This just came in from one of our preferred lenders, Paula Clark at Wells Fargo Home Mortgage: Last week at the Fed’s regularly scheduled Federal Open Market Committee meeting, some major decisions were made that will ultimately impact mortgage rates. But just what did they decide...and what do their decisions mean for home loan rates?
The Fed said they are going to ration out the remaining commitment of Mortgage Backed Security purchases through the first quarter of 2010. There will be no additional buying, but instead, a longer weaning off of the program. There was some speculation about the Fed increasing the amount of buying above the $1.25T committed to, and last week's statement is the Fed's nice way of saying "no." They will not be buying more in quantity, but what they will do is attempt to provide a smoother transition to normal market conditions.
It is a given that once the Fed ceases its purchases, that interest rates will climb significantly higher...most likely back above the 6% area. So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise. This means that waiting to purchase or refinance will very likely mean a higher interest rate.
Their decision also means that the Fed's remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time - and additionally, will not necessarily be spread out as evenly as their past purchases - which could lead to more volatility for rates in the near term.
In other news, Existing Home Sales and New Home Sales were reported slightly less than expected, but both reports continue to show signs of an improving housing market. The inventory of unsold existing homes fell to its lowest inventory level since April 2007, while the inventory of unsold new homes dropped to its lowest level since January 2007. While some of the decline in new home inventory may be due to builders constructing fewer homes - these reports indicate that the housing market is indeed showing signs of life.
Remember, with home loan rates still low - but slated to increase with the Fed's recent decision - as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if you've been considering a purchase or refinance. For sensible home advise, you can contact Paula Clark directly at tel. (702) 868-3920, cell (702) 277-3554, or email her at paula.L.clark@wellsfargo.com.
Showing posts with label first-time homebuyer. Show all posts
Showing posts with label first-time homebuyer. Show all posts
Tuesday, September 29, 2009
Monday, August 31, 2009
95 DAYS LEFT FOR THE $8,000 FIRST TIME HOMEBUYER'S TAX CREDIT
The clock is ticking for first time home buyers to take advantage of the $8,000 tax credit. The tax credit expires on November 30, 2009, if not extended. The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. If you do not close escrow by this date, you will be ineligible for the $8,000 tax credit. At the current market, you should allow 30- 45 days to close escrow today. This means you want to be in contract by October 15, 2009.
That’s 49 days to find a house. A daunting task? Probably. But if you have a great team, i.e. a highly experienced Realtor and lender, working with you, the process shouldn’t be that difficult. Easier said than done you might say, but it can be done.
More information on the tax credit can be found here:
http://www.federalhousingtaxcredit.com/2009/faq.php
That’s 49 days to find a house. A daunting task? Probably. But if you have a great team, i.e. a highly experienced Realtor and lender, working with you, the process shouldn’t be that difficult. Easier said than done you might say, but it can be done.
More information on the tax credit can be found here:
http://www.federalhousingtaxcredit.com/2009/faq.php
CLOSING DATE EXPECTATIONS WHEN BUYING BANK-OWNED PROPERTIES
Most contracts today call for 30 to 45 day closings. Most contracts also call for late fees, sometimes as high as $150/day or more, if you don't close on time.
There were new laws and guidelines enacted concerning mortgages in the last few months that have changed things.
In combination with the time-consuming challenges some buyers faced when buying bank-owned properties today, it's important to consider the potential pitfalls when deciding to agree to a closing date and the late fees, and anticipating what they could possibly cost.
First is the appraisal. Two of the biggest challenges you can face on the appraisal are value issues and repairs.
Quite often, on bank-owned property transactions, we see that the actual appraised value of the home comes in less than the agreed-to sales price.
When that happens you have four options:
- seller lowers price
- buyer pays difference
- seller and buyer split difference in some manner
- cancel (ask your agent if you have this option)
Many buyers choose the first option. This means going back to the bank for their response. That response can take sometime, anywhere from a few days to a week or more.
If the home is in need of repairs, those take time too. Allow anywhere from a few days to a few weeks, depending on the scope of the repairs.
Appraisals take a little longer to get today. The new Regulation Z federal laws that were enacted in late July made it so lenders cannot collect fees, like appraisal money, from a borrower, and therefore cannot order the appraisal, for a minimum of three business days from the date of application or the date the lender sends the disclosure package.
So, this means the appraisal is ordered about 3-4 days after application date. Appraisals can take between 5 -10 business days today so you may be looking at 8 -14 business days before you know of the value or repair challenges.
