Tuesday, 13 March 2012 20:16
FHA Refinance Incentive
President Obama announced a new major FHA change last week that generated a lot of press and has a lot of substance. Home owners who purchased prior to May 31, 2009 using FHA financing will be allowed to refinance at an up-front mortgage insurance (MIP) factor of only .01% and an annual MIP factor of only .55%. Note in segment below that these factors are increasing by significant amounts in just a few weeeks so this will equate to HUGE savings for any eligible home owner. This is a big deal equating to a savings of $100 a month on a $150k loan!
FHA Incentive to Finalize Contracts By April 6th
As announced last week, effective with all case numbers assigned on or after Monday, April 9th (originally reported as Apr 1st), FHA up-front mortgage insurance (MIP) is increasing from 1% to 1.75% and FHA monthly MIP is increasing from 1.15% to 1.25%. These increases will add $11 to a buyer's payment on a $100k purchase, $17 a month on a $150k purchase, and $23 a month on a $200k purchase. This is not great news for the FHA buyer but creates quite an incentive for the home to be selected, contract finalized, and the FHA Case # ordered by Friday, April 6th.
FHA Commentary Period Now Open Regarding Maximum Seller Paid Concessions
FHA is taking comments through March 26th on the FHA proposal to limit maximum seller paid concessions from 6% to 3% or $6000, whichever is greater.
Click here to submit your comments on the reduction of seller concessions
At first glance, this proposal appears to be bad news because of how important it is to minimize an FHA buyer's cash out of pocket. However, upon closer examination, the overriding $6,000 cap actually increases the limit that the seller can pay on transactions under $100k, so it's not all bad and actually better for lower-priced homes. For example, the limit increase to 8% on a $75,000 home!
HARP 2.0 Rolling Out on March 19th
A reminder that the government-sponsored HARP 2.0 program is rolling out on March 19th. This will enable current home owners with loans owned by Fannie Mae or Freddie Mac who purchased prior to May 31, 2009 to refinance despite the current value of their home. The two big changes moving forward are that the program allows for an unlimited loan-to-value and allows for the current level of PMI to be maintained if PMI currently required. Second mortgages can't, however, be rolled into the new loan. These are huge changes and will enable many more home owners to refinance.
This information was provided by:
Nancy Greive, Fairfield Mortgage
Perhaps making it more feasable for homeowners to refinance and afford to stay in their homes will help decrease the number of future foreclosures. Only time will tell, but this seems like a step in the right direction.
Contact Lisa Ethridge with any questions.
Tuesday, 23 August 2011 18:43
Once again, RE/MAX agents are living up to the motto of "Outstanding Agents, Outstanding Results." The directors of J.D. Power and Associates officially presented awards to RE/MAX Chairman Dave Liniger and CEO Margret Kelly at the recent RE/MAX Broker conference 2011. The J.D. Power executives went on to explain that no other company has ever received the award for both Buyers and Sellers in the same year. These people understood the market and how big of a challenge it has been for home sellers. The directors from J.D. Power were quite impressed with the results of a score of 23 from Home Sellers was earned by RE/MAX out of a possible 25. Some more scores are as follows:
Home Seller satisfaction possible score 25 points – RE/MAX earned 23 points
Overall Satisfaction (5) the highest grade possible
Agent/Salesperson (5) the highest grade possible
Variety of additional Services (3) out of 5
Real Estate Office (5) the highest grade possible
Marketing (5) the highest grade possible
Home Buyer satisfaction possible score 20 points – RE/MAX earned 16 points
Overall Satisfaction (5) the highest grade possible
Agent/Salesperson (5) the highest grade possible
Variety of additional Services (3) out of 5
Real Estate Office (3) out of 5
The next time you are ready to buy or sell a home, chose #1 rated RE/MAX. Contact me now to talk about how I can help you. I will use all the award winning RE/MAX Tools to help you. No other Real Estate company does more than RE/MAX to promote and market real estate online. This gives the Home Seller a huge marketing advantage when they choose a RE/MAX Associate to market their property. RE/MAX is the only real estate company that has a website ranked consistently as one of the top internet sites for home searches. You can go to one of the many sites that track online traffic such as Google.com/trends or Compete.com and see the advantage RE/MAX has online. Another company that does internet traffic studies, Hitwise.com has ranked RE/MAX consistently in the top 15 real estate websites. The RE/MAX ranking will continue to improve as RE/MAX has hired two firms to assist them with a major overhaul of the RE/MAX website. One firm will focus on driving more traffic and the second firm will increase the functionality and improve look and feel. All of this will create a better experience for you as the customer. Sellers will get improved exposure on their listings and buyers will have an improved home searching experience.
Monday, 22 August 2011 19:09
Summertime is a popular time for people with children to move since school is out. Moving can be expensive, but the IRS offers 10 tax tips on deducting some of those expenses if your move is related to starting a new job or a new job location.
- Move must be closely related to start of work Generally, you can consider moving expenses incurred within one year from the date you first reported to a new location, as closely related in time to the start of work.
- Distance Test Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous job location was.
