First-Time Buyer Tax Credit

The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool at your disposal to encourage potential buyers to jump off the fence and get into the real estate market.

When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for your customers to buy now. But tax credits can be confusing.

Here are 6 things you should know about the tax credit:

1. Buyers have until July 2009 to make a purchase that qualifies.
   The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009 you can take the credit on your 2009 tax return. You can take the credit on your 2008 tax return if you bought your house this year after April 9.
2. Buyers don’t really have to be “first-timers.”
   The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years. And the NATIONAL ASSOCIATION OF REALTORS® has asked Congress to expand the credit to all buyers, not just those who haven’t owned a primary residence in recent years.
3. Even if buyers exceed the income limit, they can benefit from the credit.
   The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500. Sounds like a great deal. But what if you make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don’t make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it’s a primary residence and is in the United States.
4. Think of it as an interest-free loan.
   The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. NAR is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan.
5. You don’t have to be authorized before making a home purchase.
   There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise.
6. New-home construction qualifies.
   For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home. However, any home that is not a primary residence, such as a vacation home or income property, does not qualify.

NAR Asking Congress to Expand Credit

As mentioned above, NAR has asked Congress to do away with the repayment provision of the first-time buyer tax credit and expand the credit to all home buyers, not just first-timers. The proposals were part of a four-point housing stimulus plan the association submitted in mid-October.

“Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible,” said NAR President Richard F. Gaylord. “It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans.

Tags: buyers, Finances, first time buyers, first time home buyers, homes sales, tax credit

Why is a Home Inspection Important? 3 Reasons

If you do not think that a home inspection is important, you are wrong. While some buyers make a purchase without having an inspection, nobody would recommend this. The fact of the matter is that you never know what is wrong with a home. And guess what? If you do not order a home inspection, you may never find out. If you do, it could be several months later.

Here are three of the best reasons to consider ordering a home inspection.

1. Many people think that a home inspection will cost them a lot of money. But all in all, this is not true. For the most part, you should be able to order a home inspection for right around $300 or so. Of course, this will differ based on the type of property, area, and much more. But this is a small price to pay for finding out what could potentially be wrong with the home that you are buying.
2. If you do not pay for a home inspection now, you may end up paying for it later. In other words, a problem that is not caught before you buy is one that you will have to pay for on your own when you discover it at a later date. And if the problem is a big one, such as a leaky roof, you are going to bet out quite a bit of money. When you pay for a home inspection you will give yourself the chance to learn about all the problems you are buying, or maybe even have them fixed before you move in.
3. A home inspection will give you peace of mind. You may not think that you need to order an inspection, but after you move in you will begin to worry about any problems that may be haunting you. It is much better to pay for an inspection before buying so that you can live stress free after moving in. It is no fun to always be worrying about something going wrong.

These are three great reasons to order a home inspection. If you are on the fence about whether or not to pay for an inspection, let the three tips above sway you towards doing so.

Tags: buyers, home buyers, home buying, home inspections, home ownership

How to Buy Your First Home the Easy Way!

Avoid 10 Common Potentially Devastating Mistakes First Time Home Buyers Make.

Buying a home can be a “hair-raising” experience. It can be a roller coaster of emotions… finding the right place… securing the loan… moving in. And if you’re like most of us, your home will be your largest investment. The emotions over such a large and personal purchase can often cloud good business judgment.

Many home buyers do very little research before “diving in” and investing their hard-earned money. Before doing that, doesn’t it make sense to be as informed as possible? That’s what this posting is all about. It’s designed to help you avoid 10 common, critical mistakes many home buyers make. If you follow these 10 suggestions, with the help of the right real estate professional, you’ll make a good sound business decision that you’ll be happy and proud of for years to come.

1. Inspect, Inspect and Inspect- Go over the inspection report with a fine tooth comb. Make sure the report was done by a professional organization. For condo purchases, go over the by-laws, and association fees. Don’t take anything for granted… inspect everything!

2. Imagine the Property Vacant- Your furnishings and decorations will be the ones filling this new residence. Don’t be swayed by beautiful furniture … it leaves with the owner.

Be Columbo - check out all expenses. Taxes, utilities owner dues… everything!