Another time-consuming factor when buying a bank-owned home is getting the payoff demand from the homeowner's association.
Here’s a typical scenario: The seller stopped making his payments and went into foreclosure. His bank took back the home. You bought from the bank. The seller owes his homeowner's association (HOA) money that he didn't pay when he missed his payments. With penalties and fines, this number could be in the $10,000's.
Your escrow company will order this HOA payoff demand. However, with the high number of foreclosures today and the amount of payoff requests on the HOA, these payoff demands can take weeks, or sometimes even months to get.
Finally, when buying a bank-owned home, you need the seller (the bank) to sign off on the closing statement. Because you are dealing with large banks, this can sometimes take a few days or even a week or more.
And none of this addresses any potential challenges with your actual loan.
Hopefully, none of these adversely affect your transaction. However, its important to understand the potential challenges and timeframes you face when buying a bank-owned home today, especially when negotiating closing dates and late fees.
RATE UPDATE:
INTEREST RATES ARE UP LAST WEEK. Rates approached a 50 year low, once again, and then bounced up slightly.
Courtesy of one of our preferred lenders, Aaron Gordon at Bank of America Home Loans, plan on the following rates:
5.000 % (APR 5.344) FOR A 30 YR FIXED CONVENTIONAL LOAN (OWNER OCCUPIED OR SECOND HOME) with 1.250 points, NO ORIGINATION FEE!
5.000 % (APR 5.290) FOR A 30 YR FHA / VA LOAN, WITH .625 POINTS, NO ORIGINATION FEE!
5.625 % (APR 5.960) ON A 30 YR JUMBO LOAN OVER $417,000 with 1.000 POINTS, NO ORIGINATION FEE!
5.125 % (APR 5.450) ON A 5 YR JUMBO ARM OVER $417,000 with 1.000 POINTS, NO ORIGINATION FEE!
6.125 % (APR 6.470) ON A 30 YR INVESTOR (NON-OWNER OCCUPIED) LOAN UNDER $417,000 WITH 20% DOWN with 1.000 POINT, NO ORIGINATION FEE (720 mid score)!
5.500 % (APR 5.844) ON A 30 YR INVESTOR LOAN (NON-OWNER OCCUPIED) UNDER $417,000 WITH 25% DOWN with 1.125 POINT, NO ORIGINATION FEE (720 mid score)!
NO ORIGINATION FEE ON ANY OF THE LOANS ABOVE. NO PROCESSING FEE. NO UNDERWRITING FEE. NO ADMIN FEE. Rates subject to change until locked.
QUESTION OF THE WEEK:
"My lender asked me for a copy of my tax returns and W2's. I have no idea where to find them. What can I do?"
You can call the IRS at 1-800-829-1040. Option 1, then option 9, then option 1, then option 2. You will be speaking with a live person.
Tell the agent you want a complete transcript including W2's for whichever year you need. They will usually fax it to you within one day for free.
Thursday, July 9, 2009
WILL THE NEW MORTGAGE DISCLOSURE ACT CHANGE YOUR CLOSING TIMES?
This news just in courtesy of one of our trusted lenders, Aaron Gordon at Bank of America: In an effort to provide consumer protection and transparency when the buyer gets a mortgage, the Government has made law changes to mortgage loan processing and disclosures that take affect on July 30, 2009. Referred to as the MORTGAGE DISCLOSURE IMPROVEMENT ACT OF 2009, it is part of the Government’s commitment to making sure borrowers completely understand the terms and conditions of their mortgages and are given ample time to review what they are agreeing to.
If you are a homebuyer, here is what you need to know about it.
These changes will affect the processing times of loans. By being proactive and understanding the new Act, your closing dates should still occur in the usual 30 to 45 day timeframes that it takes for a transaction to complete, thereby minimizing the added stress of delayed closings.
Initial disclosures must be provided to an applicant within three days of loan application. No fees can be collected during this three-day waiting period, except for a reasonable credit report fee.
When a borrower makes an application, the lender will present them with initial disclosures. The disclosure package includes the Good Faith Estimate, Truth in Lending disclosure, and other legal forms as required by law.
The lender will not be able to collect any fees for appraisals until the borrower has had at least three days after getting the disclosures for review. This means that the appraisal report cannot be ordered until after the three-day waiting period after initial disclosures.
The borrower must get these disclosures again at least seven business days before he signs his loan documents. If he doesn’t, the closing will be delayed until he does get them and the seven-day period for review has passed.
The borrower must be provided a copy of his appraisal a minimum of three days prior to his loan closing. If he doesn’t, your closing will be delayed until he does get a copy and the three-day window for review has passed.
