lien loans and within 3.5 percentage points for subordinate-lien loans).

The new QM thresholds take effect Jan. 10, 2014, which will not only impact lenders' liability, but also consumers' ability to qualify for home loans."
Read more: http://realestate.aol.com/blog/2013/10/23/dodd-frank-qualified-mortgage-standard/

Marketwatch: “The average credit score among borrowers who received a mortgage in September was 732, down from a peak of 750 a year prior…. To be sure, the bar to getting a mortgage remains high. Applicants who were denied a mortgage in September had an average FICO score of 696 …”
Read more: http://www.marketwatch.com/story/mortgage-lenders-ease-credit-score-standards-2013-10-16

The Toledo Blade: ”…the regulations also could have the unintended effect of making it more difficult for many working-class families to qualify for mortgage loans offered by major banks.”
Read more at http://www.toledoblade.com/Real-Estate/2013/10/13/Middle-class-buyers-may-feel-squeeze-of-new-mortgage-rules.html

How Are The Banks Doing? 

“SunTrust Banks said Tuesday it will eliminate 800 jobs nationwide, including in Charlotte, the result of a slowdown in its home-loan refinancing business.” “ … with mortgage rates rising this year, lenders have seen weakening demand for refinancing loans. That has led banks, including Charlotte-based Bank of America and San Francisco-based Wells Fargo, to trim the work force that processes those applications.”

Read more here: http://www.charlotteobserver.com/2013/10/15/4390442/suntrust-to-eliminate-charlotte.html#.UmfsWvkWKQA

Maybe now is the time to by before rates get higher and loan standards get tougher. Search the MLS for free here: http://www.realestateinsavannah.net/

It's All About Your Perspective and Your ONE Thing

As Realtors and agents we are aware of the daily challenges in the industry, specifically national issues beyond our control that impact our individual business. One of these of late is mortgage rates. Trying to keep up with the current news on the rates I find that opinions on where the rate is really varies.  It seems that it really is about perspective, which is a great lesson to adapt in our daily lives.

Mortgages Are Interesting

Here are some recent headlines from national real estate news sources:

Mortgage Professionals of America: 9/20/2013 -
Mortgage Applications Head Up as Rates Edge Down

Mortgage applications were up last week as interest rates crept down, according to a survey from the Mortgage Bankers Association. 

Read the article: . http://www.mpamag.com/mortgage-interest-rates/mortgage-applications-head-up-as-rates-edge-down-15796.aspx

Bloomberg News: 9/19/2013 Home Sales Climb as Americans Rush to Lock in Rates
Sales of previously owned U.S. homes unexpectedly rose in August to the highest level in more than six years as buyers rushed to lock in interest rates before they increased further.

Read the article: http://www.bloomberg.com/news/2013-09-19/sales-of-u-s-existing-homes-unexpectedly-climb-to-six-year-high.html

Realtor Magazine: 9/23/2013 

Mortgage Rates Level Off 
Key fixed-rate mortgages held steady this week, remaining near two-year highs.
Read the article http://www.realtor.com/news/mortgage-rates-level-off/

No Matter Where the Rate Is At …

"No matter how success is measured, personal or professional, only the ability to dismiss distractions and concentrate on your ONE Thing stands between you and your goals. The ONE Thing is about getting extraordinary results in every situation." Gary Keller

Keller Williams: 9/19/2013 

Balanced Markets; Big Opportunities: Gary Keller’s Mid-Year Market Update Amounts to ONE Thing: More Sales

The annual pace of home sales in July was 17.2 percent higher than it was last year, putting the industry on pace for the best year in home sales since 2006. “The last time we saw this number was 2003,” said Jay Papasan.  http://blog.kw.com/2013/09/19/balanced-markets-big-opportunities-gary-kellers-mid-year-market-update-amounts-to-one-thing-more-sales/

Mortgages 101

Buying a home will likely be the biggest purchase you’ll ever make and the biggest debt load you’ll ever carry. Unfortunately, almost 75% of buyers admit they never truly understood all the ins and outs of their mortgage before signing on the dotted line. Most people think a mortgage is like a promissory note, where you owe the bank money that is paid back over an agreed upon period of time. Technically speaking, a mortgage isn't a loan. It’s a document that you actually give a bank that says they have the right to use your home as collateral in the event you don’t repay the loan. Given that there is so much at stake it’s highly recommended to know what type of mortgage to use in the purchase of your new home. Two of the most popular are a fixed rate and adjustable rate mortgages but there is a wide variety of other mortgage products available. Here is a description of six broad categories of mortgages.