3. Income Plus Lifestyle Equals Mortgage Payment- Sit down with a competent real estate professional and honestly discuss your income level and living expenses. Take into account future considerations like: children, add-ons, amenities or fix-ups. Your dream home is certainly worth a sacrifice but don’t mortgage your entire future.

4. View Several Homes- See at least 3-5 properties. Don’t move on the first property you see but… don’t move too slowly either. With your agent’s help, you’ll be able to view enough properties to get a good overall perspective of your market. And when you find the right property, all the leg work will be worth it.

5. Utilize Your Team- By aligning yourself with the right real estate professional, you’ll have an entire team working for you. Top real estate professionals have lenders, title reps, inspection teams - an entire group of trained professionals to make the whole buying experience simple and easy for you.

6. Be Columbo- Check out all your costs and expenses before you sign: utilities, taxes, insurance, maintenance and homeowner dues, if applicable. Make sure all utilities are on (gas, electricity, and water), so you can inspect everything in working order. Ask lots of questions and be very detail conscious.

7. Do a Final Walk-Through- Visit the property after all the furnishings have been moved out to be sure there are no surprises. Be absolutely positive the property was left exactly as you had agreed upon in the contract. Many times, things are unintentionally overlooked that could have been spotted in a final walk-through.

8. Plan For Flexibility- Closing dates are not written in stone. Allow for contingencies and have a back-up plan. If you or the sellers need a little more time to conclude the final arrangements, don’t let these delays upset or frustrate you. These types of circumstances are not uncommon in a real estate transaction.

Before you sign do a final walk- through and be sure the property was left per contract.

9. If It’s Not In Writing, It Doesn’t Exist- All promises and discussions are to be in writing. Don’t make any assumptions or believe any assurances. Even the best intentions can be misinterpreted. Have your real estate professional keep an ongoing log (in writing) of all discussions, and get the seller’s written approval for all agreements.

10. Loyalty Breeds Loyalty- Be open, honest and up-front with your team. Hard feelings and disloyalty will cause headaches, delays or may even keep you from getting into the home you worked so hard to locate. Take the time to select the right team in the beginning and your first home purchase will be a simple, easy and profitable experience you’ll have fond memories of… for years to come.

Tags: buyers, first homes, first time home buyers

No-Nonsense Guide to Home Buying - 12 Steps to Success

by Brandon Cornett

In the last few years, the process of buying a home has been altered by the so-called mortgage crisis and the continued evolution of online real estate tools. So in this article, we will take a fresh and modern look at the process of buying a house. More specifically, I will outline the general process in twelve clear steps.

1. Check Your Credit

Credit scores have always been important for home buyers, but they are more in the wake of the mortgage meltdown of 2007 - 2008. According to industry experts, home buyers in 2006 needed a credit score of at least 620 to qualify for the best interest rates on a loan. Two years later, borrowers needed a score of 760 or higher to get the best rates. That’s a much stricter requirement!

So your first step should be to review your financial situation. Order your credit reports from Experian, Equifax and TransUnion, and check them for errors. Order your credit score (different from your reports) to see how you stack up against the national average. If necessary, focus on improving your score by paying down credit card balances, making all future payments on time, etc.

2. Determine Your Budget

Don’t make the mistake of letting a mortgage lender tell you what you can and cannot afford, in terms of a monthly mortgage payment. In reality, the only thing a lender can tell you is the amount you qualify for — not the amount you can realistically afford. In other words, you should determine your home buying budget for yourself. There are a lot of free mortgage calculators online that can make this process easier for you.

3. Research and Choose a Type of Mortgage

Do you know the difference between a fixed-rate mortgage and an ARM? This is just one of the things you need to understand before applying for a mortgage loan. Because of increased competition in the lending industry, there are more types of home loans today than ten years ago. The key to success when choosing a mortgage is to consider your long-term plans and find a loan that matches those plans. To do this, you must learn the pros and cons of the primary loan types.

4. Get Pre-Approved for a Loan

Pre-approval is a process in which the mortgage lender reviews your financial and credit history to determine your “creditworthiness” … an industry term that means: “How much of a risk is this person, and how much are we comfortable lending?” When you get pre-approved for a certain loan amount, there’s a good chance that you’ll receive final approval for that amount as well, when the time comes.