Any increases in fees that result in an APR change of 0.125% of the loan amount require re-disclosure. The borrower must then get his new disclosures and wait at least three days for review to close. Once again, this is being done to make sure the borrower has time to review what he is getting and be comfortable with it.
What if there are “surprise” costs at closing time? When that happens now, if the numbers are too far off from what was disclosed, he will have to leave the closing table, get new disclosures, get time to review, and will be unable to return for three days.
The only exception to this will be if it’s an emergency, such as if the home will be foreclosed on.
Also, keep in mind that if you change lenders in the middle of the process, the new lender will have to start the disclosure process once again. Changing lenders in the middle of the transaction could result in lengthy extensions.
Many borrowers today are often too busy to come to the office to make the application. These borrowers do it conveniently by phone or online. In these cases, the disclosures are mailed to them. As a result, the timeframes and wait period will be slightly longer.
Most lenders are estimating these changes could add three to 10 days to your closing times. Please plan accordingly.
So, let’s say you want to close as quickly as possible. What can you do to be proactive and make sure the closing time is fast as possible?
If you do all of the above, there is no reason that your 30 to 45 day closing times should be affected by this Act.
It’s important to understand that this Act has been put in place so the buyer has sufficient time to make good, sound, responsible decisions about his loan. It is not meant to delay the process but rather, when taken into consideration, should justify that the loan is for his best interest. If you need straightforward real estate advice or a referral to any of our trusted lenders, please contact The Dulcie Crawford Group at 702-285-1990.
If you are a homebuyer, here is what you need to know about it.
These changes will affect the processing times of loans. By being proactive and understanding the new Act, your closing dates should still occur in the usual 30 to 45 day timeframes that it takes for a transaction to complete, thereby minimizing the added stress of delayed closings.
Initial disclosures must be provided to an applicant within three days of loan application. No fees can be collected during this three-day waiting period, except for a reasonable credit report fee.
When a borrower makes an application, the lender will present them with initial disclosures. The disclosure package includes the Good Faith Estimate, Truth in Lending disclosure, and other legal forms as required by law.
The lender will not be able to collect any fees for appraisals until the borrower has had at least three days after getting the disclosures for review. This means that the appraisal report cannot be ordered until after the three-day waiting period after initial disclosures.
The borrower must get these disclosures again at least seven business days before he signs his loan documents. If he doesn’t, the closing will be delayed until he does get them and the seven-day period for review has passed.
The borrower must be provided a copy of his appraisal a minimum of three days prior to his loan closing. If he doesn’t, your closing will be delayed until he does get a copy and the three-day window for review has passed.
Any increases in fees that result in an APR change of 0.125% of the loan amount require re-disclosure. The borrower must then get his new disclosures and wait at least three days for review to close. Once again, this is being done to make sure the borrower has time to review what he is getting and be comfortable with it.
What if there are “surprise” costs at closing time? When that happens now, if the numbers are too far off from what was disclosed, he will have to leave the closing table, get new disclosures, get time to review, and will be unable to return for three days.
The only exception to this will be if it’s an emergency, such as if the home will be foreclosed on.
Also, keep in mind that if you change lenders in the middle of the process, the new lender will have to start the disclosure process once again. Changing lenders in the middle of the transaction could result in lengthy extensions.
Many borrowers today are often too busy to come to the office to make the application. These borrowers do it conveniently by phone or online. In these cases, the disclosures are mailed to them. As a result, the timeframes and wait period will be slightly longer.
Most lenders are estimating these changes could add three to 10 days to your closing times. Please plan accordingly.
So, let’s say you want to close as quickly as possible. What can you do to be proactive and make sure the closing time is fast as possible?
- Make the application with your lender in person.
- Get a fully executed, clearly legible copy of the purchase agreement as soon as it’s available from the lender.
- Be ready to pay for the appraisal when asked.
- Prepare and be ready to submit all requested documentation (pay stubs, W2’s, bank statements, etc.) within a day or two of application.
- Carefully review the disclosure package and notify your lender of any corrections immediately.
- Lock your loan at the time of application or early in the transaction.
- Choose a credible, reputable, ethical lender you can trust to honor the rates and fees they disclose. Surprises at the closing table will result in lengthy delays.
- Choose a lender whom you have confidence in. Changing lenders while in escrow will result in a lot of these disclosure clocks starting over.
If you do all of the above, there is no reason that your 30 to 45 day closing times should be affected by this Act.
