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Archive for the ‘Buying a Home’ Category

You have to admit one thing, confusion always seems to abound when the federal government is involved! That’s why it is important to keep connected to professionals that cut through the confusion to help sort things out for you. That is why I am bringing you this update to the new FHA approved first time home buyer tax credit of $8000.

According to the newest Mortgagee Letter from HUD, the $8000 tax credit provided for First Time Home Buyers can be applied towards the purchase of a home using an FHA mortgage. However, this must be clarified a bit. FHA mortgage loans require a 3.5% investment on the buyer’s behalf, and this can not be provided by any third party entity, including the Federal Government! This means that as a buyer, you still need to have your own funds for this 3.5% investment in your purchase!

You can still use gift funds and any other acceptable option provided by HUD and the FHA. However, you can not use the tax credit for the minimum downpayment.

There is another item one should be worried about when using this credit… fraud. There are specific ways to use the credit and get the funds, and in some cases not knowing the difference can result in fraud. I will share more information on that in a future article very soon.

So to summarize, the newest Mortgagee Letter from HUD clarifies that a borrower can NOT use the $8,000 tax credit to satisfy the 3.5% minimal investment for an FHA mortgage loan. It CAN be used as further downpayment on a home, just not for the minimal.

UPDATED!

Please read the article posted at http://carolinamortgageconnection.foundbydesign.net/2009/06/01/update-tax-credit-as-downpayment-for-fha/ for updated important information about this tax credit!

Original Article:

The $8,000 First Time Home Buyer federal tax credit passed by the Obama Administration may be useful after all! The FHA is going to permit that tax credit to be “monetized” and used as a downpayment on an FHA mortgage loan. So if you do the numbers, you could possibly purchase a $228,500 home with no money down! After all, FHA requires 3.5% of the purchase price to be committed to the deal by the buyer, and 3.5% of $228,500 is just shy of $8,000! Of course, you’d still have closing costs and points to worry about, but with the right negotiations, they could be covered by the seller.

You may not want to buy a home quite that size, but the good news is that with this new option to use the First Time Home Buyer tax credit as a downpayment for Charlotte FHA mortgages, many new home buyers in Charlotte will have access to a tremendous home buying program!

Shaun Donovan, secretary of the US Department of Housing and Urban Development (HUD) was quoted as saying:

We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment.

Regarding the housing market, Donovan said:

I do think we have some early signs hat the market overall is stabilizing. Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.

The National Association of REALTORS has been lobbying for the use of the tax credit for first time home buyers as a downpayment for some time now and it looks as though it will pay off. Some question if using the tax credit for first time home buyers as a downpayment will rekindle a “zero down” / “no money down” marketplace and risk further issues in the future, but in the mean time this should definitely help many Charlotte first time home buyers find another reason to get off the fence!

UPDATED: TAX CREDIT CAN NOT BE USED FOR THE MINIMUM 3.5% DOWNPAYMENT AS REQUIRED BY FHA. READ MORE AT http://carolinamortgageconnection.foundbydesign.net/2009/06/01/update-tax-credit-as-downpayment-for-fha/

If you believe the national news, the US Housing Market may be hitting or at least approaching its bottom. For the second time in three months, new home sales rose ever so slightly. With the abundance of real estate inventory and today’s amazing low mortgage interest rates, Charlotte home buyers, along with the entire nation, are beginning to take advantage of the opportunities.

With low mortgage rates in the Charlotte region, potential home buyers sitting on the fence are beginning to jump off and take the plunge. There are a ton of homes to choose from and the prices are just right for many. Now may in fact be the best time ever to buy a home!

If you are on the fence about buying a home, maybe you should take the next step and see where you quailify. By getting pre-approved for a mortgage in Charlotte, you can confidently know what you can afford and take advantage of the great real estate prices and low Charlotte mortgage rates.

Considering buying a home in 2009? Just outside Charlotte is a great little town called Indian Trail. Homes in Indian Trail are charming and affordable. And with Indian Trail being the second largest town in Union county you are also close to all the ammenities you will need.

While I don’t have time right now to highlight all of Indian Trail’s great features… trust me, this town is worth checking out! There are a number of real estate agents in the area and Indian Trail home loans are definitely available. So consider Indian Trail homes if you are looking to buy a home.

Today I received an email from an account representative that the lender was dropping all stated income mortgage loans from their loan offerings. This is a further decline in the faith lenders have in stated income mortgage loans.

Sometimes referred to as the “liar’s loan”, stated mortgage loans have gotten a bit of a bad rep in my opinion. When stated income mortgages first came out, there was some major common sense involved in approving the loan. Usually the borrower would need to have very good credit and a solid history of making all their payments on time. Initially, stated income was designed to service the self employed borrower that would have difficulty in proving all their income. The challenge that faced self employed individuals was that the tax code allows a lot of opportunities to lower their taxable income, and most lenders use the taxable income to base thier decision on. So if a self employed borrower’s tax return reported a net taxable income of $18,000 yet they grossed $150,000 for the year, common sense would indicate they actually used more than $18,000 to live on.

However, since lenders went so far the other way and offered stated income mortgage loans to people with salaries and even fixed incomes, many people were using the stated income programs to buy more home than they could ever afford. They would bank on the home appreciating quickly and either refinancing or selling the home. Then when the bottom fell out, they were left holding a home that they could not afford and could not dump.

Stated income was such a small part of the mortgage and real estate boom, but since it was so easy to single out as a problem, lenders have run quickly from even the good stated income borrowers!

I hope stated income loans come back soon. The people that need this mortgage loan product currently are left underserved and there is certainly a viable market for the product. But until the media stops the gloom and doom, lenders will continue to shy away from all appearance of risk.

THERE IS NO MONEY TO LOAN!