• Fixed Rate: The interest rate and monthly payments stay the same for the life of the loan.
  
• Adjustable Rate: The interest rate changes every year with the market, and payments may go up or down accordingly. They usually come with ‘caps’. A periodic cap limits how much the interest rate can be increased each time it is adjusted. A lifetime cap is the total amount an interest rate can increase over the lifetime of the loan.
• FHA (Federal Housing Administration) loan - Allows buyers who may not qualify for a home loan to obtain one Low down payment. The size of the loan may be limited.
• VA Loan - Guaranteed loans for eligible veterans, active duty personnel and surviving spouses Offers competitive rates, low or no down payments. The size of the loan may be limited.
• Balloon - Usually a fixed rate loan with relatively low payments for a fixed period. After an initial period, the entire balance of the loan is due immediately.
• Interest Only – the borrower pays only the interest on the loan in monthly payments for a fixed term. After an initial period the balance of the loan is due.

FHA and many other banks have programs or loans that allow you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan. You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage. The government offers a free downloadable brochure to help buyers learn how to shop, compare and negotiate mortgages. The brochure has a Mortgage Shopping Worksheet and a glossary of terms in the back. The brochure is a great tool that any buyer should have as they begin the process of home shopping.

News You Can Use

One of our favorite Mortgage Lenders, Michael Caputo, sent us the following information. Ever wonder what the big hype is over the Greek economy and why we should care about it? Read below.

I had an agent ask what all the talk was about Greece and why we care about it.


First, How Mortgage Rates Work

Rates come from the price of a mortgage-backed bond that's bought and sold on Wall Street, and that has its pricing set in the same way as a stock does -- supply and demand. When demand for bonds is high, in other words, prices rise.

Rising prices means lower rates on mortgage for buyers and refinancing households.

By contrast, though, when demand for mortgage bonds is low, bond prices fall. This leads to higher mortgage rates for everyone.

The relationship between mortgage bond demand and mortgage rates holds for most types of loans including the conforming, FHA, USDA and "high-cost" conventional varieties.

Because mortgage rates are based on the price of mortgage-backed bonds -- as a rate shopper -- one of the most important questions you can ask your lender is "What is the mortgage bond market doing today?".

It's your best insight into where mortgage rates might go next.

Mortgage Rates Sink On Economy, Greece

Since April, demand for mortgage bonds has been high; so high, in fact, that rates plunged to an all-time low, reaching sub-4 percent levels we never thought we'd see.

Mortgage rates have been low because investors need safe places to park their funds. Equity markets are unpredictable and global economies are on shaky ground, at best. And, when in doubt, investors move their money to the safest places they know.

Those places include the U.S. mortgage-backed bond market.

Mortgage rates have been down since April on weak, U.S. economic data and the likelihood of a Greece sovereign debt default. This is because the U.S. economy is a powerhouse and because a Greece default would send shockwaves throughout the Eurozone banking system.

In the U.S., as jobs data sank; economic output reduced; confidence dropped; and home prices idled this summer, demand for mortgage bonds picked up as investors fled stock markets, leading mortgage rates lower.

Greece's issues contributed, too. Markets were of unsure whether Eurozone leaders would offer a bona fide relief program to Greece, and as those doubts grew stronger, mortgage rates sank more.

But then an interesting thing happened.

Mortgage Rates Now "Single-Minded" On Greece

3 weeks ago, mortgage rates bottomed. It was the day before the October jobs report was released and it appeared unlikely that Greece would receive an aid package.

Since that date, however, the U.S. economy has shown signs of life.

The jobs market rebounded strongly, posting healthy gains

Home sales and homebuilder confidence rose nationwide

Retail sales and consumer spending outperformed expectations

To a recovering economy, these are all good signs. However, mortgage rates failed to rise to reflect that. Instead, markets remain captivated by what may -- or may not -- happen in Greece.

That mortgage rates are still low signals that concerns for Greece -- and the rest of the Eurozone -- have cast a long shadow on the mortgage bond markets. You can trace each day's mortgage rate movement to comments regarding Greece. The stock market is moving in kind.