It’s important to understand that this Act has been put in place so the buyer has sufficient time to make good, sound, responsible decisions about his loan. It is not meant to delay the process but rather, when taken into consideration, should justify that the loan is for his best interest. If you need straightforward real estate advice or a referral to any of our trusted lenders, please contact The Dulcie Crawford Group at 702-285-1990.
Monday, June 29, 2009
HOW TO TAKE ADVANTAGE OF THE $8,000 TAX CREDIT BEFORE IT EXPIRES FOR 1ST TIME HOME BUYERS!
Not many first-time homebuyers are aware that there is a considerable tax credit that is available for them. And if they know about it, they probably don’t know the details and how it can benefit them in their home search.
We have compiled the following information from trusted sources (i.e. mortgage lenders and escrow officers) to explain how the tax credit can be used to one’s advantage.
Highlights:
Timeframe: Must purchase a home (close and receive title) on or after January 1, 2009 and before December 1, 2009.
Down payment or closing costs: Qualifying buyers can use these funds upfront as a down payment or for closing costs.
FHA-approved lenders only: At this time, only FHA-approved loans are required if tax credit is used as a down payment.
Need 3.5% upfront: While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA's required 3.5% down payment on their own.
If you are buying a home this year, it's important to know whether you qualify for the $8,000 tax credit for first-time home buyers. Read on for details.
Qualifications for $8,000 tax credit:
- Must purchase a home (close and receive title) on or after January 1, 2009 and before December 1, 2009.
- Must be a first-time home buyer, which means you cannot have owned a home for the past three years prior to purchase.
- Must use as a primary residence. The home cannot be used as a vacation home or rental property.
- Cannot purchase a home from a close relative such as your spouse, parent, grandparent, child or grandchild.
- Must make less than $75,000 for a single taxpayer or less than $150,000, if filing jointly.
About the $8,000 tax credit:
- Use as downpayment or closing costs -- Initially, the tax credit was designed as a refundable credit on buyers' tax return next year -- either up to $8,000 or 10% -- whichever came first. Now, a new HUD initiative allows qualifying first-time home buyers to receive these funds upfront to be used as a down payment or money towards closing, as announced by U.S. Housing and Urban Development Secretary Shaun Donovan. This has been referred to as a bridge loan.
- FHA-approved lenders, only -- At this time, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit. Home buyers using FHA-approved lenders can apply the tax credit to their down payment.
- Home buyers must pay the 3.5 percent -- While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA's required 3.5% down payment on their own.
For more information on the $8000 tax credit, review these Q&A's from the IRS: http://www.irs.gov/newsroom/article/0,,id=206293,00.html
More relevant information can be found on the following links:
http://www.federalhousingtaxcredit.com/2009/home.html
As in any financial transaction, we of course recommend consulting with your financial or tax advisor for implications specific to your situation. Call us today if you need referrals to any of our lenders, or for any real estate question, at 702.285.1990.
Saturday, May 30, 2009
100% FINANCING WITH NEVADA BOND PROGRAM - FAST FACTS
First time homebuyers may not be aware that there is still 100% financing still available for well-qualified applicants, through the Nevada Housing Division’s Down Payment and Closing Cost Loan Program. The NHD offers the program to provide homebuyers under its First Time Homebuyer Program with down payment and closing cost assistance. This statewide initiative offered in every county in the state is one of the only 100% financing options left.
One of our preferred lenders, Aaron Gordon at Bank of America Home Loans, has provided us the following information:
Please bear in mind that this is a loan and a second mortgage - not a gift - which can provide up to $10,000 for down payment and closing costs.
The interest rate on a 30 year bond loan is 6.2000% today. As of 5/18, it’s 4.750% on FHA when you don’t use the bond.
The second mortgage of 3.5% to cover your down payment comes with an 8.20% interest rate and is a 20 year loan.
When is this good? If you have no other way to get the 3.5% down payment on an FHA loan.
On a $165,000 purchase, the Bond loan will cost the borrower an extra $150 - $175/mo. It makes a lot more financial sense to try and get the 3.5% or $7,000 down on this loan, as it will pay for itself within three years.
EXAMPLE:
Scenario 1
$165,000 sales price
3.5% REGULAR DOWN PAYMENT – 4.75% RATE
$845.00/month
VS.
Scenario 2
$165,000 sale price
0% DOWN PAYMENT – 6.20%
$992 + $49 for 2nd = $1041/month
This loan is not available for everyone and is based on qualifying guidelines. Although there are some strict eligibility requirements, this program may work for many first-time homeowners.
There are limited lenders in Nevada; Bank of America Home Loans is the main servicer.