THE SKY IS FALLING!

THE ECONOMY IS DEAD!

*cough* *cough*

Hold on a second.. I am trying to swallow this….

Folks, there is more than enough money for mortgage loans out there! The reason more mortgage loans are not being written right now is not because the money is gone… it’s because the buyers are gone! Applications for mortgages are way down, mostly due to fear!

And why are we full of fear? We should thank the news media for that! The panic headlines even have the White House panicing and now there is a $700 Billion “bailout” plan up for a second vote! Listening to the different talking heads, I hear about the reasons for this plan, but also am aware of all the other “stuff” being slipped into this bill! For example, Nancy Pelosi today brags that this new legislature has some great new features that will help energy and global warming, both which failed to pass last year. What in the world does that have to do with the bad mortgage debt on Wall Street? NOTHING!

True, property values across the country have fallen. Even the Charlotte area has seen a decrease in property values, although not by much! But right now is the absolutely BEST TIME TO BUY A HOME IN CHARLOTTE! Property values are lower and should rebound shortly while mortgage rates are still VERY LOW! And unless you just have the worst credit in the world, you can still get a mortgage!

Granted lenders have tightened up a bit on requirements. You will need better credit than over the past few years and you may need a little bit of money down. But that is not all bad. Lenders have gotten back to common sense.

So please, ignore the media’s claims that everything is failing and that you can’t find a mortgage. We have seen a gas shortage in Charlotte, but there is no shortage of mortgage funds available… just a shortage of buyers. Take advantage of the market and buy a home now!

A Credit Tip Concerning FHA Mortgages

Important Notice! You may be hurting your chances to get approved for an FHA mortgage loan!

Any accounts in dispute on your credit report will automatically make your mortgage application with FHA a manual underwrite! This means that even if the FHA automated approval system says yes, your mortgage application will be downgraded to a no and it will be up to an underwriter to determine if you should get the mortgage. Manually underwritten mortgage loans face tougher scrutiny and can take longer to close.

The reason I tell you this is that too many people still believe that disputing a bad account on your credit will somehow either make it go away or make it not count. This is not true. Without proper documentation, removing an account that is correctly reported will not happen. In other words, if you did not pay them, you can’t simply dispute it to make it go away.

Under this FHA guideline, disputing the account can take you from an automated Yes to a manual No. In many cases, the account in question may not have made a difference either way.

So before you begin going around just disputing items on your credit, be sure to talk to a qualified mortgage consultant. Knowing how the FHA system works can make the difference between an approval and a long drawn out denial.

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Question:
I went through bankruptcy back in January and wonder now what chances, if any, I have to get a home. This may be completely fruitless at this time, but I would like to set some stepping stones so that I would know what I need to do along the way to prepare myself to better be able to get a loan.

Thanks,
Patricia

Answer:
Patricia,

Thanks for the contact. The recent bankruptcy would present the biggest challenge in obtaining a mortgage for buying a home right away. Typically most lenders are looking for 2 years of re-established credit after a bankruptcy is discharged. So while you are going through those re-establishing years, here are a few tips:

• Pay everything on time (beyond just credit debts… utilities can help create alternative credit when the time is right)
• Pay everything by Check or Debit Card (you want hard proof of timely payments)
• If you rent, pay by Check! (This is especially important to prove!)
• Open a credit card and use it effectively to re-establish credit (see http://startovercredit.com/build-positive-credit.php for more info)
• Build a savings account. Lenders like to see money in the bank for a cushion… gives them a sense of security.
• Keep debts to a minimum. When you are rebuilding credit, use credit cards (revolving credit) properly and avoid installment loans just to build credit. In other words, don’t buy a car unless you have to. Installment loans  take forever to make a positive impact on credit.

These should help get you on track to buy a home again in the near future.

If I can be of any assistance, please give me a call.

Ed Nailor
877-411-9327 Phone

Mortgage Loans Got Tougher

Throughout this mortgage “crisis” we have had one investor that was not requiring any particular credit score. They would underwrite any loan and did a lot of manual underwritten business. (A manual underwrite is a loan decision made by a real person rather than a computer and is a tough approval to get.)

With the tightening of money and credit lines available to lenders, this investor has just made some major changes. Not only have they imposed a minimum credit score of 620, they now will no longer accept any manual underwritten loans! The result: mortgage applicants with soiled credit have one less option for mortgage financing.

The way things are headed, home buyers and mortgage applicants are going to need solid credit in order to qualify. There are still a few options out there for dinged credit, but those that just won’t pay their bills are running out of options.

If you have had some credit issues and are on the fence about buying a home, now is the time to act! While there are still lenders willing to look at less than perfect credit and accept minimal down payments, you need to act now! Forget what the media is selling. The real estate and mortgage market in Charlotte is still attractive and strong! But if you wait until all the “smoke clears” you may be left sitting out in the cold!

Mortgage Rates for Charlotte mortgages get better

Today we actually saw an improvement in mortgage rates for the Charlotte mortgage market. For the past few weeks we have consistently seen mortgage rates in Charlotte erode. However, today there was some improvement which was a welcome change.

If you are in the market to buy a home in Charlotte, or need to refinance your Charlotte home loan, now is the time to make your move. Mortgage rates are expected to continue to worsen as the summer continues, so waiting can cost you a lot of money.

I urge all Charlotte Realtors and agents to act now and get your home buyers qualified now. With the great number of homes for sale in Charlotte, this is the best opportunity to buy a home we have seen in a long time. This is especially true for First Time Home Buyers in the Charlotte NC market! With no home to sell, and only rent to walk away from, first time buyers should be jumping at the opportunities in front of them!

Act now and take advantage of the low mortgage rates available for the Charlotte area.
Apply for a Charlotte mortgage loan now and get started!