Archive for the 'Homeowners' Category
The Housing And Economic Recovery Act: Tax Credit!
Posted by Kevin Kueneke | Currently 1 Comment »
The recently passed Housing and Economic Recovery Act (HR 3221) has many nuts and bolts. Quite possibly the best part of the legislation is the new tax credit. This tax credit is for First Time Homebuyers (no ownership of a principal residence in the past three years; vacation or rental property ownership is o.k.) whose loan closed between April 9, 2008 and June 30, 2009.
The highest amount of the tax credit will be $7,500 for individuals earning up to $75,000 and couples earning up to $150,000. The credit is still available for those individuals earning up to $95,000 and couples up to $170,000, however to a lesser degree.
A tax credit is superior to a tax deduction. A tax deduction is added to all of the other deductible items on Schedule A (medical expenses, charitable contributions, home interest, property taxes, unreimbursed employee expenses, etc.) and then that amount is deducted from the adjusted gross income, giving you the bottom line income from which the income tax is calculated. 
A tax credit is taken after all of the deductions are calculated, the adjusted gross income is calculated, and the income tax is determined – then the $7,500 comes off of that amount! If the taxpayers owe less than $7500 in taxes, the difference between what they owe and the $7500 is payable to them as a tax refund. Owe $10,000? Now you only owe $2,500. Owe $5,000? Now you get a $2,500 refund.
This tax credit is not necessarily a gift…it is an interest-free, 15-year loan. The taxpayer must pay back 6.67% of the credit amount each year until paid in full. This equates to about $500 per year for the maximum credit of $7,500.
If the homebuyers sell their home within 15 years, and the gain on the home is less than the amount of the credit, then the remaining portion of the tax credit is forgiven. If the gain is greater than the remaining portion of the tax credit, then the balance will be due for that year’s income taxes.
Aside from income limitations, the credit is for 10% of the sales price of the home up to a maximum of $7,500. This means that the maximum credit starts at a sales price of just $75,000!
The reality is that many people will benefit from this program. Have more questions? Please feel free to contact me via phone (760)500-1919 or email me and I will be more than happy to discuss your particular situation.
Related Posts: Buyers, CW Mortgage, Home Loans, Homeowners, Mortgage News
Hope For Homeowners
Posted by Kevin Kueneke | Currently 3 Comments »
Part of the recently passed Housing and Economic Recovery Act (HR 3221) is the new Hope for Homeowners program. This is an FHA sponsored short-sale refinance intended to allow distressed homeowners keep owner occupied homes from going into foreclosure. Although lenders are not required to participate in the program, there will still be plenty of homes saved. Here are some basics:
• Principal residence only. 
• Existing loan must have been obtained on or before January 1, 2008.
• Borrowers can be up to date on their mortgage or in default, but they must prove that they will not be able to keep paying their existing mortgage (mortgage debt ratio must exceed 31% of monthly income) AND they must certify that they did not intentionally default on the mortgage for the purpose of obtaining the HOPE loan.
• Calculation of the new loan will be based on the borrower’s ability to make mortgage payments determined by FHA and the loan-to-value limited to 90% of the appraised value.
• The existing lien holder must waive any prepayment penalties and fees, including attorney and foreclosure fees if foreclosure proceedings have already begun.
• The existing lien holders must agree to accept the proceeds as payment in full of all indebtedness under the new loan (no 1099 from the lender for lost proceeds); all encumbrances must be removed.
• Those lien holders of existing subordinate mortgages will be entitled to future appreciation of the property. Standards and policies of the shared appreciation will be developed by FHA.
• The new loan must be a 30 year fixed rate mortgage.
• The interest rates and origination fees will be determined by the new Federal Housing Finance Agency, but will be comparable to market rates.
• The new loan amount cannot exceed $550,400 which is 132% of FHLMC loan limit established in 2007.
• The borrowers cannot put a new second lien on the property for 5 years after the refinance takes place.