Having a pre-approval letter in hand also shows sellers that you are serious about (and capable of) purchasing their home. This can make a big difference in hotter real estate markets, where the seller may receive multiple offers from competing buyers.

5. Find a Real Estate Agent

If you are buying a home for the first time, or in a new city you’re not familiar with, it’s wise to hire a professional real estate agent. When you compare the amount of money you’ll pay for a new home with the size of the agent’s commission, you’ll see that it’s worthwhile to hire an agent. Choose an agent who specializes in helping buyers, as opposed to sellers.

6. Narrow Your Search

The neighborhood you choose is nearly as important as the house itself, because both have a direct bearing on your quality of life — not to mention the future resale value. For these reasons and more, it’s always best to live in a city for a while before buying a home, even if it means renting an apartment for a while. That way, you can discover which areas you like best before committing to an area.

7. Begin House Hunting

This is where you and your agent visit properties in order to find one that matches your needs. Here are some helpful tips. Take a digital camera with you to get pictures of each home. This will help you recall the details later on. Bring a notepad as well, and for the same reason. While you’re at it, you might want to bring a friend along for an unbiased opinion of each property — you know, that outspoken friend who calls it like it is.

8. Evaluate the Asking Price

It’s referred to as the “asking price” for a good reason. Just because a property is listed at $250,000 doesn’t necessarily mean it’s worth that amount. This is another area where it helps to have a real estate agent. Most agents are expert at validating sale prices against recent sales in the area, and that’s the best way to find out if the price is realistic or inflated.

9. Make an Offer

Once you’ve determined that the price is fair and reasonable, you are ready to make an offer on the property. Always make the offer contingent upon the home inspection (see next item). That way, if the inspector uncovers an issue that you consider a deal breaker, you have a way out of the contract. Ask your agent about contingencies.

10. Get a Home Inspection

Most inspections only cost a few hundred dollars. That’s a small price to pay for the peace of mind you get in return. A home inspector will review the structural and mechanical aspects of the house, including (but not limited to) the roof, foundation, electrical, and heating / cooling system.

11. Attend the Closing / Settlement Process

So, you’ve made it through all of the inspections and the process is still on track. Great! The next step will be the closing / settlement process (it goes by different names in different parts of the country). Actually, you can prepare for this process early on by putting extra money aside. This is when the title to the property is transferred from the seller to the buyer. You’ll also be signing a lot of paperwork and paying any other fees that are due.

12. Tie Up Loose Ends

After your move, you’ll have a few more things on your task list. Transfer your utilities if you haven’t done so already. Complete a change-of-address form with the post office. Get a safe deposit box for your home insurance policy and other important documents. Set up a mortgage payment schedule or an online auto-pay system. And give yourself a pat on the back … you’re now a homeowner!

* Copyright 2008, Brandon Cornett. You may republish this article if you retain the citation notes and hyperlink below.

Citation Note: This article was created by Brandon Cornett, publisher of the Home Buying Institute. HBI offers consumer advice on mortgage loans, home buying, credit information and more. Learn more by visiting: http://www.homebuyinginstitute.com

Tags: advise, buyers, guide, home buying

Home Buyers Still Waiting

According to the most recent information from Trulia home buyers are staying on the fense when it comes to buying a home.  Market uncertainty is scaring away people who don’t own a home, particularly those who are in the 18-34 age group previously most likely to buy, says online real estate service Trulia.

More than 70 percent of non-homeowners surveyed say they have no plans to purchase a home in the next year. But the good news is 12 percent of non-homeowners say they expect to buy a home in the next 12 months.

Non-homeowners with an annual household income of $50,000 to $75,000 agreed more strongly (78 percent) on a home being central to achieving their personal American Dream than those with an annual household income of under $49,000 or over $75,000 (51 percent and 53 percent, respectively).

But first time home buyers should NOT wait too long.  Now is a great time to go out an buy your first home.  Why?  Because many buyers think that there is an actual buying season and that our current one is over for this year.  This is just not true.  What this does is keep your competition for that house away.  Your competition just quit looking and buying.  This leaves you an open field.  Another reason is the tax credit that first time home buyers get when they purchase their first home. The First-time Home Buyer Tax Credit was passed this year as part of the Housing and Economic Recovery Act (H.R. 3221) on July 30 and targets any individual or household that hasn’t owned a home for at least three years. As a first time home buyer, you can take the credit on your 2008 tax return if you buy your house this year after April 9. It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if you wait to buy in the first half of 2009 you can take the credit on their 2009 tax return. But don’t wait too long…settlement MUST take place prior to July 1, 2009.