Today's mortgage market has a one-track mind. As Greece goes, so goes mortgage rates

Rate Alert : Greece Aid Expected

Eurozone leaders are expected to announce an aid package for Greece. This is the news for which mortgage markets have been waiting since April 2011. If the program is deemed "good enough", stock markets will soar and bond markets will sink.

This will take rates higher.

There's too much risk in today's market. If you're shopping for a mortgage right now, do the safe thing -- get your mortgage rate locked.

That takes us to Thursday morning where the European Union reached a deal on the bank debt situation. Stocks will do very well today and mortgage rates will go up.

Do You Know Your Credit Score?

Our friend Michael Caputo at Starkey Mortgage sent us some great information the other day about credit scores. Whether you're looking to buy or not, it's always good to keep tabs on your credit score. See his article below.

It is always a good idea to check the accuracy of the data on your credit report. Consumers can receive a free copy of their credit report each year by visiting http://www.annualcreditreport.com/ 

Eligibility for a particular loan program and the interest rate associated with it can be impacted by a borrower’s credit score. After reviewing the report, a consumer can initiate a dispute on line.
If there are any errors on the report that need to be corrected. http://www.equifax.com/ has a tremendous amount of resources designed to help an individual improve their credit history and better manage.
The credit that they have. The higher the credit score, the lower the perceived risk for an mortgage applicant. Please feel free to call anytime to review your credit report and discuss ways to improve your credit score.

Michael Caputo
Starkey Mortgage
912-658-2366

What is HomePath Mortgage?

 HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed.


Benefits to the Borrower:

• Low down payment and flexible mortgage terms (fixed–rate, adjustable rate, or interest–only).

• Down payment (at least 3 percent) can be funded by the borrower’s own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.

• No lender-requested appraisal.

• No mortgage insurance; ask your lender for cost details on loans without mortgage insurance.

• Expanded seller contributions for closing costs allowed.

• Available for primary residences, second homes and investment properties.

• Many condo project requirements are waived

Contact us today for a FREE guide to HomePath Mortgage.

5 Mortgage and Foreclosure Myths

Here's a great article from Trulia blogger Tara-Nicholle Nelson on 5 mortgage and foreclosure myths. If you're facing a major decision regarding your home, remember to turn to the experts. For real estate advice contact us today to discuss your situation. Looking into a short sale on your home? Visit http://www.shortsalesinsavannah.net/ to explore your options. Just thinking about refinancing? Visit the Concierge page of DonCallahan.com for a list of local lenders.
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In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction. For buyers, misinformation can be the difference between qualifying for a home loan or not. Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.

1. Myth: Buyers with bad credit can’t qualify for home loans. Obviously, mortgage guidelines have tightened up, big time, since the housing bubble burst, and they seem likely to tighten even further over the long-term. But just this moment, they have relaxed a bit. In the last couple of weeks, two of the nation’s largest lenders of FHA loans announced that they’ve dropped the minimum FICO score guideline from 620 (which allows for some credit imperfections) to 580, which is actually a fairly low score.

At a FICO score of 620, buyers can qualify for FHA loans at many lenders with only 3.5 percent down. With a score of 580, the lenders are looking for more like 5 to 10 percent down – they want to see you put more of your own skin in the game, and the higher down payment lowers the risk that you’ll default. However, if your credit has taken a recessionary hit, like that of so many Americans, this might create a glimmer of hope that you’ll be able to take advantage of low prices and interest rates without needing years of credit repair.

2. Myth: The Mortgage Interest Deduction isn’t long for this world. Homeowners saved over $85 billion in 2008 by deducting their mortgage interest on their income tax returns. A few months ago, the National Commission on Fiscal Responsibility and Reform caused a massive wave of fear to ripple throughout the world of real estate consumers and professionals when they recommended Mortgage Interest Deduction (MID) reform, which would dramatically reduce the size of the deduction.

Fact is, the Commission made a sweeping set of deficit-busting recommendations to Congress, a few of which are likely to be adopted. Fortunately for buyers and sellers, MID reform is not one of them. Very powerful industry groups and economists have been working with Congress to plead the case that MID reform any time in the near future would only handicap the housing recovery. Congress-folk aren’t interested in stopping the stabilization of the real estate market. As such, the MID is nearly universally thought of as safe – even by those who disagree that it should be.

