Mike's Mortgage Blog

g Up to 110% LTV,* varies by county.**

g $100 down payment with FHA financing.

g $5,000 sales allowance paid toborrower for repairs at closing when using FHA financing.

g HUD 3% allowable closing cost funds still apply.

g All HUD-owned homes for sale in eligible states/territories.

g Only properties purchased by an owner-occupant are eligible.

g List of eligible homes in each state available at: http://www.hud.gov/homes.

If you've turned on the radio or TV recently, you've heard about the rising costs of college tuition and room and board expenses. Even with financial aid available for today's college-bound students, cash-strapped families are looking for options. Some are choosing to refinance their mortgages, while others are opting to buy second homes.

Yes, you read that right. Families are saving money by buying second homes for their college kids. While it may seem ludicrous at first, buying a second home can actually help you save money in the long term.

• Monthly mortgage payments may be less expensive than college room and board expenses.
• Many lenders have loan programs that provide the most benefit in the first 4-5 years of ownership - just in time for your kids to graduate.
• Interest on a second home is tax deductible.
• Owning a second home gives you an opportunity to build more equity and increase your net worth.
• Extra space or rooms in the home can be rented for additional income.

The National Association of Realtors is asking that this tax credit be extended beyond the November 30th deadline date, but as of now, it is set to expire. If you are looking to take advantage of this government stimulus, I would strongly recommend you get moving now. I suspect that volume will increase at lenders as the deadline approaches which will slow down the loan process. If your loan is delayed for any reason and it closes after November 30th you will not get the credit even if the reason for the delay was not your fault.

To increase awareness of this and other tax benefits of the American Recovery and Reinvestment Act, the IRS has announced several tools that are available to help explain the many benefits for American families under this Act. The IRS has placed several videos on Youtube (IRS Video) and ITunes to increase awareness. In addition, the official website of the IRS also has many useful links and explanation which you can access by going to the IRS' website. If you are looking to take advantage of these government programs, the clock is ticking.

Simply purchase specific properties with an FHA mortgage and finance all reasonable and customary closing costs.

?? Eligible buyers can receive up to 50% off listing prices on certain HUD properties.

?? Low down payment.

?? Eligible teachers do not have to be first-time homebuyers.

?? Eligible properties are listed and sold exclusively over the Internet, off ering convenience.

View eligible properties at http://www.hud.gov/homes/index.cfm

Borrowers who refinanced their mortgages in the first six months of 2009 reduced their monthly payments by a median of $120, or 10.5 percent -- an annual savings of $2.3 billion.

Over five years, that's $11.5 billion in the pockets of homeowners -- money that could boost consumer spending and help drive growth as the economy rebounds. The combination of lower payments and fixed-rate terms on the refinanced loans should also reduce the risk of future foreclosure.

The Federal Reserve's purchases of mortgage-backed securities and other "quantitative easing" that helped keep mortgage rates low, and the Obama administration's Home Affordable Refinance Program (HARP), which allows borrowers with loans backed by Fannie Mae and Freddie Mac to refinance loans with loan-to-value ratios of up to 125 percent.

The tax credit for first-time home buyers expires Nov. 30. Because deals can take up to 60 days to close, now is the time to buy.

Like everyone else in the real estate industry, I have been saying for months “Now is the right time to buy”

For first-time buyers hoping to seal the deal before the government's $8,000 tax credit expires Nov. 30, that advice is timely - and right on the money.

From contract to closing, real estate transactions typically take 45 to 60 days. But you cannot claim the credit - 10 percent of the purchase price up to $8,000, with specific income caps - if you have not closed by November's end.

Despite tighter credit and lenders' demands for more and more documentation, "it still can be done in six weeks. But buying sooner is better than later.

In an effort to increase the affordability of homeownership, the Federal Housing Administration (FHA) is announcing sales incentives for HUD Homes in Florida. These incentives are available on HUD Homes for a limited time.

· $100 Down Payment! Available to owner occupant purchasers using FHA financing. This incentive is also available to owner occupant purchasers who obtain a FHA Home Repair loan. It's a great time to purchase a HUD Home with FHA financing!

To get started, contact a HUD-registered real estate professional or follow the links in our Get Started box to the right.

Consider FHA Financing - benefits include:

• low down payment
• competitive interest rates
• flexible credit qualifying
• more protection to keep your home

The Florida Homebuyer Opportunity Program (FL HOP)—created during the 2009 regular legislative session—provides $30 million in financial assistance to first time homebuyers eligible to receive the federal first time homebuyer tax credit established through the American Recovery and Reinvestment Act of 2009.

The FL HOP program will be administered through the State Housing Initiatives Partnership (SHIP) program; offices are located in all 67 counties and 53 Community Development Block Grant (CDBG) entitlement cities. Eligible FL HOP applicants can receive up to $8,000 in purchase assistance, which is expected to be repaid by the applicant upon receipt of his/her federal tax refund.

Here’s what I know…

· HUD might allow the use of the tax credit for use as down payment in some fashion but details aren’t finalized.

· Mortgagee Letter 2009-15 was posted on 5-11-09 and removed from HUD’s website on 5-12-09 for unspecified reasons.

· Many of us saw the ML before it was pulled. It said that governmental agencies and FHA-approved nonprofits could offer tax credit advances with second liens, and that those same entities along with FHA-approved mortgagees could provide short-term loans secured by the anticipated tax credit.

Stay tuned I will post information as it becomes available.

On February 18th 2009, the Home Owner Affordable and Stability Plan was enacted by President Obama. As part of this plan the administration subsequently announced a Home Affordable Refinance Initiative to provide refinance opportunities for borrower whose mortgages are either held or guaranteed by Fannie Mae.