But remember, the actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so you can get 10 percent of the home price credited against your tax liability, up to a maximum $7,500. Income limits are $75,000 for individuals and $150,000 for households. Individuals whose income exceeds the $75,000 limit but isn’t more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000.

Any house is eligible as long as it’s a primary residence and is in the United States.

To help keep the program cost effective for taxpayers, the federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable.

There’s one restriction on the type of financing that you can use if you plan to take the credit. That restriction is on tax-exempt mortgage financing. That only applies if you are using below-market interest-rate financing from a public agency or nonprofit that’s funding the loan using proceeds from a tax-exempt mortgage-revenue bond issue. For most buyers, this won’t be an issue. It’s mainly an issue for low-income buyers using special mortgage financing.

If you have any questions, please check our First Time Home Buyer’s Knowledge Base. You can also access the First-time home buyer tax credit chart.

Terry Iwaniw
REALTOR Associate
First Time Home Buyer Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1086
http://www.terryi.com/
http://www.snewjerseyhomes.com/

Tags: buying a home, home inventories, housing market, real estate market

FHA - Risk Based Interest Rates

Since its inception in 1934, the FHA has been the answer to home ownership for millions of Americans who otherwise would never be able to own a home. The FHA was created as an answer to the Great Depression, where millionsof people lost every cent they owned and most banks went out of business.

The FHA allowed families to purchase homes with very little money and at market interest rates, even if they had a tainted credit history. The FHA was a godsend to what was left of the banking industry in 1934. Since every FHA loan was insured by Up-Front Mortgage Insurance Premiums (UFMIP) and MIP (mortgage insurance premiums) the banks had very little risk. Homeownership was now available to the masses, not just the privileged few. 

In its 74 year history, there have been many changes to the FHA, but the most sweeping change is about to take place in about a year. The FHA has always offered the same interest rate to all its borrowers, regardless of their down payment or credit rating. It did not matter whether you put down 3% or 20%, or your credit scores was 550 or 850, your interest rate was the same. That will not be the case in the very near future.

The FHA is about to implement ‘Risk Based Lending”, just like conventional banks.  Translated this means the lower your downpayment and the lower your credit score, the higher your interest rate.  This would have been implemented on October 1, 2008 but Congress placed a 1-year moratorium on this radical change to allow for the sale of the millions of foreclosed homes clogging up the banks balance sheets.

What does this mean for people who would need to take advantage of the low down payment/lower interest rates now offered by the FHA in order to buy a home? Very simply, if you wait to buy a home until 2009, may very well have to come up with more cash and suffer through higher interest rates and therefore, higher payments. Many people will be forced out of the market altogether, thereby taking homeownership out of the hands of thousands upon thousands of people.

Mr. & Mrs. Charles Humphreys, The First Home Financed
through the FHA

As a professional, my advice to anyone who thinks they will need to finance their home through FHA is to do it as soon as possible.  Once the FHA is allowed to change their guidelines to “Risk Based” financing, people who once relied on old guidelines to qualify for a low, fixed rate mortgage will be out of luck.

Linda Iwaniw
REALTOR Associate First Time Home Buyer Specialist
Fixer Upper Property Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1084
http://www.sjerseyhomes.com/

Tags: fha mortgage, Finances, home mortgages, mortgage qualifications, mortgages

An Open Letter to Mortgage Representatives and Loan Officers

A day never goes by that I don’t receive an e-mail, a postal letter, or a fax from some loan officer/mortgage representative telling me what they can offer my customers and clients. I could paper my office walls with all of the ones that I receive. But I can understand your motivation…you’re trying to solicit more business for yourself. Because that’s what I do. I’ve spoken to many of you and you ask a very valid question -

“What can I do to earn your business and have you refer your clients and customers to me?”