- Time Test You must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location, or at least 78 weeks during the first 24 months if you are self-employed. If your income tax return is due before you’ve satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test in the following years.
- Travel You can deduct lodging expenses for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay to move, but you can only deduct one trip per person.
- Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.
- Utilities You can deduct the costs of connecting or disconnecting utilities.
- Nondeductible expenses You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, drivers license, costs of buying or selling a home, expenses of entering into or breaking a lease, security deposits and storage charges except those incurred in transit.
- Form You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your moving expense deduction use Form 3903, Moving Expenses.
- Reimbursed expenses If your employer reimburses you for the cost of the move, the reimbursement may have to be included on your income tax return.
- Update your address When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS.
For more details, review IRS Publication 521, Moving Expenses, and Form 3903, Moving Expenses. IRS publications and forms are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Monday, 22 August 2011 18:56
The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.
- In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
- If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
- You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
- If you can exclude all of the gain, you do not need to report the sale on your tax return.
- If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
- You cannot deduct a loss from the sale of your main home.
- Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
- If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
- If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
- When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Wednesday, 10 August 2011 01:35
FHA’s Energy Efficient Mortgage Program (EEM) enables a borrower to finance the cost of energy efficiency improvements to a home into an FHA loan. The basis of the program is that the energy efficient improvements conserve energy, result in lower utility bills, make more income available for a mortgage payment, enable a buyer to qualify for more home, and increase a home’s resale value. In addition, an energy-efficient home is more sustainable for the environment.
Information provided courtesy of Nancy Grieve with Farfield Mortgage. Contact us today for more information on this loan.
- The EEM program is only available with a standard FHA purchase or refinance loan using standard underwriting procedures, which include a minimum 3.5% down payment.
- Both new and existing 1 – 4 family unit properties are eligible, including condominiums.
- A “cost effective energy package” is one where the cost of improvements, including maintenance, is less than the present value of the energy saved over the useful life of those improvements. The EEM program allows 100% of the “cost effective energy package” to be financed into an FHA loan.
- Advantages to a borrower are that they are not required to qualify for the additional financing, no additional down payment is required, and the maximum debt ratio is expanded to 45%.
- The maximum FHA loan limit may be exceeded by the amount of the energy efficient cost improvements; however, the home does not have to appraise for an extra amount to include the amount of improvements.
- The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating report that is prepared by an energy consultant using a Home Energy Rating System (HERS). Factors considered include insulation, appliance efficiencies, window types, and utility rates. The report includes an overall rating index that ranges from 1 to 100 with the lower number indicating greater energy efficiency. The cost of the energy rating report and inspections may be financed into the loan.
- The energy efficient improvements eligible for financing into the mortgage equals the dollar amount of the improvements plus the cost of the report / inspection AND must be less than 5% of the property’s appraised value, 115% of the median area price of a single-family dwelling, or 150% of the Conforming Freddie Mac loan limit.
- For purchases, the costs of improvement must be put into an escrow account at closing and all work must be done within 90 days of closing.
- More details are available at the following two FHA web sites: Site 1 & Site 2
Thursday, 19 May 2011 18:41
There is a proposal before regulators to require a minimum of 20 percent down on all residential transactions. If allowed to take effect, the rule would put home ownership out of reach for middle-income Americans. It would take the average family 14 years to save up the down payment to buy a home.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) became law on July 21, 2010. Section 941 of the Dodd-Frank Act requires financial institutions that securitize mortgages loans to retain at least 5 percent of the credit risk. The Dodd-Frank Act, however, exempts from the risk-retention requirement securities backed exclusively by “qualified residential mortgages,” or QRMs—mortgages with underwriting and product features that historical loan performance data indicate result in a lower risk of default. By exempting QRMs from the risk-retention requirement, the cost of securitizing these mortgages is reduced, thus providing a market incentive for the wide origination of responsible loans.
Highlights of the Proposed QRM Standards
- The proposed QRM rule would require an 80% LTV, which requires a 20% down payment.
- The proposed rule would also limit the mortgage payment to 28% of gross income and limit all debt to 36%.
- No credit score requirement is included, but a mortgage loan would qualify as a QRM only if the borrower is not currently 30 or more days past due on any debt obligation.
- Borrowers could not have been 60 or more days past due on any debt obligation within the preceding 24 months.
- Borrowers could not have, within the preceding 36 months, been through bankruptcy, been foreclosed on, engaged in a short sale or deed-in-lieu of foreclosure, or been subject to a Federal or State judgment for collection of any unpaid debt.
The QRM definition is of extraordinary importance for three reasons:
1. It will determine the types of mortgages that will be generally available for borrowers for the foreseeable future.
2. It will serve as a precursor for what the successor(s) to the current GSEs (Fannie Mae and Freddie Mac) are likely to be allowed to securitize.
3. Finally, the QRM proposal will telegraph the administration’s intentions for FHA. A narrow QRM will require severe tightening of FHA to prevent huge increases in FHA’s already robust market share.
Take action now and tell Congress that 20% down payments put the American dream out of reach.