Qualification Guidelines for the Nevada Bond Program
A first-time home buyer is defined as someone who has not owned or co-owned their own residence within the past three years. So even if you owned a home a few years back, if it’s not in the last three you may still qualify.
If you are purchasing in a "Targeted Area" there are no restrictions on former home ownership. Please contact Aaron if you think the home may be in a targeted area. These are usually areas where this is not as much resale activity and the State wants to stimulate its growth.
Total gross household income must fall within the Maximum Income Limits. In Clark County, if you have a 1-2 person household, income cannot exceed $78,480. If you have a 3 person or more household, it cannot exceed $91,560.
In Washoe County it can be a bit higher. In Elko County a bit lower. See the website for details at http://nvhousing.state.nv.us then click “NHD – Down Payment Assistance Program”.
The purchase price of the residence you wish to buy may not exceed the Maximum Purchase Price Limits for the area in which it's located.
Those maximums currently look like this:
Income must support the repayment of the loan pursuant to the underwriting criteria applied by FHA, VA, or Fannie Mae, as applicable. This simply means your loan has to be able to be approved by FHA, Fannie Mae, Rural Housing, or VA.
Also, if you require that assistance, you will have to prove that your assets, after closing, are $5,000 or less including, without limitation, cash, savings accounts, stocks, bonds and equity in real property. 401K is exempt, which is great news!!
You will also be required to successfully complete a First Time Home Buyer Education Course in person.
This is a fantastic loan program for first-time homebuyers who find themselves unable to qualify because they lack a minimal down payment.
However, due to historic low interest rates, they will want to exhaust all gift possibilities first.
One of our preferred lenders, Aaron Gordon at Bank of America Home Loans, has provided us the following information:
Please bear in mind that this is a loan and a second mortgage - not a gift - which can provide up to $10,000 for down payment and closing costs.
The interest rate on a 30 year bond loan is 6.2000% today. As of 5/18, it’s 4.750% on FHA when you don’t use the bond.
The second mortgage of 3.5% to cover your down payment comes with an 8.20% interest rate and is a 20 year loan.
When is this good? If you have no other way to get the 3.5% down payment on an FHA loan.
On a $165,000 purchase, the Bond loan will cost the borrower an extra $150 - $175/mo. It makes a lot more financial sense to try and get the 3.5% or $7,000 down on this loan, as it will pay for itself within three years.
EXAMPLE:
Scenario 1
$165,000 sales price
3.5% REGULAR DOWN PAYMENT – 4.75% RATE
$845.00/month
VS.
Scenario 2
$165,000 sale price
0% DOWN PAYMENT – 6.20%
$992 + $49 for 2nd = $1041/month
This loan is not available for everyone and is based on qualifying guidelines. Although there are some strict eligibility requirements, this program may work for many first-time homeowners.
There are limited lenders in Nevada; Bank of America Home Loans is the main servicer.
Qualification Guidelines for the Nevada Bond Program
A first-time home buyer is defined as someone who has not owned or co-owned their own residence within the past three years. So even if you owned a home a few years back, if it’s not in the last three you may still qualify.
If you are purchasing in a "Targeted Area" there are no restrictions on former home ownership. Please contact Aaron if you think the home may be in a targeted area. These are usually areas where this is not as much resale activity and the State wants to stimulate its growth.
Total gross household income must fall within the Maximum Income Limits. In Clark County, if you have a 1-2 person household, income cannot exceed $78,480. If you have a 3 person or more household, it cannot exceed $91,560.
In Washoe County it can be a bit higher. In Elko County a bit lower. See the website for details at http://nvhousing.state.nv.us then click “NHD – Down Payment Assistance Program”.
The purchase price of the residence you wish to buy may not exceed the Maximum Purchase Price Limits for the area in which it's located.
Those maximums currently look like this:
- Clark: $349,515
- Nye: $283,981
Income must support the repayment of the loan pursuant to the underwriting criteria applied by FHA, VA, or Fannie Mae, as applicable. This simply means your loan has to be able to be approved by FHA, Fannie Mae, Rural Housing, or VA.
Also, if you require that assistance, you will have to prove that your assets, after closing, are $5,000 or less including, without limitation, cash, savings accounts, stocks, bonds and equity in real property. 401K is exempt, which is great news!!
You will also be required to successfully complete a First Time Home Buyer Education Course in person.
This is a fantastic loan program for first-time homebuyers who find themselves unable to qualify because they lack a minimal down payment.
However, due to historic low interest rates, they will want to exhaust all gift possibilities first.
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