I can now answer that question - refer home buyers to me. Now, to better understand my answer I need to expand on it a bit more. First of all, I have not had a serious home buyer that I haven’t been able to find a home for. It may take a bit of time, but I end up finding them exactly what they were looking for. Secondly, I have never had a deal fall apart because of the house disappearing or my buyers no longer qualify to own it (different then no longer being qualified to acquire the funds to purchase it).

With that said, I can now more fully explain my perspective and you can better understand where I’m coming from. I spend a considerable amount of time, money, and effort to attract home buyers to our business. These buyers are very precious to us so we aren’t going to be quick to throw them away. If they don’t have a mortgage representative and ask us who we would recommend, do you think we are going to recommend -

1. Someone we’ve never worked with and just wants us to give them a try, or
2. Someone that we have worked with before and has demonstrated that they will makes sure that the deal goes to the settlement table.

I think that you’ll agree that it is a no brainer, we’re going to go with the proven entity. So, how do you start a lucrative business relationship with us? Send me serious, qualified buyers. If the buyer comes from you, then they are your client. However, when they come to me through my efforts then I will recommend services to them that will insure that the deal goes to the settlement table. Essentially, look at the situation in a logical manner -

• Every buyer working with a real estate agent does not need a mortgage (buyers with cash do not need to get a mortgage). I can find them a home that they can buy.
• All mortgage applicants need a home to use the funds from the mortgage loan on. As a mortgage represenatative, unless you have a real estate license, you can’t locate a home for them.

Because all mortgage applicants (excluding those seeking refinancing) must become home buyers, not all home buyers must become mortgage applicants. So, the fastest way to garner business with us in giving you a shot is to use your buyer as the test and not ours.

Terry Iwaniw
REALTOR Associate
First Time Home Buyer Specialist
Foreclosure Prevention Consultant
RE/MAX Home Team
609-417-1086
http://www.terryi.com/
http://www.snewjerseyhomes.com/

Tags: advertising, mortgage loans, mortgage reps, mortgages, promotion

Clarification of the Buyer’s Credit Being Offered

The recently passed housing bill has a provision in it that 1st time homebuyers a tax credit of 10% (up to $7500) of the purchase price in the form of a tax credit.  What this means is that any first time homebuyer who purchases a home between April 9, 2008 and July 1, 2009 is eligible to receive this credit on their 2008 Tax Return.  This $7500 IS NOT a grant to be used for closing or down payment, you will not be receiving any funds from the federal governemnt.  It is a tax credit towards their next tax return that you file.  As an example, if a client has a tax liability of $10,000 for 2008 they will get a $7500 tax credit / tax refund and will only owe $2,500 in taxes for the year.  There is no way to get this money earlier then when they file their 2008 tax returns. 

Additionally, after receiving this tax credit, the homebuyer then has to repay the $7500 over the next 15 years. Meaning what,you may ask?   This means that they will have an additional tax liability for each subsequent year of $500 for the next 15 years. 

If you have any other question, please feel free to give me a call at 609-417-1086.

Terry Iwaniw
REALTOR Associate
RE/MAX Home Team
Laurel Springs, NJ
http://www.snewjerseyhomes.com/
http://www.i-teamhomes.com/
609-417-1086

Tags: 1st time buyers, federal government, Finances, housing bill, housing rescue bill, mortgages, tax credit

Do We Cheer or Do We Panic?

As many of you have read, the US Government has enacted the new Housing and Economic Recovery Act of 2008 this past week.  The basic summary of this new law can be read here .  The NAR has sent out announcements about how this is something that will help the home owners and boost the housing industry.  If there is something to help distressed home owners, I am mostly for it.  There was an announcement recently about rule changes in the way lenders must process foreclosures in the State of Maryland.  I welcome this because the mortgage industry has the clout to demand that borrowers are investigated to insure that they didn’t acquire their mortgage funds through fraud.  However, who is making sure that mortgage lenders didn’t use predatory practices to sell their financial instruments?  The State of Maryland is enacted some rules that slows the process down a bit and  puts the burden of proof on certain aspects of the mortgage on the lender.  But…that’s for another blog entry.  You can read about the Maryland rule changes here.