• Income must be documented by income tax returns for the most recent two years.
• The borrower cannot have been convicted of mortgage fraud under Federal or State law during the past 10 years.
• The borrower must supply documentation to prove that they only own this one residence. If they own other properties, they cannot utilize this program.
• Borrowers will pay an Upfront Mortgage Insurance Premium (UFMIP) of 3% of the loan amount and an annual mortgage insurance premium of 1.5% of the loan amount. This is higher than the 1.5% UFMIP and 0.5% annual mortgage insurance of “regular” FHA loans.
• Equity Appreciation: upon sale or disposition of the property or subsequent refinance there will be shared equity on a graduated scale; HUD is entitled to 100% of the initial equity if property is sold or loan refinanced in first 12 months, 90% in months 13-24, 80% in months 25-36, 70% in months 37-48, 60% in months 49-60, and 50% months 61 and on. HUD will be entitled to 50% of any appreciation over and above initial 10% equity, regardless of future sale date.
• The program will be implemented October 1, 2008, and expires September 30, 2011.
As stated above, lenders are not required to participate and most likely will not assist certain borrowers whose written down loan amount is less cost effective than a foreclosure. That is, if the new loan amount that the borrowers can actually afford, based on verified income, is significantly lower than the possible post-foreclosure net proceeds, the lien holder will most likely choose to foreclose.
The official HUD website states that FHA will insure up to $300 billion in new loans under this program so for those borrowers that will qualify, this program is obviously good news and very welcome relief.
***As of October 1, 2008, HUD is encouraging all interested homeowners to contact their servicing lender regarding this program***
Related Posts: CW Mortgage, Education, Foreclosures, Home Loans, Homeowners, Mortgage News, Short Sales
March Into Home Ownership – Why NOW is the time to buy!
Posted by Carole Ferris | Leave A Comment »
When was the last time interest rates were this low while the selection of available homes was the highest in a decade? Historically, the correct answer is Never. By way of example, an interest rate of 8.0% is 45% more expensive than a 5.5% interest rate. Generally speaking, this means that if you qualify for a $400,000 loan today you will only qualify for a $275,000 home when interest rates go to 8.0%.
The new loan limits HUD is rolling out will be good through the end of 2008, interest rates are historic lows and San Diego has an outstanding inventory of homes for sale. These are all indicators that taking advantage of ownership in San Diego real estate is a wise idea. The new maximum FHA loan limit in San Diego County is expected to be $729,500. By law, the new loan limit must be established by the 15th of March, 30 days after the bill was written into law.
Rarely are buyers in control in Southern California, however for many months now they have been. Cyclical housing downturns occur regularly, but they do not last forever. Buyers could not be kept out of the housing market indefinitely, and cycles often result in values going down and then rebounding to even higher levels!
Economic reports about San Diego reveal that the market is still growing, albeit at a more moderate pace. Even after the loss of 89,000 people, the California still had a net gain of over 400,000 people. By 2050, our Golden State is expected to reach a population of 60 million! San Diego County’s population grew by 22,000 last year, bringing it up to nearly 3 million. By 2050 it is expected to grow to 4 million! Bottom line is that all of these people will all need a home in which to live.
The media reminds you that California leads the nation in foreclosures, but fails to mention that it is in part because California also has the greatest number of homes and mortgages in the nation to begin with. Out of the 1,456 zip codes in California, the foreclosure problem only exists, primarily, in 20% (293) of those zip codes. And, the bulk of the foreclosures in the 293 zip codes are in the Inland Empire, the Central Valley and Sacramento region.
With San Diego’s large and diversified economy, its location on the Pacific Rim, and its great climate, doesn’t it make sense to purchase your home when money is so affordable, prices are down, and when there is such a great selection of homes from which to choose?
I say March is a great time to march into home ownership.
Related Posts: Buyers, Homeowners, Interest Rates, Mortgage News, Real Estate News, San Diego