3. Myth: It’s just a matter of time before loan guidelines loosen up. The US Treasury Department recently recommended the elimination of mortgage industry giants Fannie Mae and Freddie Mac. I won’t get into the eye-glazing details of it here, but the long and the short is that (a) this is highly likely to happen, and (b) it will make mortgage loans much harder and costlier to get, for both buyers and homeowners. It’s possible that loans are as easy to get as they’re going to get. So don’t expect that if you hold out, zero-down mortgages will come back into vogue anytime soon. Fortunately, Fannie and Freddie aren't likely to disappear for another 5-7 years, so you have a little time to pull your down payment and credit together. If you want to get into the market, the time to get yourself ready is now!

4. Myth: If you don’t have equity, you can’t refi. Much ado is being made about how stuck so many people are in their bad loans, because they don’t have the equity to refinance their way out of them. If you’re severely upside down (meaning you own much, much more than your home is worth), stuck may be the situation. But there are actually a couple of ways homeowners can refi their underwater home loans. If your loan is held by Fannie or Freddie (which you can find out, here), they will actually refinance it up to 125% of its current value, assuming you otherwise qualify for the loan. That means, if your home is worth $100,000, you could refinance a loan up to $125,000, despite the fact that your home can’t secure the full amount of the loan.

If your loan is not owned by Fannie or Freddie, you might be a candidate for the FHA “Short Refi” program. While most mortgage workout plans are only available to people who are behind on their loans, the Short Refi program is only available to homeowners who are current on their mortgages and need to refinance up to 115 percent of their homes’ value. So, if you owe $250,000 on your home, you can refinance via an FHA Short Refi even if your home’s value is as low as $217,000. If you think you’re a good candidate for a short refi, contact your mortgage broker, stat – there are some in Congress who think that this program is so underutilized (only 245 applications have been submitted since it rolled out in September – no typo!) that its funding should be diverted to other needy programs.

5. Myth: If you’ve lost your job and can’t make your mortgage payment, you might as well mail your keys in. Until recently, this was essentially true – virtually every loan modification and refinancing opportunity required that your economic hardship be over before you could qualify. And documenting income has always been high on the requirements checklist. But there are some new funds available in the states with the hardest hit housing and job markets, which have been designated specifically for out-of-work homeowners.

The US Treasury Department’s Hardest Hit Fund allocated $7.6 billion to the states listed below – all of which are now using some portion of these funds to offer up to $3,000 per month for up to 36 months in mortgage payment assistance to help unemployed homeowners avoid foreclosure. Contact the state agency listed below if you need this sort of help:

•Georgia: http://www.dca.state.ga.us/housing/homeownership/programs/hardesthitfund.asp


View original article here:http://www.trulia.com/blog/taranelson/2011/03/5_mortgage_and_foreclosure_myths?ecampaign=anews&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F03%2F5_mortgage_and_foreclosure_myths

Are You Ready to Move Up?

Today's market has created an environment where it is a great time to be a buyer. Interest rates are still at historical lows, the job market is improving, and affordability is near generational highs.
Those with growing families and steady jobs may be asking themselves if now is the time to "move up". To answer this question, consider these points:

1. Finances: Is your job steady and secure? Moving up can mean taking on the responsibility of a bigger monthly mortgage payment, along with higher property taxes.

2. Equity: Some buyers use the equity they have built in their current house to help fund their "move up." Now is a good time to research the local housing market. Some neighborhoods may have experienced dramatic declines in home values, while others have maintained a healthy level. To find out how much equity you have built in your house, go to www.DonCallahan.com and generate a “market snapshot” on your home.

3. Housing Trends: Now that you have researched the local housing trends, you must ask yourself whether or not you feel comfortable making a move in your particular economic climate. Do you feel that there is a healthy balance of buyers and sellers, should you need to move and sell? As your local real estate agent, I can answer many questions pertaining to local market trends and values.

4. Family Considerations: Moving up may mean moving away from friends, family, and school districts. Be sure to take this into consideration before jumping into a life changing situation.

5. Energy: A bigger house means more energy consumption. This translates into a bigger carbon footprint, as well as a heftier monthly bill. If you are moving up, consider looking for homes that meet green standards. Energy star rated appliances, adequate insulation, and even new insulated windows can make a huge difference.

Remember, homeownership is a long-term investment. In today's troubled market it is best to keep in mind that home values may not be at their bottom. But if you meet the financial qualifications outlined above, then a long-term investment, and a "move up" sound like a good fit! Now, have fun picking out your dream home!

