Category Archives: Buyers

As a Borrower, What Should You Know About FHA Loans?

Many new and second homeowner’s use FHA loans. The market can be confusing and here are some helpful facts to help you in your home buying process. Qualified Lenders offer FHA loans, considered mortgages, and these mortgages are insured by the Federal Housing Administration (FHA). Many buyers still do not totally understand the benefits that can be had from FHA Loans.

Here are some interesting facts.

  1. Low-income borrowers are not the only one’s to benefit from FHA Loans. There is no maximum income restriction.
  2. FHA loans can be for more than first-time home buyers.
  3. FHA loans are not only for lower priced homes. Loan amounts for FHA can be almost $800K. The loan amount cap was originally around $363,000 and increased to almost $800K to help stabilize the housing market.
  4. FHA does not have anything to do with low-income housing. Simply FHA loans are mortgages that are insured by FHA.
  5. FHA loans, in many cases, are more affordable conventional loans and allow the borrower to have a smaller down payment.
  6. More lenders are willing to loan to to FHA (the federal government) that assures repayment.
  7. FHA loans can be assumed. This means a new buyer can take over the payments as long as they bring the seller’s current equity (cash in the home) to the table. This works well when interest rates have risen greatly compared to what the seller’s current mortgage interest rate is.

Read More at RISmedia

Tax Credit Perks

There are a lot of tax credit perks. The new law that was extended past November 30, 2009 has a lot of benefits. The new law applies to step up buyers moving up to their next home. If you have lived in your home as the primary residence for 5 of the last 8 years then you qualify. See links below for more helpful information.

But did you know that if you are stepping up and having trouble selling your home, you can still qualify without actually selling the first home. But. . . you must purchase the second home as your primary residence.  Not too bad. It is time to move. . . . Are you ready?

“There is no requirement that existing homeowners must have sold their home to be eligible for the $6,500 tax credit. However, Weichert encourages existing homeowners who want to benefit from this incentive to move quickly, particularly those who prefer to first sell their current home before purchasing a new one.” Quoted from : RIS Media – Repeat Buyers Need to Act Fast to Capitalize on Expanded Tax Credit

Tax Credit Details

Additional Tax Credit Details from Realtor.org

Frequently Ask Tax Credit Questions

AKHome.info Tax Credit Archives

How Much Home Can I Afford?

Many calls come in from first time home buyers not knowing where to start when getting ready to buy a home. Some are not sure how much they can afford or should afford. Here are some helpful tips:

1) One of the first thing to do is to locate an agent that you feel comfortable with and that has your best interests in mind. Interview them if you do not know someone personally, even if you are looking to have representation as a buyer.

2) At the same, time find a loan agent. Check with your agent as he or she may have many contacts from mortgage companies and banks. Quite often I find that Mortgage companies may have better programs and lower rates, although not 100% the case.

3) The next thing is to do a budget after getting pre-approved with your loan agent. Many of my buyers says to me, “I am approved for this amount but I don’t want to go that high”. They would like some breathing room.

Below you will find a link for a home affordability calculator for the NAR (National Association of Realtor’s). If you need assistance, have your loan officer, real estate agent, tax advisor sit down and go over your figures with you. Happy House Hunting. Tax Credit deadline to be under contract is April 30, 2010.

Home Affordability Calculator

Pittsburgh Comes in at Number 4!

Pittsburgh and the Metro Area proves time and time again a great section of the country to live. Â Home prices and Mortgages are stable and affordable in the region. The days on market are lower than other cities.

Top Cities that were least effected by the Recession from Forbes:

“To identify these cities, Forbes magazine ranked the 100 largest Metropolitan Statistical Areas by employment rates, the conventional mortgage home price index, and the average days on the market for properties currently for sale.

The top cities on Forbes list were:”

* Omaha/Council Bluffs, Neb.
* San Antonio, Texas
* Austin-Round Rock, Texas
* Pittsburgh
* Harrisburg/Carlisle, Pa.
* Dallas/Fort Worth
* Rochester, N.Y.
* Houston
* Raleigh/Cary, N.C.
* Baton Rouge, La.”


Quoted from Realtor.org
and Forbes, Francesca Levy (11/19/2009)

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Heinz Stadium, Pittsburgh, PA

Photo Copyright, 2009 Amy S Myers

Would You Want a Home with This Inclusion?

This morning the agents in my office visited a few new homes that came up for sale.  It is an older home great shape but needs some updating and would make a great starter home. It has two full baths, brick, and is cape cod style. There is another home on the property that has two bedrooms, block building, real cute, would make a great rental. Both are located on a 1.6 acre lot. The property has plenty of level area for picnics or playing but over in the corner is . . . . a cemetery. It is a quite interesting. Would that keep you away or give you interest in buying? There appears to be about maybe about twelve grave stones. The stones date as far back as the 1700’s. It is surprising that you can even read some of the stones.  I was able to snap a few with my cell phone. This property is only maybe about 2 miles from our office. It comes with a cute stove too.

So in summary:Â Two homes (a two and a three bedroom) on 1.6 acres and a cemetery for a little over $100K.