Refi Plus allows responsible borrowers who are current on their mortgages but have been unable to refinance because of a decline in home prices or limited availability of Mortgage Insurance Coverage to take advantage of historically low interest rates. This product is meant to improve the home owner's financial position by reducing the payment or / and improving the terms of the payment.

LOOK UP PROPERTY ELIGIBILITY

• Current property must be owned or guaranteed by FNMA
• Existing loan was delivered to FNMA prior to March 1st, 2009
• Check FNMA's website Click Here

• Include copy of the note and mortgage statement with submission
• It is critical to CMG value estimates that the address is entered accurately
• Appraisals are not required unless value is overstated upon submission

• Prior to May 2nd, 2009
• CMG will not offer Refi Plus on properties that currently have Mortgage Insurance
• CMG is forced to wait until MI Companies will be fully participating in this program
• CMG will not offer Refi Plus on Non-Owner Occupied and 2-4 Units

• Changes coming May 2nd, 2009
• DU will be updated to identify if property has MI
• Property has MI - DU will search for lower rates for borrower
• Property does not have MI - No new MI required
• CMG will offer Refi Plus on Non-Owner Occupied and 1-4 Units

LOAN LIMITS

• Conforming $417,000 (One Unit)
• Agency High Cost balances are not eligible

FEES

• NRCCs can be rolled into new loan amount
• Not to exceed 105% LTV

TERMS AVAILABLE

• 30 Year Fixed

TRANSACTION PURPOSE

• Rate and Term only

LTV / CLTV

• 105% LTV (may be increased to 125%)
• No Minimum on CLTV
• No limit on CLTV
• Existing 2nd lien mortgage cannot be paid off through Refi Plus product
• Existing 2nd lien mortgage must be re-subordinated
• Use current payment on 2nd from credit report to qualify

CREDIT

• 620 middle Fico
• No FICO score requirement May 2nd, 2009

• Borrowers must be current on their mortgage
• No more than 2x60 day lates in last 2 years

• Bankruptcy - 4 years since date of discharge
• Foreclosure / Deed in Lieu - 7 years

BORROWER / CO-BORROWER

• All borrowers on current loan must be on new Refi Plus loan
• No exceptions to this rule
• Without all original borrowers, Refi Plus is not available

• Co-Borrowers can be added with no restriction
• Non-Occupied Co-Borrowers are not allowed

PROPERTY ELIGIBILTY

• No Maximum Property restriction for owner occupied transactions
• 4 properties owned restriction for nonowner occupied transactions

• 1 - 2 Unit SFR, PUD and Condo
• 1 - 4 Unit will be available May 2nd 2009

• Condotels & Manufactured Homes are not eligible
• Modular Homes are allowed
• Condos
• No warranty required
• No owner occupancy ratio requirement
• No HOA cert
• No verification of pending litigation required

• Insurance Policy Coverage
• HOA must maintain "Blanket" Policy
• Must cover equipment and fixtures inside individual units
• If no "Blanket" Policy, borrower must obtain "Walls-In" or HO-6 Policy
• Coverage amount must be for 20% of the value
• Must cover 100% of replacement costs of project improvements

• Fidelity Bond Insurance
• Required on all projects with > 20 units
• Current HOA reserve balance is required to determine coverage adequacy

OCCUPANCY

• Owner Occupied
• Nonowner Occupied will be available May 2nd 2009
• 2nd Homes are not eligible

QUALIFYING

• Wage, Salary, Bonus and Overtime
• 1 recent pay stub and VOE

• Self Employed and Commissioned
• Most recent 1 year tax return

• Assets
• 2 months PITI Typically

• Qualifying with Subordinated 2nd Lien
• Qualify with current payment from credit report

1. Not knowing how much house you can afford.
Many novice homebuyers spend a lot of time researching homes — comparing kitchen layouts and backyard square footage — but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage, Without first figuring out how much house you can afford, you risk falling in love with one you can't.

2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn’t mean it’s worth that much now. Values have slipped significantly so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you’ll likely reap by buying a lower-priced foreclosed home.

3. Letting your true feelings show.
No matter how much you've fallen in love with a house, don’t let the seller’s agent in on it. Otherwise, he will gain the upper hand in negotiations.

4. Failing to find a good buyer's agent.
Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order. After all, buyer’s agents have a fiduciary responsibility to the buyer exclusively — and should be looking out for his best interests. Start your search at the National Association of Exclusive Buyer Agents, a nonprofit representing buyers, or consider using an agent recommended by a relative or friend. Interview the candidates about their experience; ask if they’ve worked with first-time buyers before and what kind of service you’ll get from them.

5. Underestimating the costs of owning a home.
Whether it’s a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many homebuyers don't anticipate the additional costs for repair and maintenance, or for an increase in utility costs, Consider the age of your new home and how well it’s been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home’s purchase price annually for repairs and upkeep.

6. Failing to budget for property taxes.
Property taxes — and the likelihood that they’ll climb over the course of your time in the house — should be factored into any home buying budget. To get an idea of how much you’ll be paying, call the local assessor’s office or talk to people in the neighborhood.

7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. “You can’t assume you’ll walk in there, make the offer and get it,” says Clark. Try not to get discouraged if you lose out on the first — or second — house you make an offer on.

8. Skipping the inspection.
Before signing anything, hire a professional inspector. The seller isn’t likely to tell you everything. Buyers hire their own inspector — independently of the selling real-estate agent — to ensure there’s no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple Web search with your ZIP code.)

9. Doing too much too fast.
Some buyers want to make the house their own right away. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that’s not always the case — especially in today's market. Instead, buyers need to exhibit patience and make changes over time.

10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in over the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house.