Mortgage Rates Climb

By Chris Vogler chris.vogler@bankofamerica.com
Bank of America Home Loans

Stronger than expected economic data with a hint of higher inflation was negative for mortgage markets last week. Concerns about the level of demand for US securities from China added to the pressure. As a result, mortgage rates ended the week higher.

A number of factors combined during the week to push mortgage rates higher. The recent trend of improving economic data continued this week in the housing sector. The inflation information seemed to show a sharp increase. Later in the week, a Treasury auction for securities which provide protection from inflation showed that investor concerns about future inflation are growing. Investors also worried about a decline in demand for US bonds from China. As the largest foreign holder of US fixed-income securities, any sustained drop in demand from China would have a large impact on US bond markets, including mortgage-backed securities (MBS) markets.

Overall, last week's housing sector data was positive. December Existing Home Sales rose 12% from November. The inventory of unsold existing homes declined 4% to an 8.1-month supply. First-time buyers purchased 33% of existing home sales. December Housing Starts fell from November, but December Building Permits, a leading indicator, rose to the highest level since March. The performance of the housing market varied in different regions, but to see improvement on the national level is encouraging.

7 Reasons to BUY NOW

Check out Keller Williams Realty's newest e-book "7 Reasons Why Now is a Great Time to Buy a Home!" This guide provides excellent examples as to why now is the best time to buy a house. (Also available on the Buyers page of www.DonCallahan.com) Mortgage rates have never been lower, home prices are excellent, and the inventory is full. If you are ready to buy now, contact us today at don@doncallahan.com.

Guest post by James Kelley
www.VAbenefitblog.com

Owning a home in the same place where historic battles took place and parks as old as the United States itself exist can be a true treasure to pass down to one’s children.

Buying a home, however, can be a stressful process, especially if you go the conventional route. And if we’re talking about U.S. Veterans, men and women who have done so much for the country, the last thing they need is hassle.

But even other government-backed programs are saving everyday people from the burden of conventional loan processes. Programs like the VA, USDA, and FHA mortgage plans give people the chance to buy a home without the stress and heavy expense. How? All three programs have great perks and offer lower rates. Let’s take a look at them.

FHA LoanThe Federal Housing Administration insures the FHA loan. Unlike the VA and USDA loan, the FHA has no income limits or career type requirements. It’s open to anyone and everyone.

An FHA loan has lower closing costs. The down payment is about 3.5 to 5%, which is about three times lower than conventional loans. All of the government-backed programs allow families to use gifted or borrowed money to make payments or put towards a down payment, if applicable. Conventional loans do not allow money from sources in which a proper paper trail cannot be kept.

The FHA program is a favorite among many buyers especially low to middle income families because the credit and debt requirements are not super strict. With the FHA, it is feasible for anyone with past financial errors to work his or her way back up to a decent score and obtain the loan.

USDA LoanThe U.S. Department of Agriculture secures USDA loans. Only homes within rural localities can be bought with this mortgage program. Check with a USDA lender to see which areas around Savannah, GA are eligible for the program.

The USDA, like the VA program, does not require a down payment. Other perks include 100% financing, no monthly mortgage insurance fees, and the actual mortgage payment is sometimes lower than the FHA loan. One slight downfall is the USDA does set income limits to determine eligibility.

VA LoanMany veterans do not know about the growing popularity of the VA loan. Secured by the U.S. Department of Veteran Affairs, it offers amazing deals and an easy application process.
The rates are low, and there is no money down or monthly mortgage insurance.

VA loans can be guaranteed up to $729,000, in some areas. The average loan is about $207,000. There are no upfront fees, except for a possible appraisal fee, though having a service-related disability allows the lender to waive funding fees. The buyer and the lender, however, will still have to bring in a certified home appraiser as per the VA requirements.

To qualify, the service member must be able to prove that they served in the military for 90 days during wartime and 181 days during a time of peace. He or she must have been honorably discharged. Veterans, active duty personnel, reservists and National Guard members can qualify. Also, some surviving spouses might be eligible for the VA loan.

The Next StepTalk with a lending counselor today. They can help you decide which option will save you the most money.

The Basics: 2009 First-Time Home Buyer Tax Credit

Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Breaking news: Tax Credit Can Be Used on Closing Costs.

Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors: The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000. The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

(from Realtor.org)

Loan modification or assistance

More Help for Homeowners in the Future.
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage. According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster. While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices. The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
Copied from Brett Flanders Countrywide Mortgage

Stimulus Plan Finalized

(information from Countrywide lender Michael Caputo)
Government announcements dominated the financial news this week. Updates on two major programs both were favorable for mortgage markets, and mortgage rates fell modestly during the week.
The most highly anticipated news concerned Tuesday's speech from Treasury Secretary Geithner on the financial institution assistance plan. This "Financial Stability Plan" involves multiple programs to remove bad assets from banks' books and to support new lending. It also contains funds to help prevent foreclosures. Investors were sorely disappointed by the lack of details about how the plans would work, however, and they responded to the uncertainty by purchasing relatively safer assets. The stock market plunged, while Treasury and mortgage-backed security markets rallied, pushing rates lower. Geithner suggested that more information about a plan to purchase troubled assets and a comprehensive housing program will be released in the next few weeks.
In the middle of the week, Countrywide/Bank of America made a material change to our jumbo pricing. With 30 yr fixed jumbo rates up to $1,000,000 in the mid 5% range, make sure you keep your clients up to date on the exciting changes to our pricing structure.
Later in the week, the House and the Senate agreed on a compromise $789 billion fiscal stimulus plan, which is expected to pass within days. The Obama administration estimates that the plan will create 3.5 million jobs. Both the House and the Senate had passed versions which were larger than the final compromise plan, and the reduction in scope helped mortgage markets. A smaller plan means that the government will have to issue less debt. Unfortunately, one of the spending cuts in the final plan was a provision for a $15,000 homebuyer tax credit, which came with an estimated price tag of $35 billion. Instead, the government will leave in place an $8,000 tax credit, applicable to only first time homebuyers. The primary change to the tax credit is that it will no longer need to be repaid. The estimated cost of this $8,000 tax break is less than $3 billion. There are several provisions in the overall stimulus package that will be beneficial and help stimulate demand for housing.
Chief among these is the $8,000 home buyer tax credit for new home buyers. While we are disappointed and would have preferred a more enhanced tax credit like the Senate version, the conferees did retain some key elements from the Senate and made other modifications that are beneficial to home buyers and home builders. For qualified home purchases in 2009, the legislation:
Stipulates that the $8,000 tax credit does not have to be repaid, unlike the tax credit passed last summer;
Keeps the tax credit refundable, or claimable regardless of tax liability;
Extends the sunset date from July 1, 2009 until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall buying months;
Allows tax credit home buyers to participate in the mortgage revenue bond program; and
Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds.www.federalhousingtaxcredit.com is being updated to reflect the new changes. By Tuesday, you should be able to direct your clients to the site for all the tax credit information. The FAQ section is very comprehensive and should be able to answer most of you buyer's questions.
On Wednesday, the President will outline his plan to help slow the wave of foreclosures. With 10,000 foreclosures a day, the administration is set to pledge up to $50 billion to help more homeowners avoid foreclosure. The major money center banks all announced plans to stop foreclosing on owner-occupied units through March 6th until the President's new plan can be rolled out.

Why are mortgage rates going up as oil prices and the economy are going down.

This is a note my good friend and excellent lender over at Countrywide sent ot me today. Read it over.
The activity in Mortgage-Backed Securities (MBS) market - and other financial markets - has been very unusual this month. The Fannie Mae Required Net Yield has already made two round trips from about 5.70% to 6.60% over the past few weeks, displaying a level of volatility rarely seen. Under normal market conditions, the vast majority of the significant rate movements are the result of fresh economic news. This month, however, it has been common to see large rate movements unconnected to any news announcements, for reasons discussed below. One reason is that the credit crisis has forced many investment funds and financial institutions to reduce their leverage and raise capital. In many cases, these big holders of MBS are selling assets across their portfolios.This explains why MBS, stock, oil, and other markets have frequently all been falling on the same days. The fundamental economic data clearly supports lower mortgage rates. Global economies are slowing, oil prices are down, and expectations for future inflation are moving lower. As long as these investment funds are forced to sell assets, however, there will continue to be upward pressure on mortgage rates. How long it will last is one of the biggest questions facing investors today.