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Good Faith Estimate

A good faith estimate is a statement that you receive from your lender before making an offer on a home. This summary will tell you the loan amount, loan term, interest rate and monthly payment and how much to bring to closing amount other things. It is required by law that you receive this at the time of writing your offer. January 1, 2010 the government is requiring a new format for lenders. This is intended to protect borrowers from big surprises at the closing table. Keep in mind this statement is an estimate and can go up or down slightly.

Read more from Realtor.org on new changes on January 1, 2010

Home Sales Expected to Increase

According to Realtor.org home sales are expected to increase in the coming year. The tax credit has already shown to improve the market and the first time home buyer tax credit extension is expected to keep the momentum going bringing additional “step-up” buyers into the market. Don’t let the holidays slow you down. There is still a limited amount of time to find your dream home and get closing processed successfully. Find a good agent that can walk you through all the steps.

Here is what Realtor.org had to say:

“Home sales will increase 15 percent to about 5.7 million units and REALTOR® income will be up 20 percent in 2010, NAR Chief Economist Lawrence Yun told a packed room of REALTORS today in a residential economic update at the 2009 NAR Conference & Expo.

Yun credited the home buyer tax credit with unleashing sales on the lower-end of the housing market this year, bringing up to 400,000 first-time buyers into the market who wouldn’t have bought otherwise. That influx tightened inventories of starter homes, shored up prices, and helped reduce households’ fear over continuing price drops.

This virtuous cycle will continue now that the federal government has extended the credit to mid-2010 and expanded it to make a smaller credit available to repeat buyers and to households with higher incomes. “The key is stabilizing prices and preserving household wealth,” he says.

Yun predicts the supply of homes to stabilize at the historic norm of six to seven months. Homes above $500,000 will remain elevated in the near-term, but that weakness will be offset by a hefty drop in starter-home inventories, which are running at about a five months supply.    . . . ”

Quoted from Realtor.org where you can read more.

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Photo Copyright 2007, Amy S Myers

Using Homebuyer Tax Credit for Down Payment

Buyers have inquired, and articles have been written about the possibility of using the first time homebuyer tax credit, or at least part of the funds, for a down payment on the purchase of home.  I had written previously about this opportunity..

The key to having funds be used for a down payment was finding someone who would fund this amount because it would really have to be a loan. Well, I actually saw this happen.  I recently had a closing in October, where the buyer for my sold listing actually did use the tax credit for the down payment.  The transaction contained seller’s assist (where the seller pays part of the closing fees) and the balance due after that was around $4k. PHFA (Pennsylvania Housing Financing Agency) backed the balance due amount. The buyer’s have 12 months to pay the approximately $4K amount back as an interest free loan. The funds to pay back would come after filing their taxes in the spring.  What we were told at the closing is, if they chose not to pay it off it would become a loan and would be a lien against the property.

What I did find out at the closing was the PHFA had run out of funds at the point of this closing so we were not likely to see funding again in the near future from PHFA. It was a great deal for the buyer because with the seller assist, VA backed funding, and the tax credit funds for the down payment, the cash due at closing from the buyer was “Zero dollars”.   This is extremely rare but apparently it does happen. The interesting thing was the buyer even had a credit due them at closing but due to the loan rules the buyer was not able to get any money in their pocket after the transaction so it had to go onto the principle of their loan.

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Photo Copyright 2007, Amy S Myers

Tax Credit Extension Signed into Law by President

Great News! It is official. The President has sign the homebuyer tax credit extension to law. Activity has already picked up in the area this week.

“Obama Signs Extended Tax Credit into Law”-Â Expected to contribute approximately $22 billion to the economy, Congress overwhelmingly passed a bipartisan measure this week extending the $8,000 home buyer tax credit to April 30, 2010″. . . . .

More people are now eligible to take advantage of the law, which includes a $6,500 tax credit for buyers who are current home owners and have lived in their home for five of the past eight years.”Â

“Which Properties Are Eligible? Â – The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?  – The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

1) The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

2) The buyer’s income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.” – Quoted from Realtor.org

Additional details on the tax credit

Here is a helpful chart on the new home buyer tax credit changes. You will be able to compare the first home buyer tax credit plan that expires November 30, 2009 and the new plan that starts December 1, 2009. Chart supplied by the NAR (National Association of Realtors)

Additional info from CNN.com

“The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers — those who have not owned a home in the past three years — still qualify for an $8,000 rebate. But now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.  “

Senate Democrats Agreed to Extend First-Time Home Buyer Tax Credit

Great News! Senate Democrats Agreed to to Extend First-Time Home Buyer Tax Credit. If you have paused your home search, get ready to go back out and look. The monetary cap is not as high but still very much worth the deal. For you home buyers who are ready to upgrade to your second home, now is the time because the buyers are going to still be enticed. Make sure you have your house priced right. There are still some great buys for “step up” buyers so have fun shopping.

“Senate Banking Committee Chairman Chris Dodd (D-Conn.) says Senate Democrats have agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed — not closed — by April 30. Purchasers would have another 60 days to close the sale. The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.

“The credit would be cut nearly 10 percent to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.”

Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/27/2009)and Realtor.org

img_6135-450lPhoto Copyright 2007-2009, Amy S. Myers