The same day that I received an e-mail announcement from NAR about the new law, the same day numerous mortgage reps sent me their summaries of the key points of the law, I received another e-mail message telling me that because of certain provisions of this new law that home ownership was going to plummet, that the housing market was never going to recover.  The e-mail message urged me to take drastic action and contact my representative, to sign petitions, to do whatever I had to do to get this provision changed/reversed.  What was this provision?  It’s one of the key points in the summary of this new law…it is point # 5:

“Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.”

OK.  On the surface someone reading the law could interpret to believe that people can’t get (as gifts) their downpayments.  However, the provisions in the law state that if funds are provided from a NON-PROFIT source, that it would be allowed.  So, who sent me the e-mail message that the law was going to reduce home ownership?  If you guess ed one of the Downpayment Assistance Companies (those that do so for a fee/profit), you are absolutely correct!  The e-mail message didn’t bother me nor did I rush to the phone to call my Congressman to get the provision removed.  Wow!  Strange coming from a real estate professional, isn’t it?  Not really, when you think about it logically.  First of all, the e-mail from the downpayment assistance company was purely self-serving, they weren’t concerned about the housing market, they weren’t concerned about future home owners, they were concerned about their profits and the viability of their business surviving.  After all, their business model is to provide downpayments for home buyers…for a fee.  They aren’t a charity.  But I don’t see that the provision is going to impact my business as much as the downpayment assistance company says it will.  Again, think about it logically.

1.  When a buyers’ downpayment is gifted to them by a family member, thier employer, or churches without a profit motive then the buyer is less likely to walk away from their mortgage obligation or the home because even though the  downpayment was not their money directly, they will need to face those that gifted them the money in some way, shape, or form.  If the downpayment is gifted to them by some anonymous source, why would they care what that entity/source thinks of their actions.  They’re never going to see them.  They have no ties of any sort to the anonymous source.  They won’t feel the same way if the downpayment was gifted by Mom and Dad, or Uncle Bill and Aunt Sue, or a brother or sister.  Imagine being responsible for the family being ostrasized by the church group that gifted the buyers their downpayment.  Big difference!

2.  Now I’ve had to deal with enough buyers and negotiate on their behalf and equally on the seller’s behalf to know that the current norm is that most buyers need help with their closing costs.  Majority of the time the buyers offer includes some amount of seller concessions toward closing costs.  So, now the buyer makes an offer to purchase the seller’s home, maybe at some lesser amount then full price, they ask for seller concessions and then, on top of all that….they want to seller to “donate” the downpayment amount to the Downpayment Assistance Company PLUS a fee so that the downpayment shows as not coming from the seller?  This is definitely a hard sell to the home owner.  I haven’t come across any seller that was THAT deperate to sell their house to give away their gains on their house (which they will probably need ot buy their next home).  Yes, there may be cases where the seller is moving to a rental or something, but it’s still a hard sell to try to keep “picking” the seller’s pocket.

3.  Essentially, I have to agree completely with the provision of the law regrarding the source of the downpayment funds.  Maybe, just maybe, if you can’t get a hold of the downpayment you may NOT be ready for home ownership.  It’s just not fiscally responsible to do so at this time.  Did we forget already the outcome from the sub-prime mortgage fiasco?  You cannot prop up people who cannot normally afford to buy a home with any type of artificial means.  If they can’t get the downpayment, they shouldn’t be buying a home.

There should be some other type of consequences to buyers actions.  Giving them funds from any anonymous source is not benefitial to anyone other then the entity that is acting as the go-between to provide it…for a fee.

Tags: donwpayment assistance, downpayment gifts, downpayment sources, downpayments, Foreclosures, genesis, gifting, nehamiah

Weak Market and Fear of Inflation Among Reasons for Spike in Mortgage Rates this Week

Freddie Mac today released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage (FRM) averaged 6.63 percent with an average 0.6 point for the week ending July 24, 2008, up from last week when it averaged 6.26 percent. Last year at this time, the 30-year FRM averaged 6.69 percent. “Market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve (Fed) will raise short-term rates this year all combined to push mortgage rates higher this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Some of the key drivers to these concerns were consumer prices jumping 1.1 percent (annualized) in June — the largest increase since September 2005 on a year-over-year basis — coupled with consumer prices growing at a 5.0 percent clip (on a year-over-year basis), the strongest since February 1991.”

Tags: Federal Reserve, Freddie Mac, mortgage market, mortgages, rates