Rates moving higher this week has frustrated some buyers with all the talk about the Fed cutting rates. The Fed has control over short-term rates, which they are expected to cut by .50% today at 2:15pm. It is very common to see mortgage rates rise when the Fed cuts short-term rates. A second factor is that many investors are seeking to reduce the level of risk in their portfolios. They are buying Treasuries, mostly shorter-term,which are considered the safest and most liquid investment. These investors are generally not turning to MBS, and MBS prices have performed worse than Treasuries this month, meaning that the spread between mortgage rates and Treasury rates grew wider. The question is not whether investors will get their money back, but rather when they will get it back. MBS yield more than comparable Treasuries because MBS have prepayment risk and Treasuries do not.

The recent volatility and uncertainty in financial markets makes it more difficult to evaluate the prepayment risk, so investors are demanding higher yields and thus mortgage rates have gone higher.

Fannie and Freddie in the Spotlight

My friend over at Countrywid mortgage Mike Ca[puto sent this to me today and I wanted to share it.
While there have been concerns for months about the size of losses at Fannie Mae and Freddie Mac due to the credit crisis, the troubles at the two firms increased significantly during the week. Monday, a report from an investment bank suggested that the two firms would have to raise enormous amounts of capital to comply with revised accounting rules. Thursday, Former Fed member Poole claimed that the two firms are insolvent under standard accounting rules and warned that a government bailout might be needed in the future. Friday morning, there was speculation that the government was considering a takeover of the two firms.
The response from government officials was swift. The director of OFHEO, Fannie and Freddie's regulator, reported that they both remained "well capitalized" based on their charters. On Thursday, Fed Chief Bernanke and Treasury Secretary Paulson attempted to reassure investors that the financial system was sound. Since Fannie and Freddie are government-sponsored enterprises, and together account for about 70% of mortgage originations and hold $5.3 trillion in home-loan debt, most investors believe that the government would step in to prevent the collapse of the firms. Friday, Treasury Secretary Paulson stated that he sees no bailout on the horizon for Fannie and Freddie and that the government is working to support them to carry out their "important mission" in their "current form".
Bottom line, despite the negative headlines, comments from OFHEO, the Fed, and the Treasury eased investor concerns. While the stock prices of Fannie and Freddie plunged during the week, investors apparently were comfortable that the firms' guarantees of the mortgage loans were not at risk, and mortgage rates ended the week moderately higher.
Next week should be interesting if nothing else. As a reminder, FHA risk-based pricing takes effect on Monday.

A recent survey and a rate increase could mean more competition for homes

Recent indication is that first time home buyers are getting tired of sitting on the sidelines. According to a recent online poll taken by the National Apartment Association, 17 percent of renters plan to make the jump to home ownership in the next year; 41 percent of the 2,041 respondents planned to be home owners within two years. Only 31 percent planned to still be paying rent five years from now.
Another factor that could very soon contribute to an increase in home buying could be rising mortgage costs. Fixed-rate mortgage rates rose to 6.32 percent, the highest it has been since October. After months of aggressively dropping interest rates, many lenders are worried that the Fed will be forced to raise rates back up. As interest rates rise, so do mortgage rates. According to a press release on freddiemac.com, Frank Nothaft, Freddie Mac vice president and chief economist said that, "Mortgage rates jumped this week after a number of Federal Reserve officials, most notably Chairman [Ben] Bernanke and Vice Chair [Donald] Kohn, expressed concern over a threat of inflation." We may very well be seeing the beginning of the end of the super-low mortgage and potential buyers may realize that with rising rates, now may be the time to jump in. Nothaft added, "Moreover, pending home sales for April unexpectedly rose by 6.3% and mortgage applications for home purchases ... were also up last week."

1031 EXCHANGE RULES YOU MUST KNOW

1. Exchanges can be used only for investment properties or properties owned for use in a business. They can't be used for residences or for second homes unless the property is used only for rent to third parties.
2. Exchanges must be made between "like-kind" properties. The like-kind properties must both be used for investment purposes, but they do not have to have the same use. The term "like-kind" means that all properties involved must be investment properties. So your rental condo can be exchanged for a strip shopping center, or a rental house can be exchanged for a parcel of vacant land.
3. To meet IRS guidelines, you must identify in writing the replacement property within 45 days of the relinquished property sale date.
Under the "3 property rule," you may identify up to three properties of any value and then buy one or more from that list. Alternatively, under the "200% rule," you may identify as many properties as you wish, provided their total value does not exceed 200% of the value of the relinquished property.